Borrowers in Australia with “zombie mortgages” are failing to make their mortgage payments, placing $270 billion in home loans at risk of default or severe stress in the coming year.
Barrenjoey banking analyst Jon Mott warned that the rising cost of servicing loans issued during the COVID-19 mortgage boom might hit the major banks hard as the employment outlook worsens and the cost of living rises.
“We believe many borrowers are entering a period of severe stress,” Mr. Mott said, “with mortgage rates now well through the serviceability buffers used during the pandemic boom.”
