Mortgage delinquencies in Australia on full-documentation loans deteriorated during the December quarter, while delinquencies on non-conforming low-documentation loans reached a record high, according to global ratings agency Fitch Ratings.

Delinquencies on full-documentation home loans that are past 30 days due increased to 1.75 per cent for the December quarter from 1.5 per cent during the June 2008 quarter, Fitch said in a statement.

But delinquencies on non-conforming, low-documentation loans that are past 30 days due now stands at a new record high of 19.73 per cent, reflecting the sector’s inability to refinance since the virtual closure of the low-documentation origination market, Fitch said.

Going forward, Fitch expects delinquencies to deteriorate further during the March quarter and a gulf to develop throughout 2009 between struggling borrowers and those feeling relief from the Reserve Bank of Australia’s five interest rate cuts since September.

The key factor will be each borrower’s ability to retain full employment during the economic downturn, Fitch said.

AAP