Loan Repayments

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<p>Mortgage deferrals prompted by the COVID-19 pandemic have continued to trend down, according to the latest figures from the Australian Prudential Regulation Authority (APRA).</p>

<p>Householders and small businesses who were struggling to make mortgage repayments at the onset of the pandemic are back paying down their home loans again.</p>

<p>Repayments are not being made on about 2 per cent of the value of total housing loans on issue, compared to the 10 per cent peak deferral tally, according to the Herald Sun.</p>

<p>According to the Australian Banking Association, home loan deferrals at Commonwealth Bank, Westpac, National Australia Bank, ANZ, BOQ, Suncorp and Bendigo banks dropped 80 per cent between June and December last year, from 493,000 to 101,000.</p>

<p>Business loan deferrals dropped almost 90 per cent from 228,070 to 25,497 at the seven banks during the same time period.</p>
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Repayments are not being made on about 2 per cent of the value of total housing loans on issue, compared to the 10 per cent peak deferral tally

jchancellor

COVID-19 based mortgage deferrals trending lower

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<p class="post-title entry-title">EXPERT OBSERVER</p>
<p class="post-title entry-title">It's like<em> deja vu </em>all over again! </p>
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<div>The historic ratio of household debt to disposable income was once again revised down, but the trajectory remained up. </div>
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<div>And in the end, we ended up back in the same old place, with an Aussie household debt ratio still at 1.9x disposable income. </div>
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<div>Note that the impact of tax and rate cuts has yet to flow through fully to these figures, so behavioural patterns could change going forward. </div>
<br><div class="separator"><img src="https://1.bp.blogspot.com/-E1JICRVccs4/XY2p48YKbqI/AAAAAAAAx_E/iSC6SMuc62Yj4H-65nfDIT5IdyvUEI7mQCNcBGAsYHQ/s640/RBA1.jpg" width="640" height="378" data-original-height="808" data-original-width="1366"></div>
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<div>The 'record high' headlines will naturally follow in due course, although the ratio was ostensibly about 200 per cent a couple of years ago - before previous revisions were pushed through - and the growth in housing credit has since been crunched lower (to record lows for housing investors, at zero growth). </div>
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<div>The bulk of Australia's household debt remains concentrated in the upper two income quintiles, while net of a huge surge in prepayments the debt-to-income ratio is pretty much unchanged since 2006. </div>
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<div>Treasurer Frydenberg was also lightning quick off the mark to highlight that the value of assets was 5x that of the debt. </div>
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<div>Meanwhile the ratio of household interest payments to disposable income continued to fall and sow sits well under 9 per cent.</div>
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<div>This ratio is now some 33 per cent lower than at the 2008 peak, and trending lower (it was also higher in the late 1980s than it is today):</div>
<br><div class="separator"><img src="https://1.bp.blogspot.com/-p9EkMGT4dH4/XY2p49HieWI/AAAAAAAAx_A/AJhLZqxNtjAwS6pUx5zeVs07A6IQAmC-ACNcBGAsYHQ/s640/RBA2.jpg" width="640" height="370" data-original-height="813" data-original-width="1404"></div>
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<div>Interest rates have since fallen further in the September quarter, so further declines are in the post.</div>
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<div>There has been some mortgage stress, even in spite of the household interest payments ratio being down by a third, mainly experienced in Western Australia and largely related to the forced interest-only mortgage reset.<br><br><div class="separator"><img src="https://1.bp.blogspot.com/-kzDI0RPnsOI/XY245qcXHRI/AAAAAAAAx_k/poT5fkvt4uYJppj8l-6cjZan2M6BGJG3wCNcBGAsYHQ/s640/sandp.jpg" width="640" height="360" data-original-height="803" data-original-width="1422"></div>
<br>That said, S&amp;P expects arrears to fall as repayments have become easier. <br><div> </div>
<div><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>. </em></div>
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pwargent-M4siyDbqQY

Interest repayments continue to get easier: Pete Wargent

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<p>The Agency have renegotiated their debt repayment terms, with a repayment due today extended by two weeks.</p>
<p>They advised their shareholders that their current funder, Macquarie Bank, "remained supportive of the company and expressed an interest to extend the current debt facility."</p>
<p>The repayment will now be due April 9.</p>
<p>The Agency have also been in discussions with other credible debt providers regarding refinancing of its primary bank debt, with an update expected near the next repayment date.</p>
<p>All non-commissioned staff at The Agency will now see their hours cut, effective mid-April, given the reduced workloads due to the ongoing COVID-19 pandemic. </p>
<p>Things have never been busier given they have 4500 tenants.</p>
<p class="x_MsoNormal">The Agency thanked the Federal Government for the new Job Keeper program which allows companies to access $1,500 per fortnight per employee should The Agency's turnover decline by 30 per cent.</p>
<p class="x_MsoNormal">They may well be bracing for the prospect, with The Agency's managing director Paul Niardone saying the new initiative will assist them in keeping their team employed and potentially lessen the time they will be working to reduced hours.</p>
<p>Mr Niardone said it is clear there is a need for immediate measures so The Agency continue to deliver their selling and management goals.</p>
<p>“We do not want to follow the example of other large companies and stand down the workforce to ride this crisis out", Mr Niardone said.</p>
<p class="x_MsoNormal">"We want to avoid staff reduction as much as possible and avoid causing anyone the additional stress of having to find a job in what is already a trying time.</p>
<p class="x_MsoNormal">"What we do want to do is work together to ensure that we support each other and remain in employment.” </p>
<p>They advised the business continuity measures have been supported by the "vast majority of its staff".</p>
<p class="x_MsoNormal">“It is not just about ensuring the business and all its staff can successfully navigate this period of uncertainty, but that we use this time to reinforce our systems and practices and ensure we are well positioned to take advantage of what in time will become an improving market," Niardone said.</p>
<p class="x_MsoNormal">The Agency's share price spiked last week, up ¢2 to ¢6 a share. Shares are currently trading at ¢5, reflecting a $15 million market capitalisation.</p>
<p class="x_MsoNormal"><span>The </span><span>Agency boasts</span><span> a </span><span>rent roll valued</span><span> at </span><span>$23.5 million</span><span> and </span><span>mortgage book valued</span><span> at </span><span>$5.2 million.</span></p>
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jrobinson-rf4aSBido9

The Agency secure two week extension on financing as staff hours get cut

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<p><span>Housing affordability in the June quarter 2016 improved to levels last seen seven years ago according to the latest </span>Adelaide Bank/REIA Housing Affordability Report.</p>
<p>The report found the proportion of median family income needed to meet average loan payments was 29.4 percent, the best level since June quarter 2009, according to REIA president Neville Sanders.</p>
<p>He said affordability improved through more favourable interest rates and modest increases in income.</p>
<p>"Most states and territories saw improvements in housing affordability. The only quarterly decline was seen in the Australian Capital Territory while no change was recorded in New South Wales and Queensland," he said.</p>
<p><span>“</span><span>Victoria recorded the greatest improvement across the country with the proportion of income required to meet average monthly loan repayments decreasing by 1.7 percentage points to 31.0 percent.</span><span><br></span></p>
<p><span>“The lending figures show that owner occupiers are the dominant force in the moderating market in which the growth of investor activity has abated following the introduction of macro prudential measures. Disappointingly the proportion of first home buyers appears to be on a downward spiral and is at its lowest for over two decades. Western Australia has the largest proportion of first home buyers in the owner-occupier market nationally. </span></p>
<p><span>“</span><span>The quarter also brought good news for renters with rental affordability improving as the proportion of the median family income required to meet median rents declining from 25.1 percent in the March quarter to 24.8 percent in the second quarter of 2016. The Northern Territory saw the best </span><span>improvement, followed by South Australia and Tasmania.” </span></p>
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jonathanchancellor-7SQnKwU6yx

June quarter housing affordability levels improve

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<p>Budgewoi on the New South Wales central coast is Australia’s worst performing suburb when it comes to missing housing loan repayments, according to research published yesterday.</p>
<p>The latest Australian Mortgage Delinquency by Postcode report by Fitch Ratings found Tasmania is the worst performing state for mortgage repayments, replacing Queensland with an average delinquency rate of 1.33%.</p>
<p>Overall, the average mortgage default rate in Australia hovered at around 0.99% for the month ending March, which is up 9% since September 2014.</p>
<p>Of the top 20 worst-performing postcodes, the majority are in metropolitan regions.</p>
<p>However, metropolitan suburbs performed better on average than their rural and regional counterparts.</p>
<p>This is particularly the case for states such as Western Australia, Queensland and the Northern Territory due to the downturn in the mining industry.</p>
<p>James Zanesi, director of Fitch Ratings Australia, told <em>SmartCompany </em>that national arrears rates are currently very low.</p>
<p>“They are extremely low and probably due to the current situation Australia is in,” Zanesi says.</p>
<p>“This means very low interest rates, unemployment at an acceptable level and the economy which is really strong and house process as well. So we have a situation where arrears can’t improve that much as you’ll always have mortgage defaults due to divorces … and other unexpected circumstances.”</p>
<p>Zanesi points out while Queensland has been the worst-performing state for mortgage repayments since about 2012, it is interesting to see Tasmania take out the top spot.</p>
<p>“This is reflecting the high unemployment rate and the slow housing market,” he says.</p>
<p>“The housing market in Tasmania has been overall the same during the last three years and especially if you look over the past decade.”</p>
<p>Looking forward, Zanesi says if house prices start to slow down there will be certain areas that will suffer more.</p>
<p>“This means areas such as the west of Sydney or others hit by strong house prices will start to have an increase in arrears,” he says.</p>
<p>Here are the 20 worst performing suburbs when it comes to mortgage repayments:</p>
<p> </p>
<ol>
<li>Budgewoi NSW</li>
<li>Kingston QLD</li>
<li>Petrie QLD</li>
<li>Corio VIC</li>
<li>Greenacre NSW</li>
<li>Melton VIC</li>
<li>Hampton Park VIC</li>
<li>Laidley QLD</li>
<li>Salisbury SA</li>
<li>Ballajura WA</li>
<li>Goodwood TAS</li>
<li>Jimboomba QLD</li>
<li>Green Valley NSW</li>
<li>Bundamba QLD</li>
<li>Aldinga SA</li>
<li>Parafield Gardens SA</li>
<li>Mount Isa QLD</li>
<li>Claremont TAS</li>
<li>Hoxton Park NSW</li>
<li>Lalor VIC</li>
</ol>
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