Low rates 'hiding mortgage stress'
KPMG partner John Kensington, editor of the accounting firm’s Financial Institutions Performance Survey (FIPS), said that despite falling over the past couple of years, impaired and past due assets were still well above pre-global financial crisis levels.
But he said low interest rates meant banks were managing to prevent these troubles spilling over into a flood of mortgagee sales, which currently account for only 0.2% of houses being sold.
Kensington said banks were managing their struggling assets well and low rates allowed them more flexibility when dealing with clients.
“What some banks are doing at the moment is that if someone can’t make all their payment, provided they can pay the interest component, they’re prepared to let them make part payment on the principal.”
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