Fitch expects Australia’s mortgage arrears to fall in 2Q17 and 3Q17

The US ratings agency, Fitch ratings, is out with its latest review report on Australia’s ‘Mortgage Market Index‘, which measures the mortgage arrears.

Key Points via Reuters:

Australia's mortgage arrears increased by 12bp qoq to 1.21% at end-1Q17, due to seasonal Christmas/holiday spending and possible difficulties faced by consumers because of low real-wage growth

The qoq increase in arrears from 4Q16 to 1Q17 was less than 1Q16 (16bp qoq to 1.10%)

The 30+ days arrears in 1Q17 were 11bp higher yoy, despite an improved economic environment and lower standard variable interest rates

Unemployment increased slightly by 2bp and real wage growth was low, but positive.

Underemployment has been growing despite relatively stable unemployment

Fitch Ratings expects arrears to fall in 2Q17 and 3Q17 after the holiday season due to the current low interest rate environment and decreasing unemployment