New home loan data: Borrowers remain resilient, but mortgage stress is growing

By Cameron Thomson · · 2 min read
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New data from the Australian Prudential Regulation Authority (APRA) has found that home loan borrowers are generally staying on top of their mortgage payments, but there are some early warning signs of growing mortgage stress. 

How are home loans doing?

As of December 2023, loans that are 30-89 days past due have marginally increased from 0.4% a year ago to 0.6%. The share of non-performing loans (loans that haven't been paid or repaid for a while) also rose from 0.7% to 0.9% over the same period.

However, the vast majority of borrowers are still managing to make their payments on time, even in the face of significantly higher interest rates compared to a year ago. 

The share of new loans with high debt-to-income ratios above 6x (that is six times the debt amount to income) has nearly halved from 11% to 5.6%. This could mean that banks are being more cautious about lending to overstretched borrowers or that Aussies are moving away from excessive home loans and repayments.

If inflation were to suddenly bump up again and interest rates were pushed up, it would put further pressure on household budgets and expand the cohort of stressed borrowers. 

How is the banking system holding up?

The banking system as a whole looks like it’s in a pretty good position, despite current economic conditions. Australia Deposit Insitutitions have continued to increase their capital buffers, with the total capital ratio rising by 2.3 percentage points over the year up to 20%. (In short capital ratios show a bank’s ability to pay liabilities and handle risks).

Overall, while there are some cracks, Australia's mortgage market is holding up despite facing off against a high interest rate environment. 

No matter the economic conditions, borrowers should make sure they’re getting a good home loan interest rate by comparing providers. You can check out our best home loan page for more or look at some lenders in the tables below…

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Last updated 14 September 2024 Important disclosures and comparison rate warning*

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

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