Fitch – Australia mortgage arrears rebound, but remain low

Australian mortgage arrears increased 16bp to 1.11% in 1Q16, due to seasonal Christmas spending, rising standard variable rates and a low real-wage growth, but remain low compared with the 1.75% peak in March 2011, says Fitch Rating.

Fitch adds the strong housing market, low unemployment-rate and low-interest-rate environment create favorable conditions for mortgage performance, but a sudden change in employment conditions or negative real-wage growth poses a major threat.

Fitch expects –

Arrears to fall over the next two quarters once the effect of Christmas spending fades and

The May 2016 interest-rate cut starts benefiting borrowers