Fitch Ratings say Australian mortgage arrears showed sharper than usual rise

Fitch Ratings reports a sharper-than-usual seasonal rise in Australian mortgage arrears in the first quarter of 2025, driven by ongoing cost-of-living pressures and high interest rates.

• Conforming mortgage arrears (30+ days) rose 23 basis points to 1.36%, while non-conforming arrears jumped 39 basis points to 5.32%.

• The increase is nearly three times the typical seasonal rise, which averages around 8 basis points in Q1.

• Fitch attributes the spike to the cumulative impact of prolonged high interest rates and persistent inflation straining household finances.

While arrears worsened in Q1, recent RBA rate cuts in February and May—which weren’t yet reflected in the Q1 data—are expected to ease pressure on mortgage performance going forward. Fitch also anticipates another rate cut before year-end.

Meanwhile, housing prices rebounded, rising 0.9% q/q after a small decline in Q4 2024. Fitch expects further gains in 2025, supported by limited housing supply, falling rates, and strong migration, which should help contain losses from mortgage defaults.

Info via Reuters

This article was written by Eamonn Sheridan at www.forexlive.com.