New data from property investment specialists Performance Property Advisory reveals mortgage stress is on the rise as a result of rising defaults across three of the Big Four banks over the past year – Westpac, National Australia Bank (NAB) and Australia and New Zealand Banking Group (ANZ).
Performance Property Advisory Director David McMillan said the number of home loans at least 90 days overdue has risen between 15 per cent and 25 per cent at Westpac, NAB and ANZ over the past six months.
“This is disappointing to see as the average loan to value ratio is down at the lowest point in 20 years and interest rates are at record lows with the RBA rate at 1.5 per cent, so we should be seeing more active homebuyers and less defaults in the marketplace right now,” he said.
“Despite low unemployment figures in Australia, the economy is clearly unhealthy in certain pockets, and if the rise in mortgage defaults continues on its current trajectory this will cause instability and volatility in some markets.
“We believe this is the time to be conservative and have genuine cash buffers.
"While the number of defaults is not a cause for concern right now, unemployment is likely to rise within the next few years as we have been overbuilding.
"Owner-occupiers who can’t service their mortgage due to a loss in income may have to sell in a down-market.”
Mr McMillan also said the average mortgage is also over four times the average income, the highest it has ever been and is progressing at an alarming rate.
“If this rate reaches fives times the average income, this could cause vulnerability in the marketplace and become another barrier local buyers will need to overcome to make a property purchase.”