There are 'pockets of stress' in Commonwealth Bank's mortgage book

Patrick Smith / Getty Images
  • Data from CBA shows the number of mortgage customers over 90 days in arrears is climbing again.
  • The long-term trend shows the 90+ days in arrears ratio bottomed out in 2014, before resuming a steady upward trend.
  • The number of customers falling behind on their mortgages still comprise less than 1% of the total loan book.

Commonwealth Bank reported full-year results this morning, and despite a fall in profits the bank’s shares are up in early trade.

As part of its investor presentation, CBA provided an interesting update on the number of mortgage customers who are falling behind on their home loan.

With Australia’s housing market now in decline, the percentage of home loans in arrears will be an important indicator of whether further falls are in store.

The latest data shows mortgages that are more than 90 days in arrears still comprise less than 1% of the loan book, but there’s a clear upward trend.

We took a look at CBA’s annual data from prior years, to get a better understanding of the longer term patterns:

Commonwealth Bank, Business Insider

The bank’s 2015 annual report showed the 90+ days in arrears ratio was tracking at around 0.5% from December 2013 to June 2015.

And prior to that, 90+ loans in arrears declined from above 1% in 2011. Loans in arrears bottomed out in 2014 before resuming a steady uptrend.

Elsewhere in today’s report, CBA said its provisions for consumers’ loans had increased to $1.199 billion as at June 2018, up from $1.158 billion 12 months ago.

The bank said the extra provisioning reflected “pockets of stress” in some areas.

This chart shows that loan stress appears to be most apparent in WA and NT:

Commonwealth Bank

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