Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
On Monday 7:30 did a segment on the mortgage debt burden on Australian households. Using a leaked report prepared by APRA from before the GFC they indicated that the regulator was concerned about the level of mortgage debt in 2006, and included modelling to suggest that up to 7% of households could default by 2009, … Continue reading “ABC 7:30 Does Mortgage Debt Burden”
Today we release the latest modelling of our mortgage probability of default, and a map showing the current and predicted default hot spots across Australia. The blue areas show the highest concentrations of mortgage defaults. The average is 1.2%, but our maps show those areas a little above the average (1.2%-1.7%) and the most risky … Continue reading “Mortgage Delinquency Mapped”
Continuing our analysis of the impact of rate rises on mortgage holders, today we turn from investors (where we showed that a considerable proportion would be in difficulty if rates rose even a little), to look at owner occupied borrowers. For this snapshot we are only looking at households loans for occupation, so exclude investment … Continue reading “How Sensitive Are Owner Occupied Mortgage Holders To Rising Interest Rates”
DFA has completed detailed analysis of households and their use of small amount credit contracts, a.k.a. payday lending. Note this is looking at short term credit. If you are after our recent work on mortgage defaults and household financial stress, please follow this link: The analysis, derived from our longstanding household surveys, was undertaken in … Continue reading “The Stressed Household Finance Report 2015 is Available”
A recent speech by Lars Rohde, Governor of the National Bank of Denmark, included some interesting insights into mortgage risks and their management. Given rising house prices, and credit growth, he reflects on the EU’s approach to risk management of mortgage lenders. Some messages worth reflecting on in the Australian regulatory context! The principle is that … Continue reading “A Danish Perspective On Mortgage Risk”
The AFR has done a nice piece on the post code level analysis we completed, and a nice interactive map. Here is the guts of the article, citing DFA. It’s not just households in Western Sydney and the outer suburbs of Melbourne and Brisbane who are feeling the pressure of paying their monthly mortgage. A compilation … Continue reading “The top 100 postcodes at risk of mortgage default”
An article by Cameron Kusher, CoreLogic RP Data senior research analyst highlights that according to data from the Reserve Bank the ratio of household debt to disposable income is 153.8% and the ratio of housing deb to disposable income is 140.3% both of which are record highs. Each quarter the Reserve Bank (RBA) publishes selected … Continue reading “Australian Mortgage Holders Sensitive to Interest Rate Movements – CoreLogic RP Data”
Last month the results from the latest Dodd-Frank Act Stress Tests were released. Unlike the APRA tests the outcomes of which (other than high-level general comments), are totally secret; the results for individual banks are disclosed, allowing comparisons to be made. In addition, there is real focus on capital ratios, which in Australia according to … Continue reading “What Does The Fed’s Bank Stress Tests Tell Us?”
The RBA published a Research Discussion Paper “Stress Testing the Australian Household Sector Using the HILDA Survey”. They use data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey to quantify the household sector’s financial resilience to macroeconomic shocks. Given high household indebtedness, large mortgages and high house prices, estimating the potential impact … Continue reading “Stress Testing Households – RBA Paper”
The Australian Prudential Regulation Authority (APRA) has today written to authorised deposit-taking institutions (ADIs) outlining further steps it plans to take to reinforce sound residential mortgage lending practices. These steps have been developed following discussions with other members of the Council of Financial Regulators. In the context of historically low interest rates, high levels of … Continue reading “APRA Reinforces Sound Residential Mortgage Lending Practices”