By Jeff Whalley From: Herald Sun March 27, 2012 11:33AM
THE PROPORTION of homebuyers falling behind on mortgage repayments jumped unexpectedly last quarter, according to new research by global ratings agency Fitch.
- More homebuyers on struggle street
- Jump in the number of mortgage defaults
- Fitch predicts default levels to increase
Despite a stable interest rate environment and low unemployment, the arrears rate ticked up from 1.52 per cent to 1.57 per cent, according to Fitch data.
"It is too early to judge which factors contributed to the increase in arrears during quarter four of 2011," Fitch's Structured Finance team James Zanesi said.
"(But) to a measurable extent, declining house prices were the only key driver of mortgage performance to show a negative trend through (the quarter)."
Mr Zanesi said the housing market stagnation could impact the borrower who was hoping to refinance or repay through sales proceeds.
"Less seasoned and most-leveraged loans are most affected by declining house prices."
The ratings agency is also predicting a deterioration in mortgage performance in the first quarter of this year's seasonal Christmas spending, and minor increases in bank standard variable rates to outweigh the benefits of the two cash rates cuts late last year.
Fitch said that although deliquency rates were increasing and were above historical Australian averages, they remain low relative to other countries.
This month, the RBA and investment experts warned banks not to relax their lending standards in an attempt to drum up business.
It followed RateCity findings that some banks are back to lending almost the entire value of properties, putting borrowers at risk of mortgage defaults.
Moody’s Investment Service senior analyst Arthur Karabatsos warned that mortgage defaults are highest in areas with this type of high loan-to-value ratio (HLVR) borrowing, such as Sydney's outer west
Commonwealth Bank, NAB and Westpac reduced deposit requirements to 5 per cent on some home loans this month.
The RBA delivered rate relief to homeowners in November, lowering the cash rate by 25 basis points to 4.25 per cent.
It kept rates on hold in February and this month.