Like TAA, it’s up, up and away with home loan arrears, as long as lenders and analysts consider the data as might have been done when that television jingle entered pop culture.
In a bracing update shared by non-bank funder Firstmac yesterday, gross home loan arrears of more than 30 days soared from 0.51 per cent to 2.36 per cent.
Defining most of the problem away (in the manner of APRA and the ABA) net arrears at Firtsmac in May were 0.47 per cent, a minor lift from April. On the other hand, “total COVID impacted borrowers” represent 5.65 per cent of the book of Australia’s largest non-bank lender.
An industry-wide assessment of mortgage quality by S&P Global Ratings and using data only for the first quarter shows 30 day arrears on prime mortgages were 1.4 per cent, only a few weeks in the lockdown shock. On non-conforming loans arrears were 4.4 per cent.
COVID-19 hardship levels S&P estimated at “up to 10 per cent” on prime loans in March and double that on non-conforming loans.
Then in a harsh report yesterday, Evans and Partners’ banking analyst Matt Wilson argued that “the sheer logistical challenge [for banks] is staggering: 457,660 individual mortgagors now need to be assessed and managed.
“Loan deferrals are still growing but are clearly decelerating. Mortgages now represent 74 per cent of total deferrals (up from 71 per cent) and amount to 9 per cent of system mortgages,” he said.
“Business loan deferrals are 6 per cent of system business credit but of more relevance as they represent 14 per cent of small/medium business credit.”