By Stephen Johnson For Daily Mail Australia
Published: 10:04 BST, 17 June 2019 | Updated: 10:09 BST, 17 June 2019
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A mortgage time bomb is expected to explode in 2019 and 2020 as house prices continue to decline and monthly repayment levels jump by more than a third.
The number of struggling borrowers has increased this year, new figures from American credit ratings agency Moody's Investors Service shows.
Australia's major banks approved a large volume of interest-only loans five years ago when house prices in Sydney and Melbourne were approaching record highs.
Borrowers who took out these loans will soon be made to pay off both principal and interest just as real estate values continue to plunge in Australia's biggest cities, leading to a 37 per cent jump in average repayment levels.
With Australia's household debt-to-income ratio standing at 189 per cent, Moody's is expecting a jump in mortgage delinquencies, where borrowers have missed at least one monthly repayment.
A mortgage time bomb is expected to explode in 2019 and 2020 as house prices continue to decline (pictured are houses at Cecil Hills in
'Over coming quarters, we expect Australia's record-high household debt, which amounts to almost 200 per cent of annual gross disposable income, will contribute to a moderate increase in delinquencies,' it said.
The 30-day delinquency rate for Australian residential mortgage-backed securities rose from 1.54 per cent in the December quarter of last year to
