Mortgage stress declined across Australia in the six months to September 30 as borrowers adjusted to a period of stable interest rates.
The Reserve Bank of Australia cut interest rates in November and December for the first time since November last year.
Mortgage delinquencies fell significantly across all six states during the six-month period.
Western Australia recorded a strong improvement, thanks to a rebound in the mining sector, global ratings agency FitchRatings said.
The percentage of delinquencies, or loan repayments that were more than 30 days overdue, dropped from 1.77 per cent in March to 1.42 per cent at September 30.
This indicated that one in 400 borrowers had cured their delinquent status during that six month period, the agency said.
“As mortgage rates have decreased and the Australian economy and unemployment remain solid, the increased cost of living remains the main variable generally affecting household affordability,” FitchRatings director James Zanesi said.
“Those regions which have shown strong sensitivity to mortgage rates due to socio-economic factors and which were affected most in March 2011 by Christmas spending and increased interest rates have benefited most from stable cash rates.”
Australia’s housing debt now totals $1.2 trillion, and FitchRatings examined 1.056 million home loans that had been securitised in the Australian market, or 17 per cent of Australia’s total housing loan stock.
In aggregate, the loans had a total outstanding balance of $194 billion.
Queensland remains the worst performing state with an overall delinquency rate of 1.7 per cent, and Fairfield-Liverpool in New South Wales continues to be the worst performing region, FitchRatings said.
Victoria is the best performing state and by September 30 its delinquency rate was 1.04 per cent, considerably lower than other states.
WA’s performance improved markedly in the six months to September with one in four borrowers removing their delinquency status.
The rebound in both the tourism and mining industries and a slight improvement in employment over 2010 and 2011 might have contributed to improved mortgage performance, FitchRatings said.