Low interest rates cause low home loan delinquencies

Monetary policy - or, more specifically, the record run of low interest rates - has had a noticeable and positive effect on Australia's home loan sector, according to Fitch Ratings.

The agency's latest report "Australian Mortgage Delinquencies by Postcode" shows troubled loans across all six states at the end of September 2014 were all below the levels at end-September 2011, indicating that monetary policy had a positive impact on mortgage performance, according to Fitch.

The agency noted that: "the 30-plus days delinquency rates are 52 basis points lower, thanks to the 185 bp improvement in the SVR over the same time frame."

And, providing fodder for that most national of pastimes - discussing house prices - Sydney had the strongest appreciation over the six months to September 2014 (5.2 per cent), while house prices in all other capital cities remained broadly unchanged.

The study relies on data from home loans (conforming and non-conforming) that have been securitised in the Australian market with a total outstanding balance of over A$203 billion (A$160 billion at 31 March 2014).

The volume of securitised mortgages in the study represents about 12 per cent by value of the total housing loan stock in Australia. As such, it provides a good proxy for the performance of the Australian residential housing finance sector.