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ISCOVER
Staff Reporter
Further interest rate rises could prompt more borrowers to fall behind on their mortgage repayments, a new report has found.
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According to Moody’s Investor Service, rising rates will also continue to exert pressure on the affordability of mortgages.
Moody's assistant vice president and analyst Irene Kleyman said while the current monetary policy would not have a negative impact on borrowers; further rate hikes could potentially deteriorate conditions.
The performance of the Australian mortgage market remained stable during Q3 2010 with delinquency levels steady in both prime and non-conforming RMBS.
"Prime RMBS 30 days-past-due delinquencies were generally steady, moving up 3 basis points from the last quarter to 1.43 per cent, while non-conforming RMBS 30 days-past-due delinquencies decreased to 13.24 per cent – 0.50 per cent lower than Q2," Irene Kleyman said.
"However, looking ahead, while delinquencies for non-conforming loans have improved from their peak in late-2008, their vulnerability to interest rate increases and their risky nature make them susceptible to deterioration in the macroeconomic environment.”
