This bank didn’t lose a single dollar to mortgage stress last year

afr.com:

Bernadette Inglis thinks the so-called “mortgage cliff” was over-hyped.

Coined to describe the phenomena where $350 billion in ultra-low fixed rate mortgages rolled off this year to more expensive variable rates, it stoked fears that delinquencies would spike among borrowers.

Ms Inglis, pictured in Newcastle last week, said the merger gave NGM greater scale, which is increasingly critical to competition in financial services. Chris Elfes

But Ms Inglis, the chief executive of the newly merged Newcastle Greater Mutual Group, believes the cliff was a distraction that lenders and mortgage brokers became overly focused on.

“You have to be careful about being fixated on these things,” Ms she said, speaking after the bank posted its first financial results since Newcastle Permanent merged with Greater Bank. “It can make you incredibly apprehensive, but that doesn’t help the customers.”

NGM claims 90 per cent of its borrowers are ahead on repayments. It took a nonetheless proactive approach to communicate with customers that were due to transition to a higher repayment schedule.

For a borrower with a $1 million mortgage, the 4 per centage points of Reserve Bank tightening has meant their monthly repayments have jumped by $2269, according to RateCity analysts.

“The industry was facing into this massive change and, when we thought about managing through it, we thought about it clearly from a customer perspective,” the CEO said.

She argued the customer-first focus had been vindicated because 90 per cent of its transitioning customers were retained. Further, NGM reported there were no loan losses in its mortgage portfolio across the year to June 30.

“While the credit quality of the lending book remains exceptional and the arrears