The latest report from S&P Global Ratings covering securised mortgage pools in Australia to end Oct 2017, showed 30 day delinquency fell to 1.04% in October from 1.08% in September. They attribute part of the decline to a rise in outstanding loan balances during the month, and many older loans in the portfolios (which may not be representative of all mortgages, thanks to the selection criteria for securitised pools).
+90 Day defaults are still elevated, see the chart below.
Here is their state summary
Overall trends across the states show the differences across states, with WA and NT still significantly above other states.
The ACT recorded the lowest arrears levels, at 0.58%. QLD and WA, where arrears have been more elevated for some time, recorded another month-on-month decline in mortgage delinquencies. In QLD, arrears fell to 1.39% in October from 1.47% in September. In WA, they declined to 2.12% from 2.21% a month earlier, against a backdrop of increasing loan balances. Home loan arrears also declined in NSW and VIC, but by smaller magnitudes. In NSW, arrears fell to 0.75% in October–the second lowest in the country–from 0.79% in September. In VIC, arrears declined to 0.94% from 0.96% the previous month.
In terms of the outlook, they say:
“improving employment conditions and low interest rates have helped to keep mortgage arrears low, but risks remain. Australia’s high household indebtedness, which has outpaced income and GDP growth for some time, leaves borrowers vulnerable to a change in economic circumstances. We do not expect arrears to increase much above current levels while these relatively benign economic conditions persist, particularly given the high level of seasoning in the Australian RMBS sector”.
