No relief for Australian mortgagors

All signs are that the Australian Prudential Regulation Authority is unlikely to revise its guidance for the minimum serviceability buffer banks must apply when assessing home loan applicants. As a result, we think mortgage stress and defaults will climb higher in the coming months. Meanwhile, GDP data released yesterday confirmed our long-held view that New Zealand's economy would enter into a recession this year. On a more positive note, however, it increasingly looks like the country's deepest ever housing downturn has finally run its course.