Home loan arrears to rise moderately in 2019: Moody's

Moody's Investors Service says that mortgage delinquency rates in Australia will increase moderately through 2019.

It has been broadly stable over the past 12 months. Within the 20 postcodes with the lowest mortgage delinquencies in Australia, eight were in Sydney and seven in Melbourne.

"Softening housing market conditions — particularly in the key states of New South Wales and Victoria — combined with high household leverage, higher interest rates and the conversion of interest-only mortgages to principal and interest repayments, will push up delinquency rates," says Jacqui Dredge, a Moody's Analyst.

"Nevertheless, macroeconomic conditions will remain supportive, such that the increase in delinquencies will prove moderate."

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Moody's analysis is contained in its report on the RMBS mortgage delinquency market,

The proportion of Australian residential mortgages that were more than 30 days in arrears registered 1.58% in May 2018 compared with 1.62% in May 2017. 

Delinquencies fell moderately in all states except New South Wales (NSW) and the Australian Capital Territory (ACT) over the year to May 2018.

Moody's report also says that Western Australia and Queensland dominate the list of worst performing regions.

Specifically, seven of the 10 regions with the highest 30-plus delinquency rates in May 2018 were in either Western Australia or Queensland, impacted by the after-effects of the mining boom unwinding.

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