The agency notes that Australian mortgage performance - as measured by mortgage delinquencies - deteriorated in Q408, evidenced by the increase in the Fitch Dinkum Index for 30+ day delinquencies to 1.75% in Q408 from 1.50% in Q208, which is the measure for full-documentation loans. Most of the jump in delinquencies occurred in the 90+ day arrears.
Non-conforming low-documentation 30+ day delinquencies currently stand at a new record high of 19.73%, almost five times higher than conforming low-documentation 30+ day delinquencies of 3.95%. Fitch believes the non-conforming sector continues to suffer from an inability to refinance with the practical closure of the low-documentation origination market. The agency expects its low-documentation index to deteriorate at a consistently faster speed than the full-documentation index.
With many of Australia's major trading partners in recession, the global downturn will continue to impact Australian borrowers. However, the Australian Government has continued its efforts to stimulate consumption with one-off payments in December 2008, March and April 2009 - an additional factor which in the short term, may provide temporary support to arrears levels as borrowers choose to make loan repayments versus spending on consumption.
Covering four categories of delinquencies (30 to 59 days, 60 to 89 days, 90+ days and 30+ days) for full-documentation loans and low-documentation loans (both prime and non-conforming low-documentation loans), as well as claims against lenders' mortgage insurance, the Dinkum report enables market participants to compare the performance of Australian mortgages and monitor trends in the market.
