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Tuesday, 18 June 2019

Mortgage arrears creep higher

Arrears rising

30 plus day mortgage arrears increased moderately to 1.53 per cent in April 2019, up 17 basis points from a year earlier, according to S&P Global. 

90 plus day arrears were 0.8 per cent, up from 0.7 per cent a year earlier, with only the ACT bucking the trend towards longer and more troubling 90 plus day delinquencies. 

Around the traps, 30 plus day arrears were low in Victoria (1.43 per cent), and very low in New South Wales (1.28 per cent), Tasmania (1.15 per cent), and the ACT (1.06 per cent). 

Job vacancy rates are tracking at record highs according to the NSW Budget, so there's comparatively little risk of a serious deterioration in Sydney. 

On the other hand, mortgage arrears climbed to 3.10 per cent in Western Australia and 3.33 per cent in the Northern Territory. 

Although investor arrears (1.52 per cent) were lower than owner-occupier arrears (1.76 per cent) there is some evidence to suggest that a fair chunk of the recent stress relates to investor loans being reset from interest-only mortgages. 

The Reserve Bank's head of financial stability spoke at length on mortgage arrears today, and unsurprisingly sees no risks posed to FS at these levels. 

However, the RBA can do something for household cashflows and flagged further rate cuts this year in its Minutes, in turn taking in the Aussie dollar down to decade lows.