According to an official at the Reserve Bank of Australia (RBA), mortgage arrears have reached levels not seen since 2010, but do not pose a risk to the financial system or households.
Jonathan Kearns, head of financial stability at the RBA, said the economic conditions were contributing to the rise in housing arrears. "Slow income growth, falling housing prices and rising unemployment in some regions also contributed, but they did not act alone, interacting with previously weaker credit standards and the more recent tightening. loan standards, "he said. summit on the property in Canberra on Tuesday. "To the extent that we can indicate the causes of the increase in arrears, while the economic outlook remains reasonable and household income growth is expected to accelerate, the influence of at least some other factors might not reverse of course in the near future, so the arrears rate could continue to increase a little longer. "
A robust labor market has helped Australians meet their mortgage lending commitments. The forecast, however, indicated that hirings would cool down. The RBA has recently lowered interest rates to their all-time low, with the aim of reducing unemployment and boosting wage growth.
"About two-thirds of borrowers have accumulated prepayment reserves for their mortgage loan, while others have assets outside their property," Kearns said. "Households with financial room for maneuver can withstand a certain period of unemployment, but if it lasts too long and runs out of savings, they may become backlogged. With generally sound lending standards, as long as unemployment remains low, the arrears rates should not reach levels posing a risk to the financial system or significant harm to the household sector. "
Kearns stated that areas with high unemployment rates, such as parts of Western Australia, had levels of arrears twice as high as the national rate.
While unemployment was a delay factor in mortgage payments, it was not the only reason for all arrears. Total income or the lack of wage growth was a major challenge, according to Kearns.
"Borrowers often risk losing part of their income, for example because of reduced hours of work, a smaller premium, or the fact that tenants leave their investment property. They do not have an important buffer or a buffer of savings, even low income falls, or an unexpected increase in spending may result in arrears of borrowers, "said Kearns. "When nominal income rises sharply over time, mortgage payments absorb a decreasing share of the borrower's income.As their mortgage matures and their income increases, borrowers are better positioned to cope with a in the last five years, the growth of nominal income has been about half of its long-term average. "
On Monday, Moody's announced that outstanding mortgage-backed securities had increased throughout the month of March, with a repayment delay of 1.58%, compared to 1.48% versus in the previous year.
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