Australia’s mortgage arrears decreased by 8bp to 1.06% in 3Q16, as borrowers benefitted from the May and August 2016 Reserve Bank of Australia rate cuts and continued low mortgage rates, says Fitch Ratings in the latest Dinkum RMBS Index report.
The lower arrears were primarily in the 30-59 days bucket, but when compared to 3Q15, arrears were actually up by 16bp, despite Australia’s strong economic environment of appreciating house prices and low interest rates. Fitch believes underemployment and the mining sector slowdown, which have led to lower house prices in the regional areas of Queensland, Western Australia and the Northern Territory, may have also affected borrowers.
Losses experienced by Australian RMBS transactions remained extremely low, with lenders’ mortgage insurance payments and/or excess spread sufficient to cover principal shortfalls during the quarter.
Fitch’s Dinkum RMBS Index tracks arrears and performance of mortgages underlying Australian residential mortgage-backed securities
