Mortgage stress is rising

Stress builds

The good news is that 80 per cent of the 'fixed rate cliff' has essentially now passed.

The not-quite-so-good news is that interest rate hikes are not a one-time thing...the new higher mortgage repayments are recurring, and the stress is now beginning to build.

From Westpac's investor pack this week the cumulative effects are becoming apparent.

1.22 per cent of TCE versus a prior year comparative of 1.06 per cent, with more to come. 

It's not entirely surprising that stressed exposures are rising, of course, given the brutal increases in interest rates, but now we're starting to see this show up in actual mortgage delinquencies. 

Source: Westpac

This is concerning, as the line is only going up from here, and the situation is worse for some of the non-bank lenders.  

Consumers are getting beaten up, and this is further evidence that Australia's monetary policy is much swifter and more effective than in other countries where fixed rate mortgages tend to proliferate.

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There's been stacks of spirited debate about upzoning Australian cities...something we discussed in some detail on the podcast this week.

But could this simply be a precursor to even faster immigration over the long run? 

I don't know the answer to that, but it's quite possible. 

Have a listen here.

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