Australians face repayment shock

[SYDNEY] Sydney mortgage broker Luke Gardiner, who started his business just last year, is already overwhelmed with customers. "There has not been a slow period in the last 12 months," said the broker, whose Gardiner Financial Services Pty arranged more than A$5 million (S$5.7 million) in mortgages in both June and July, about A$1 million more than in May. "I've been waiting for a break, but it hasn't come."

Driving the growth is demand for high-risk mortgages such as interest-only loans and financing to buy rental properties. That's setting the stage for a jump in mortgage delinquencies when interest rates increase from record lows, Moody's Investors Service said this month. The easier terms are fuelling housing demand, boosting prices 11 per cent in major cities in August from a year earlier.

"There has been an advent of higher-risk lending," said Nader Naeimi, head of dynamic asset allocation at Sydney-based AMP Capital Investors Ltd, which manages about A$144 billion. The regulator "hasn't been able to curb it".