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.