Climbing Mortgage Arrears Signal Heightened Financial Strain

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The report details a surge in 30+ day mortgage arrears, striking 1.21% in Q4 2023-a noticeable leap of 10 basis points over the previous quarter. This incremental yet steady uptick since December 2022 poses a stark contrast to the multi-decade lows experienced earlier that year. Furthermore, the report spotlights a significant hike in early-stage arrears where delinquencies between 30 and 60 days have ascended by six basis points to 0.45%, the highest recorded since early 2016.

An annual escalation in arrange numbers typically occurs in the final quarter; however, this year's upturn has exceeded previous patterns, hinting at the pressure applied by sustained inflation and the cumulative 4.25% rise in official interest rates since May 2022. Such financial pressures are beginning to leave a noticeable imprint on numerous Australian borrowers.

The disparity in payment regularity is even more pronounced within non-conforming mortgage indexes, as these segments marked a substantial increase in delinquencies. The rate of mortgages exceeding 30 days in arrears rose by 24 basis points, and those surpassing 90 days grew by 28 basis points, from the previous quarter.

• The Reserve Bank of Australia (RBA) has uncovered that variable rate mortgage holders are enduring intensified financial burdens, with approximately one in every twenty now facing negative cash flow situations.
• Households are grappling with expenditures that eclipse their incomes-a state primarily provoked by the recent interest rate surges and persistent inflation.
• Despite these daunting trends, the RBA notes that a majority of borrowers remain capable of servicing debts and maintaining essential living standards, albeit under much tighter financial constraints.

Scrutinizing Australia's household finances, we find that since the onset of 2022, there has been an approximately seven percent drop in real disposable income when considering inflation and interest payment adjustments. Whilst dwelling values persist in reaching new zeniths, growth in house prices continues to bolster the collateral value significantly.

National median home values have crossed the threshold of $1.09 million, with noteworthy cities such as Sydney and Melbourne quoting medians of $1.6 million and $1.1 million, respectively, paving the way for a strain on affordability for the average Australian.

Projections from Fitch suggest that housing prices could inflate further by four to six percent come 2024. Supply constraints, a pressurized rental market, and robust migration patterns reinforce this expectation. They also provide some solace for mortgage holders that asset-backed losses are likely to remain low, cushioned by substantial equity accrued through a prolonged period of property value appreciation.

Published:Tuesday, 26th Mar 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Finance News

Clear

Commonwealth Bank's Business Lending Reaches New Heights

18 Feb 2026: Paige Estritori

The Commonwealth Bank of Australia (CBA) has reported a significant 12% increase in its business lending portfolio, reaching $168 billion by December 2025. This growth underscores the bank's commitment to supporting Australian businesses and reflects a broader economic confidence among enterprises. - read more

Reserve Bank's Rate Hike: Implications for Australian SMEs

18 Feb 2026: Paige Estritori

The Reserve Bank of Australia (RBA) has raised the official cash rate by 0.25 percentage points to 3.85%, marking the first increase in over two years. This decision, driven by persistent inflationary pressures, has significant implications for small and medium-sized enterprises (SMEs) across the country. - read more

APRA's New Debt-to-Income Limits: What Borrowers Need to Know

18 Feb 2026: Paige Estritori

The Australian Prudential Regulation Authority (APRA) has announced the implementation of a new policy aimed at mitigating financial risks associated with high debt-to-income (DTI) home loans. Effective from 1 February 2026, authorised deposit-taking institutions (ADIs) are required to limit the issuance of new mortgage loans with DTI ratios of six times or more to no more than 20% of their total new lending. - read more

Renown Lending Boosts SME Funding Pool to $400 Million

10 Feb 2026: Paige Estritori

In a significant move to bolster support for small and medium-sized enterprises (SMEs) across Australia, Renown Lending has announced an expansion of its funding pool from $250 million to $400 million. This substantial increase aims to provide fast and flexible financing solutions to businesses nationwide, addressing the growing demand for accessible funding options. - read more

Westpac's Bold Move to Strengthen Business Lending

02 Feb 2026: Paige Estritori

In a significant strategic shift, Westpac Banking Corporation is intensifying its focus on business lending by restructuring its branch operations and investing heavily in digital platforms. This move aims to enhance support for small and medium-sized enterprises (SMEs) across Australia. - read more

AFCA Cautions SMEs on Unregulated Lending Practices

02 Feb 2026: Paige Estritori

The Australian Financial Complaints Authority (AFCA) has issued a cautionary advisory to small businesses regarding the potential risks associated with engaging lenders who are not members of AFCA. This warning comes in response to a noticeable increase in complaints from SMEs about lenders operating outside the regulatory framework. - read more

SMEs Seek Financing Solutions Ahead of ATO Debt Rule Changes

02 Feb 2026: Paige Estritori

Australian small and medium-sized enterprises (SMEs) are proactively seeking financing solutions in response to impending changes in Australian Taxation Office (ATO) debt regulations. Effective July 1, general interest charges (GIC) and shortfall interest charges (SIC) on tax debts will no longer be tax-deductible, prompting a significant uptick in loan inquiries from businesses aiming to manage their tax obligations efficiently. - read more

Click for more Finance News