Mortgage delinquencies are set to rise in 2010 as borrowers battle rising interest rates and Christmas-induced credit card bills, says global ratings agency Fitch.

Home loans in arrears by more than 30 days increased across all borrower categories during the December 2009 quarter, Fitch said in a report released on Monday.

Arrears on mortgages held by non-conforming, low-documentation borrowers spiked more than 50 per cent on the September quarter as the impact of three consecutive interest rate rises kicked in.

Non-conforming borrowers represent a small portion of the mortgage market and, as expected, they were the first to be hit by the interest rate hikes, associate director of Fitch structured finance RMBS (residential mortgage-backed securities) team, Leanne Vallelonga said.

“Further deterioration is expected.”
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photo credit: kretyenBy Jill Fraser for Lending Central

Despite continued economic volatility globally mortgage delinquencies have not worsened and overall Australian residential borrowers have kept up their mortgage repayments.

Credit ratings agency Fitch Ratings’ last report, released this week, reveals that delinquencies have continued their downward trend, decreasing between the first three months of this year and the second quarter.

Arrears improved slightly across all sectors except for non?conforming reduced?documentation loans in the 30-59 day bracket, which increased to 4.87% in the second quarter of this year from 4.45% in the first quarter.

General ongoing arrears stability suggests that peak arrears were reached in the last quarter of 2008 and arrears are not likely to reach those levels again for the remainder of 2009.
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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.
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