The Sydney Morning Herald is at it again telling us there’s a “dark side to the housing boom”. It’s been reporting like this which has helped promote the view that there is some sort of problem with repossessions and foreclosures of homes in Sydney and by extrapolation, the rest of Australia.

There isn’t: the problem is confined to the south western suburbs and it’s not innocent people being thrown out of their homes. In many cases it’s the remnants of people wanting to get rich quickly from negative gearing deals, or others who were sold housing deals they could not afford. The graph below shows the writs of possession by region in Sydney in 2006.

It’s these people who we should have some sympathy for, but it is not a problem, terrible as that might sound. Why? Because some in the media, lobby groups and politicians have never stopped to think the story through by looking at the overall level of arrears in mortgages held by all financiers.

The figures were there in the Reserve Bank’s Financial Stability Review quoted in the SMH article. And for anyone who was looking for help, the Reserve Bank’s Deputy Governor Ric Battellino laid it out in black and white in a speech yesterday in Melbourne.

How many problem home loans are there in Australia? According to Mr Battellino, “less than 20,000 of the 5,300,000 housing loans in Australia are 90 days overdue on repayments.”

Fancy that: less than 20,000 mortgages in arrears past 90 days. Didn’t read that in the headlines in the papers today.

That’s around 0.41%. Just think of it: around 5,280,000 mortgages are performing in Australia. Some people might be feeling stressed in meeting those, but they haven’t slipped behind in their payments. Arrears for loans past 90 days is the first step in a process which ends up with foreclosures, repossessions and sales. But it’s a long way.

And there’s another furphy that the SMH and others promulgate: that we have a credit card problem. We do have lots of credit card debt, but there is little mention that people have been using them less often over the past year to raise cash.

But there are problems in some parts of Sydney, Melbourne and Brisbane. Of the top 15 local government areas of Australia where households have debt serving ratios of over 30%, 11 are in Sydney, three in Melbourne and one in Brisbane. Those in Sydney are predominantly in the southwest and west, as the below graph shows.

There are always people who borrow too much in every boom and bust. Remember when home loan rates were around 17% and we had high levels of unemployment back in the 1990s, now that was stress!

It’s a small regional hiccup, not a national problem, no matter what Kevin Rudd and other pollies might think. It will work its way through the system by the first quarter of next year. If mortgages past 90 days rise from their current level next year, then we know we have a problem.