The low interest rates in Australia will continue to assist local borrowers in servicing their loans and better managing debt, rating agency Fitch says in a report seen by news agency Bloomberg.
Analysts, led by Hai Duong Le, also expect that this year, the macroeconomic landscape will remain stable as the jobless rate will stay low and the gross domestic product will continue to increase, which will further ease debt pressure on domestic households.
Mortgage arrears in the country, which are comparatively low to other markets, are predicted to remain stable this year thanks to the record-low interest rates and healthy employment level. In the first quarter of the year, the share of prime home loans that were between 30 and 59 days overdue touched its lowest post-Christmas level since March 2006, at 0.59%. Meanwhile, the proportion of mortgages that were 30 days late edged up to 1.48% from 1.46% three months earlier. The only group bucking the trend was self-employed workers, where the share of overdue loans increased to 7.57% in January-March from 7.05% the previous quarters.
Interest rates in Australia have been hovering around low levels after the Reserve Bank slashed its main rate by two percentage points to 2.75 in November 2011. Thanks to the lower borrowing costs, many Australians managed to get ahead on loan repayments in 2012, according to nearly 50% of respondents to a survey conducted by QBE Insurance’s mortgage insurance unit.