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Decline in Mortgage Arrears as Home Prices Set to Rise

Fitch Ratings Forecasts 4-6% Increase in 2025

Decline in Mortgage Arrears as Home Prices Set to Rise?w=400

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Recent data from Fitch Ratings' Dinkum RMBS Index indicates a decline in Australian mortgage arrears, with 30-plus day arrears falling to 1.13% in the fourth quarter of 2024.
This improvement suggests that homeowners are managing their mortgage obligations more effectively, despite ongoing economic challenges.

Concurrently, Fitch Ratings forecasts a 4-6% increase in national home prices throughout 2025. This anticipated growth is attributed to limited housing supply, a tight rental market, and high net migration, all of which contribute to upward pressure on property values.

The Reserve Bank of Australia's (RBA) recent cash rate cut in February 2025 is expected to further support this trend by making borrowing more affordable. Fitch Ratings anticipates additional rate reductions within the year, which could lead to a continued decrease in mortgage arrears.

However, the report also highlights that loans originated in 2023 have higher arrears rates compared to previous years, indicating that newer borrowers may be facing greater financial strain. This underscores the importance of prudent financial planning and risk assessment for both lenders and borrowers.

In summary, while the decline in mortgage arrears and the projected rise in home prices present a positive outlook for the Australian housing market, stakeholders should remain vigilant. Monitoring economic indicators and maintaining responsible lending and borrowing practices will be crucial in sustaining this momentum.

Published:Saturday, 28th Feb 2026
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

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Negative Amortization:
A situation in which the loan payment for any period is less than the interest charged over that period, causing the loan balance to increase.


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