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The national average for home loan repayments in arrears for the June quarter is 0.89 per cent, down from 0.97 per cent in the previous quarter.
The study by S&P Global Ratings anticipates arrears to remain subdued as interest rate cuts and lower inflation provide some ease for Aussie families.
Owner-occupiers are responding to the lower interest rates smartly, electing to keep mortgage repayments the same or save the extra cash rather than increasing spending.
Owner-occupiers had a higher average arrears rate than investors (1.06 per cent versus 0.67 per cent). Meanwhile, low-doc arrears were far more common than full-doc.
According to S&P, the gap between owner-occupier and investor arrears has been steadily widening as investors are more likely to take advantage of property price growth to voluntarily sell properties if experiencing financial pressures.
Coinciding with the S&P report was data in Resimac’s results for FY2025. Here, the 90-plus days arrears for prime home loans at each of the major banks were revealed:
- NAB: 1.15 per cent
- ANZ: 1 per cent
- Westpac: 0.86 per cent
- CBA: 0.70 per cent
Erin Kitson, analyst at S&P Global Ratings, said the mostly variable-rate market in Australia will keep arrears subdued as interest rates continue to fall.
“Prime mortgage arrears across the RMBS sector have averaged around 1 per cent over the past ten years. As future rate cuts are expected to be gradual, we expect arrears to stabilise around these levels. Increasing mortgage competition could make arrears reductions more pronounced though, as refinancing activity is reenergised,” she said.
“The biggest drivers of arrears are unemployment, as loss of income is a key cause of mortgage default, and interest rates. With interest rates coming down and unemployment forecast to remain low, we expect arrears to trend lower, easing debt serviceability pressures for borrowers.”
Broken down state by state, the average arrears rate for each was:
- Northern Territory: 1.19 per cent
- NSW: 1.04 per cent
- ACT: 1 per cent
- Victoria: 0.97 per cent
- Western Australia: 0.89 per cent
- South Australia: 0.66 per cent
- Queensland: 0.59 per cent
- Tasmania: 0.55 per cent
The 10 worse suburbs for arrears across the country were:
- Fountain Gate, Victoria: 2.79 per cent
- Casula, NSW: 2.56 per cent
- Cambridge Gardens, NSW: 2.49 per cent
- Point Cook, Victoria: 2.19 per cent
- Bateau Bay, NSW: 2.02 per cent
- Berkshire Park, NSW: 1.99 per cent
- Craigieburn, Victoria: 1.75 per cent
- Cranbourne, Victoria: 1.74 per cent
- Pakenham, Victoria: 1.74 per cent
- Hoppers Crossing, Victoria: 1.71 per cent
[Related: Mortgage arrears hold steady despite March rise]
