Delayed payments on Australian mortgage had increased in the first quarter at its highest. It is now considered a big blow to the country’s thriving property market.

As of March 31, the Fitch Ratings showed that more home borrowers were a month or more behind on payments than as of Dec. 31.

A measure of 30-day arrears, Day Dinkum Index, rose to 1.79% from 1.37% at the end of the fourth quarter last year. Moreover, 90+ day delinquencies rose to 0.79% from 0.54%.

According to Fitch such result is subject to other factors like "the impact of any further interest-rate rises as well as the recent increase in the cost of living."

The Wall Street Journal said in a report by property analyst RP Data-Rismark late last month, during the first-quarter, prices in the country's eight capital cities were down 2.1% from the previous quarter, with Brisbane, Perth and Darwin suffering the biggest declines.

A calculation from data drawn from the National Association of Realtors in the U.S. and the Real Estate Institute of Australia, the average home in Sydney now costs around US$200,000, more than one in greater New York and nearly as much as one in Honolulu or San Jose, California. In total, the prices in Australia have quadrupled in a little more than 20 years.

Moreover, a research from the International Monetary Fund late last year concluded that homes in Australia were 5% to 10% overpriced. Saying that the market is well-supported by strong local income growth and an unemployment rate of below 5%, local economists and the central bank dismissed claims that there is a property bubble.

Westpac Banking Corp. and Commonwealth Bank of Australia cautioned on the impact of rising delinquencies on both their earnings and the mortgage market.

Westpac Chief Executive Gail Kelly said in an interview last month, "What we see from now on is... house prices going sideways.”

Fitch sees the November decision by the Reserve Bank of Australia to lift its key cash rate 0.25 percentage point to 4.75%, and the series of natural disasters which destroyed the states of New South Wales and Queensland earlier this year as the main causes of the delinquencies.
Standard & Poor's supported Fitch’s report when it said earlier this week that Australian residential-mortgage backed arrears greater than 30 days rose to 1.79% in February from 1.64% in January, near the record high of 1.84% in January of 2009.

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