Mortgage delinquencies set to continue rising through 2019: Moody's

Australian mortgage delinquencies, which increased over the year to November 2018, will continue to increase through 2019, according to Moody's Investors Service latest delinquency report.

"Mortgage delinquencies will continue to increase over 2019, because of high debt levels, subdued wage growth, the conversion of a large number of interest-only mortgages to principal-and-interest loans and declining house prices," says Alena Chen, a Moody's Vice President and Senior Analyst. 

"However, delinquencies will remain low overall, given the rate of economic growth and low unemployment, which will continue to support borrowers' ability to meet their mortgage repayments," says Chen. 

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The proportion of Australian residential mortgages that were more than 30 days in arrears increased by 0.13 percentage point to 1.58% over the year to November 2018.

Mortgage delinquencies increased in New South Wales (NSW), Victoria, Western Australia, Tasmania, South Australia, Australian Capital Territory and Northern Territory over the year to November 2018, but declined in Queensland.

In NSW, the delinquency rate increased to the highest in five years, though it remains relatively low compared with most other states and territories and NSW's long-term average.

Regions with exposure to the mining sector continued to dominate the list of areas with the highest delinquencies. 

Moody's semi-annual delinquency map report provides a detailed analysis of the rate of residential mortgage arrears at a national, regional and postcode level in Australia.