Westpac reports that borrowers are generally ahead in their mortgage payments, even amidst escalating living costs

According to a recent financial summary for the initial quarter of the fiscal year 2024 (1Q24) by Westpac, a significant number of its mortgage holders are surpassing their payment schedules.

This financial summary, disclosed this Monday (19 February), indicates a growth in Westpac’s Australian mortgage portfolio by approximately $5.6 billion compared to the last quarter, achieving a total of $490.9 billion, which is 1.0 times the growth of the system.

The average mortgage value was noted at $306,000.

A slight majority of these mortgages, specifically 50.2%, were processed through Westpac’s own channels, marking a decrease in comparison to previous years.

Despite a slight increase in late payments — with the rate of accounts over 90 days in arrears climbing to 0.95% from 0.86%, and those 30-plus days in arrears reaching 1.7% from 1.54% — a large portion of Westpac’s clientele are paying ahead of their due schedules.

Westpac’s data shows that 76% of its home loan accounts in Australia are ahead in their payments, and 72% of clients have balances exceeding their required payments as of the end of December 2023.

Furthermore, 32% of these accounts have payments that are at least two years ahead of schedule, with about a quarter (23%) precisely on track with their payment timelines.

The proportion of loan balances advanced by six months to two years in repayments increased from 12% to 14% over this period, while those more than two years ahead saw a slight rise from 21% to 22%.

Additionally, the balances in offset accounts surged, reaching $59 billion, the highest in four years.

Peter King, Westpac Group’s CEO, mentioned that the uptick in late payments mirrors the current economic challenges. However, he emphasized the bank’s commitment to supporting customers grappling with increased living expenses and the tough decisions required for budget management.

The composition of Westpac’s mortgage portfolio includes 67.5% owner-occupied homes and 31.3% investment properties, with 81% of the mortgages being variable rate, a notable increase from the second quarter of 2023, which saw 67% in variable rates. First-time home buyers represent about 11% of Westpac’s mortgage demographics.

King anticipates the economy will stay robust, buoyed by low unemployment rates and strong corporate financial health. He forecasts an economic deceleration coupled with diminishing inflation pressures, potentially easing monetary policies within the forthcoming year.