Australia’s mortgage arrears have climbed back toward 2010 levels, but remain short of posing a threat to the financial system or households, a senior Reserve Bank of Australia (RBA) official said.
The number of borrowers falling behind in their mortgage repayments is still well beneath the levels reached in the early 1990s recession, as well as those in a number of other developed nations, said Jonathan Kearns, head of financial stability at the RBA.
“Housing arrears have risen, but by no means to a level that poses a risk to financial stability,” Kearns said in a speech to a property summit in Canberra yesterday. “Weak income growth, housing price falls and rising unemployment in some areas have all contributed.”
Kearns said arrears could edge higher “for a bit longer” as some of those economic drivers might not reverse in the near-term.
About 1 percent of household loans, which also include credit card and personal debt, are more than 90 days overdue, according to RBA data.
Australians amassed one of the world’s highest levels of household debt in a five-year property boom amid a combination of low interest rates, lax lending standards and supply shortage.
Prices have since tumbled, with Sydney’s down about 15 percent from the 2017 peak, as regulators tightened standards and banks curbed lending after an inquiry revealed widespread poor behavior.
A strong labor market has kept a lid on home-loan arrears as households have sufficient income to meet their commitments.
However, forward indicators are suggesting some moderation ahead for hiring and has the RBA worried enough to signal further easing after its first interest-rate cut in almost three years.
“Around two-thirds of borrowers have accumulated buffers of prepayments of their mortgage, and some others have other assets outside of their property,” Kearns said.
“Households with financial buffers can withstand some period of unemployment, but if that extends too long and depletes their savings, they risk falling into arrears,” he said.
“With overall strong lending standards, so long as unemployment remains low, arrears rates should not rise to levels that pose a risk to the financial system or cause great harm to the household sector,” he said.
The RBA is likely to lower interest rates again to drive increased hiring and boost households’ confidence that inflation would return to target.
The central bank made the comment in minutes of its June 4 policy meeting, when it eased the cash rate to 1.25 percent in the first reduction in almost three years. The report was released yesterday.
Commonwealth Bank of Australia updated its RBA forecast earlier yesterday and now sees two reductions — next month and in November — to take the cash rate down to 0.75 percent.
POWERING UP: PSUs for AI servers made up about 50% of Delta’s total server PSU revenue during the first three quarters of last year, the company said Power supply and electronic components maker Delta Electronics Inc (台達電) reported record-high revenue of NT$161.61 billion (US$5.11 billion) for last quarter and said it remains positive about this quarter. Last quarter’s figure was up 7.6 percent from the previous quarter and 41.51 percent higher than a year earlier, and largely in line with Yuanta Securities Investment Consulting Co’s (元大投顧) forecast of NT$160 billion. Delta’s annual revenue last year rose 31.76 percent year-on-year to NT$554.89 billion, also a record high for the company. Its strong performance reflected continued demand for high-performance power solutions and advanced liquid-cooling products used in artificial intelligence (AI) data centers,
SIZE MATTERS: TSMC started phasing out 8-inch wafer production last year, while Samsung is more aggressively retiring 8-inch capacity, TrendForce said Chipmakers are expected to raise prices of 8-inch wafers by up to 20 percent this year on concern over supply constraints as major contract chipmakers Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Samsung Electronics Co gradually retire less advanced wafer capacity, TrendForce Corp (集邦科技) said yesterday. It is the first significant across-the-board price hike since a global semiconductor correction in 2023, the Taipei-based market researcher said in a report. Global 8-inch wafer capacity slid 0.3 percent year-on-year last year, although 8-inch wafer prices still hovered at relatively stable levels throughout the year, TrendForce said. The downward trend is expected to continue this year,
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
RSS