Mortgage defaults are set to rise in 2010 as Aussie borrowers are faced with rising
interest rates and post Xmas credit card bills.
Home loans in arrears by more than 30 days increased across all borrower categories
during the December 2009 quarter, Fitch international rating agency reported on
Monday.
Prime mortgages make up the vast majority of mortgages in Australia, and arrears
over 30 days declined by 0.02 per cent in the December quarter to 1.19 per cent.
However, arrears on mortgages held by non-conforming and low-documentation
borrowers spiked more than 50 per cent on the September quarter as the impact of
three consecutive interest rate rises kicked in.
Non-conforming borrowers represent a small portion of the Australian mortgage
market and, as expected, they were the first to be hit by the interest rate hikes.
Further interest rate increases, combined with continued global instability and the risk
of rising unemployment in Australia, were expected to push mortgage arrears higher
in 2010, Fitch said.