The scary new mortgage repayment figures every Aussie with a home loan must know about

The percentage of borrowers behind on their mortgage payments has worsened following the most aggressive rate hikes in a generation – and more bad news is expected.

CoreLogic research director Tim Lawless said mortgage delinquencies, where a borrower is at least 30 days behind on their repayments, are likely to get worse as higher interest rates push unemployment higher.

“It is likely that mortgage arrears will rise further as unemployment rises, household savings continue to decline and, more broadly, economic conditions enter a period of weakness,” he said.

New CoreLogic data showed that 1.6 percent of borrowers fell behind on their repayments in the March quarter of 2024 – with more than half of stressed mortgage holders in this group more than 90 days late.

That’s a big increase from just 1 percent in the September quarter of 2022, when the Reserve Bank had hiked rates five times.

The RBA has now raised interest rates 13 times to a 12-year high of 4.35 percent, as part of the most aggressive monetary policy tightening since the late 1980s.

The Reserve Bank does not expect inflation to fall back within the 2 to 3 percent target until December 2025.

But that would mean more than 44,000 people losing their jobs, with unemployment expected to rise to 4.3 percent by then, up from 4 percent in May.

Still, Lawless said unemployment would have to be much higher for mortgage rates to rise.

Reserve Bank Governor Michele Bullock hinted that she was concerned about higher unemployment making it harder for borrowers to pay off their mortgages

“It is unlikely that payment delinquencies will experience a material ‘breakout’ unless labor markets weaken substantially more than forecast,” he said.

Reserve Bank Governor Michele Bullock has hinted she is concerned about higher unemployment making it harder for borrowers to pay off their mortgages.

“People who have jobs are critical to meeting the challenges of higher living costs,” she told reporters on Tuesday.

The RBA left rates unchanged this week, but Ms Bullock confirmed the board had considered a rate increase but not a rate cut.

“Yes, the board discussed the case for raising interest rates at this meeting,” she said.

‘No, no cuts have been considered.’