Homeowners and property developers in Australia have felt the ill effects of deteriorating conditions in the residential property market, which have triggered a rise in profit warnings and mortgage arrears.
According to credit ratings agency Fitch, late payments on home loans soared unexpectedly at end-2011, which suggests mortgage pain is impacting an already slow housing market.
Stockland, one of Australia’s biggest residential developers, said its earnings for the full year declined 3.5 percent, as sales and settlement fell behind projections.
“Often this is due to buyers going through the finance process and getting knocked back even where we assessed them as being able to get finance,” said Matthew Quinn, Chief Executive of Stockland.
While investors struggle to get funds, repayment arrears of prime residential mortgage-backed securities (RMBS) soared 1.57 percent in the final quarter of 2011, up from 1.52 percent in Q3 last year.
Fitch noted that the gauge of mortgage payment arrears is still low by international standards. However, the number of those behind on payment is expected to increase this year, as the effect of February’s “minor increases” in bank interest rates take effect.
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