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Staff Reporter
Mortgage arrears are falling month on month as more Australians decide to defer major purchases.
According to the latest statistics from Standard & poor’s, loans underlying Australian prime residential mortgage-backed securities that are greater-than-30 days in arrears eased to 1.69 per cent in June 2011, from 1.77 per cent a month earlier.
Subprime RMBS arrears were lower, down 102 basis points to 11.65 per cent, with less than $1.92 billion in subprime RMBS outstanding.
“Australian households are more cautious as uncertainty in the global economy and financial markets increases preferring to reduce debt, build savings, and defer major purchases. While this is good from the perspective of overall household financial management, it impacts on the economy by, among other things, negatively affecting the retail sector. This also means borrowers in more severe arrears could find it more difficult to recover - particularly the affected self-employed borrowers whose cash flows are sensitive to non-mining sector activities,” Standard & Poor’s credit analyst Vera Chaplin said.
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