Arrears fall as prices rise

The strong housing market is suppressing home loan arrears. Fitch Ratings, in its latest Dinkum Index analysing the September 2014 quarter, put loans 30 days or more past due at their lowest level since late 2007. Fitch said delinquencies dropped by 14 basis point to 1.08 per cent.

Serious arrears also benefited, with loans 90 days or more in arrears sitting at 0.47 per cent, the lowest level since December 2009.

Arrears are expected to remain largely stable in fourth quarter 2014, Fitch said, due to low, stable interest rates, a strong housing market and lending, and relatively low (albeit rising) levels of unemployment.

The trend may reverse, however. Fitch said the current yearly rate of growth in housing prices was unsustainable, particularly in the Sydney and Melbourne markets.