Home Loan Arrears on full documentation mortgages have increased significantly during the December quarter. While mortgage delinquencies on non-conforming loans have reached a record high during the same period.
Arrears on full-documentation home loans of over 30 days increased to 1.75 per cent for the December quarter from 1.5 per cent during the June 2008 quarter. Arrears on non-conforming, low-documentation loans that are past 30 days due, now stand at a new record high of 19.73 per cent, reflecting the sector’s inability to refinance since the virtual closure of the low-documentation origination market.
It is expected that mortgage delinquencies will deteriorate further during the March quarter . All this is despite the numerous and significant home loan interest rate cuts by the Reserve Bank of Australia over the past 6 months.
The key factor contributing to home loan arrears is loss of employment with the secondary factor being unavailability of non-conforming funds.