Mortgage arrears continue slight upward trend

Mortgage arrears continue slight upward trend
Mortgage arrears continue slight upward trend

The number of prime Australian housing loans in arrears has risen for the fifth consecutive month, figures according to the Standard & Poor’s Performance Index (SPIN) show.

Not by much as 1.13 percent of prime residential mortgage-backed securities (RMBS) were in arrears during March – up from 1.11 percent in February.

“While a decline in outstanding loan balances during the month would have affected this movement, the dollar value of loans in arrears increased, resulting in prime arrears being up overall,” S&P noted.

The proportion of full-doc loans rose to 1.09 per ent in March from 1.07 percent a month earlier.

According to S&P, the SPIN for low-documentation loans meanwhile fell 14 basis points in March to 4.41 percent, with part of the decline reflecting a rise of around 2 percent in outstanding loan balances,” the agency said.

“Low-doc loans represent around 1.3 percent of total loans outstanding that underlie prime RMBS transactions – down from a peak of 13.2 percent in January 2008.”

Regional banks experienced the largest decline in arrears of all loan originator types – down 13 basis points to 2.02 percent – while the major banks’ SPIN rose 7 basis points to 1.01 percent.

Arrears remain below their decade-long average of 1.25 percent, S&P advised.

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