Interest rate rise causing missed repayments

Friday 28 May 2010

Article by Mozo

Recent interest rate rises are causing more borrowers to miss mortgage repayments, according to Moody’s Investors Service.

The firm’s latest overview of the residential mortgage-backed securities market found that the rate of delinquencies is beginning to rise, with late payments of more than 30 days rising to 1.34 per cent in March compared to 1.1 per cent in December.

Speaking to the Sydney Morning Herald, a Moody’s analyst Ryan Lu said that six consecutive interest rate rises since October 2009 has put pressure on consumers.

"At the same time, seasonal upward trend in delinquencies – due to holiday spending during Christmas and the new year – is also pushing the arrears level up," he added.

Earlier this week, research from rental company Thorn Group highlighted that it has seen a boost in business as many homeowners are renting appliances such as washing machines rather than buying their own as they are strapped for cash due to rising mortgage repayments.

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