Soaring property prices are prompting struggling mortgage holders to sell up rather than face financial strife, ratings agency Moody's says.
As house prices rose 7.6 per cent nationally in 2014, mortgage delinquency rates fell to their lowest level in eight years, a Moody's report shows.
This rate refers to the proportion in dollar terms of loans more than 30 days in arrears.
"A borrower in stress has a better option to cure those delinquencies if they choose to sell the property," Moody's assistant vice president Alena Chen said on Thursday.
"(Whereas) if the housing market is not doing as well, they may not necessarily think it's a viable option to sell."
Only 1.19 per cent of Australian residential mortgages were overdue by a month at the end of November 2014, down from 1.24 per cent the year before, new figures from Moody's show.
Some of the lowest delinquency rates were recorded in Sydney, where house prices rocketed 12.4 per cent in 2014 - much more than any other Australian city.
Record-low interest rates are also reducing delinquencies as smaller loan repayments make it easier for mortgage holders to keep up, Ms Chen said.
A 0.25 per cent rate cut, like that seen in February, reduces repayments on a $400,000 mortgage by $60 a month.
The news reflects the Reserve Bank's sentiments this week that household financial stress remains low, despite slow wage growth and weakening labour market conditions.
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