Coronavirus to cause more mortgage stress than the GFC: S&P
Staff reporterDecember 8, 2020
The economic hit during the coronavirus pandemic will cause more severe stress in Australia's mortgage market than that experienced in the GFC, says S&P.
Mortgage holders are likely to struggle to keep up with their repayments the ratings agency has warned.
Given the sudden and wide-ranging halt to economic activity, the number of borrowers who fall behind on their mortgages is set to rise.
The move by the big banks to expand hardship provisions for borrowers will mean some relief, the agency said.
“We currently expect increases in arrears to be higher than during the 2008 global financial crisis, given the wide-ranging effects on the economy stemming from the sudden disruption to economic activity,” S&P Global Ratings analyst Erin Kitson wrote in a note to clients.
She highlighted self-employed borrowers and those directly exposed to the disruption in economic activity.