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What mortgage numbers are telling us

Real estate & property news
22 June 2024
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Whilst the announcement from the Reserve Bank this week would have come as a surprise to almost no-one, the news that official interest rates would remain on hold once again this month would have been a case of “good news/bad news” for many homeowners in the City of Hume.

The good news was that the interest rates on our mortgage loans was not going up, even though most experts would have been astonished if they had. The bad news was that the rates weren’t going yet either, although hopefully we are another month closer to the point when they will.

Of course, the announcement was an opportunity for several sections of the media to start talking about mortgage stress and the impact that higher interest rates are having on households around the country. So I thought it might be a good time to look at the numbers to see what the reality actually looks like.

The latest data from Corelogic comes with a headline that mortgage arrears reached 1.6 per cent of loans in the March quarter, rising from 1.0 per cent in the third quarter of 2022. That sounds like a concerning trend, until you realise that this figure was actually 1.8 per cent at the start of the pandemic. So perhaps it’s not quite as dramatic as it first seems.

It is also important to understand that a mortgage loan in arrears is made up of two sub-categories. There are ‘non-performing loans’ which are those that are at least 90 days behind; and those that are between 30 and 89 days behind. The latest numbers indicate that homeowners in the second category make up 0.68 per cent of the 1.6 per cent of total loans in question, with 0.93 per cent of loans in the non-performing category.

Obviously, the higher cost of borrowing money has played a key role in this trend, with average variable interest rates on owner-occupier loans rising from 2.86 per cent in April 2022 to 6.39 per cent in March 2024. However, that’s not the only reason, given the well-publicised cost of living pressures that are impacting household as well.

Whilst the prospect of a reduction in official interest rates remains “the light at the end of the tunnel” for many, (with forecasts varying from late 2024 to early 2025 depending on who you follow), the other positive news for those homeowners who are doing it tough is that unlike many other periods in the past, the current tightening of economic activity has not brought an increase in ‘negative equity’ across the Australian property market. Indeed, in most cases, the ongoing shortage of available property for sale has seen prices continuing to rise rather than fall.

With this in mind, if you would like an accurate update on exactly what price your property could bring in the current market, whether you are weighing up your options or simply considering making your next move before prices rise even further, feel free to give us a call at Barry Plant Gladstone Park this week on 9330 1088.

We are always happy to assist.


Bill Karp - Director

Barry Plant Real Estate

Gladstone Park

Real estate & property news
22 June 2024
Save Article

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