Australians are finding it easier to pay their home loans with mortgage delinquencies falling for the fourth year in a row.
The proportion of residential mortgages across Australia more than 30 days in arrears fell to 1.4% in May 2014 from 1.6% in April 2013 and 1.9% in 2011.
Alena Chen, a Moody’s Investors Service Analyst, says national house price growth and record low interest rates helped keep delinquencies low.
She says steady economic growth also supported the mortgage market, despite an increase in unemployment over the year.
Of the eight states and territories, New South Wales and Queensland experienced the largest falls of 0.3 percentage points.
The Australian Capital Territory and Northern Territory were the best performers while South Australia and Tasmania were the worst performing.
Nationally, capital cities have lower delinquency rates than non-metropolitan regions in all states except Tasmania, as this chart shows.
Moody’s outlook for the performance of mortgages in prime residential mortgage backed securities for the remainder of 2014 is stable.
Moody’s says this is underpinned by its economic forecasts for modest GDP growth of 2.5% to 3.5%, a continuation of the low cash interest rate of around 2.5% and a broadly stable unemployment rate of 5.5% to 6.5%.