The Australian Prudential Regulation Authority has confirmed that mortgage arrears are worsening across all borrower types, with deputy chair Therese McCarthy Hockey saying arrears of at least 30 days were rising, The Nightly reported. Default data from APRA showed home loans at least 90 days in arrears rose to 1.01% in June, from 0.99% in March.
APRA chair John Lonsdale appeared before the Senate economics committee and acknowledged the employment market as a key concern, with unemployment reaching 4.7% in September, described as a five-year high. Borrowers are classified as delinquent if they are 30 or more days behind on repayments, while the default rate covers those 90 or more days in arrears.
Lonsdale said the regulator had observed a trend of more first home buyers taking on loans with loan-to-valuation ratios in the 90 and 95% categories, though he acknowledged the data was incomplete. Greens senator Barbara Pocock asked that the data on first home buyer leverage trends be provided to the committee in writing, saying it was difficult to absorb verbally. The hearing included questioning from Nationals leader Matt Canavan.
McCarthy Hockey said banks are reporting to APRA and the data reflects borrowers approaching their banks for assistance, with the banks engaging with them. Lonsdale said cost-of-living pressures and mortgage stress exist in the community, but that the extent to which stress translates into non-performing loans is a separate matter, and that banks report customers are coming to them earlier, working through repayment plans, with better management of mortgage stress than in the past.
First home buyers who entered the market using a 5% deposit scheme carry high leverage, and APRA has flagged it is watching this group as unemployment rises and cost-of-living pressures persist.
Reporting: The Nightly
Background: APRA
Written by Pick & Scroll News from the reporting and documents linked above.
