The Fitch Ratings quarterly Dinkum Index shows that delinquent mortgages in Australia jumped from 1.3 to 1.37 percent in Q4 last year.
The increase was attributed to the growing number of people who were already one or two months behind on their home loans, which resulted in serious arrears of 90 days or more, according to Fitch.
The percentage of households more than 90 days behind on their mortgages increased from 0.48 to 0.54 percent.
Meanwhile, low-documentation loan delinquencies of more than 90 days dropped from 5.79 to 5.70 percent.
“Prime” low-documentation loans, or people with reasonable income for their mortgage size but inadequate documentation of their income, saw an increase in 30-day arrears to 4.06 percent.
Fitch believes these rates are still very low, compared with most developed countries.
“Mortgage performance is also expected to worsen in Q1 2011, driven mainly by the usual impact that the Christmas spend / holidays has (have) on first-quarter mortgage performance,” explained James Zanesi, Associate Director of Fitch’s Structured Finance Team.
“The 25 basis-point November 2010 interest rate hike and the Queensland floods might also affect the Index.”
Mr. Zanesi also believes the Reserve Bank’s string of interest rate increases last year do not affect the number of people falling behind on their repayments.
“While increasing mortgage rates normally translate into an increase in arrears, Australian borrowers have shown a strong capability to cope with higher mortgage payments in 2010,” he added.