Despite the affordability challenges and the cost of living pressures on households, mortgage holders are still managing to meet their payments, even as their household savings continue to be eroded but are not yet exhausted.
The finance sector regulator, the Australian Prudential Regulatory Authority (APRA), released its latest quarterly report. The economy continues to demonstrate that loan quality remains strong. Non-performing loans as a percentage of credit outstanding increased to 0.77% during the September quarter. However, it is important to note that this is still lower than the pre COVID rate which was 0.89% in the December quarter of 2019.
APRA also advised that lending standards have remained ‘prudent’. The share of new loans with a loan-to-value ratio greater than or equal to 80 per cent decreased to 28.7%, which is its lowest level since the series began in March 2019, when the ratio was 36.4%. This may well be prudent, however the effort to assemble a 20% deposit is becoming ever more difficult and feeds into the affordability crisis.
Higher dwelling prices and increased loan values are probably good for someone, but for the nation as a whole, its just part of the large and slow moving trainwreck that is the housing affordability crisis.
