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The Reserve Bank of Australia’s decision to keep the official cash rate on hold has helped Australian households breathe a sigh of relief, new data from Fitch has revealed.
According to the latest Fitch Dinkum Index, Australian mortgage arrears over 30 days fell to 1.69 per cent in Q211 from the record high of 1.79 per cent in Q111.
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"The stable mortgage rates over Q211 have allowed households to slightly adjust to the challenges which hampered mortgage performance during Q111, such as increasing interest rates, natural disasters, and seasonal Christmas spending," Fitch's associate director of the structured finance team James Zanesi said.
"Mortgage performance is also expected to continue its stabilisation through Q311 as the effect of Christmas spending continues to pass through, borrowers affected by natural disasters in Q111 continue to cure their delinquency status and households adjust their spending to the increases in mortgage rates over the last two years.”
Fitch notes in particular that, in line with expectations, the decrease in arrears was mainly in the 30-59 days and 60-89 days buckets, which were also the buckets in which arrears increased the most during Q111. The Fitch Dinkum 30-59 Days RMBS Index and 60-89 Days RMBS Index decreased to 0.71 per cent and 0.31 per cent in Q211 respectively, down eight basis points and three basis points from Q111.
