Home loan hardship applications jumped materially in the past year, and the risk posed to the economy by stretched borrowers “warranted ongoing close attention”, the regulatory group in charge of the financial system urged.
The Council of Financial Regulators noted that the risks to household balance sheets, and in turn financial stability, would increase if inflation were to remain high for longer.Loan arrears advanced at their fastest pace for at least two years in January, from historically low levels. Ninety-day arrears – the most at risk of default – rose 9 basis points to 0.95 per cent at Westpac in the October-December. At NAB, the number was steady at 0.75 per cent of its home lending book.“The last leg of this tightening cycle could prove to be the most challenging, as savings are depleted, unemployment rises, and higher interest rates continue,” S&P warned last month.
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