RMBS Mortgage Arrears Lower Again, But…

S&P Global Ratings said RMBS Mortgage arrears fell to 1.08% in September across Australian down from 1.10% in August 2017.

They say mortgage arrears rose in both the Northern Territory and the ACT during September but fell elsewhere. While the ACT tops the list with a rise mortgage arrears it is only at a low 0.64%, compared with Western Australia who has the highest arrears of 2.21%.

However, while outstanding loan repayments on 30-to-60-day arrears also declined in most states between January and September, 90-day+ arrears  rose in Western Australia and Queensland. This is the same as we saw recently in the bank reporting season.

S&P said the growth in full-time jobs is positive for mortgage arrears. In addition, the rises rates on in more risky investor loans have minimal impact on RMBS.

This is a myopic view of mortgage portfolios as securitised loans are selected, and seasoned to manage risks. To that extent, it is not necessarily a good indicator of the wider market – including investor loans.

S&P expects arrears to rise over the coming months, as they “traditionally start to increase in November and continue through to March.”

This from Macquarie shows the trends.


Author: Martin North

Martin North is the Principal of Digital Finance Analytics

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