Home loan delinquency at 20-year high as debt levels biting
THE proportion of Westpac home loan customers running severely behind on their home loan repayments has climbed to its highest level in more than 20 years.
The startling revelation suggests souring home loans are becoming a pressing issue across the banking sector as high debt levels take a heavy toll, an industry insider says.
Westpac has revealed the proportion of home loans where customers are 90 days or more behind on repayments has hit 0.9 per cent.
It means about one in every 110 customers is behind on their repayments by three months or more. The 90-plus day delinquency rate is up from 0.72 per cent a year ago.
While the proportion is small, it is significantly higher than the peak hit during the global financial crisis a decade ago, according to research.
At that time, the number of customers running severely behind on their repayments remained below 1 in every 200, or 0.5 per cent.
The delinquency rate is also at its highest level in records going back more than 20 years.
An industry insider noted there was a rise in the delinquency rate across the industry following the deterioration in the housing market.
As a result, all the major banks were likely to be “in the same boat”, he said.
In a trading update yesterday, the bank said all three of its major peers – the Commonwealth Bank, ANZ and National Australia Bank – had higher rates of overdue or impaired home loans relative to their total mortgage books.
Impaired mortgages are those that have soured to the point where the bank is doubtful the loan will ever be repaid.
Westpac also revealed yesterday the number of residential properties in its possession at the end of June was 550 – up from 396 a year earlier, and 482 six months ago.
They are the properties the bank has repossessed from customers who were unable to repay their loans, but is yet to find buyers for.
Westpac said properties in Western Australia and Queensland accounted for most of the increase over the past six months.