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ISCOVER
Staff Reporter
Arrears on residential mortgage loans underlying RMBS transactions fell marginally last quarter, a new report has found.
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According to Standard & Poor’s latest RMBS mortgage arrears report, arrears fell 0.01 per cent to 1.43 per cent in Q2.
During the same period, arrears for subprime RMBS also decreased, by 0.17 per cent to 12.07 per cent.
Standard & Poor's credit analyst Vera Chaplin said the arrears for prime RMBS have ranged between 1.4 per cent and 1.5 per cent since the beginning of the year--establishing a new trend line at currently higher mortgage rates.
“Further rises in mortgage rates could test the debt serviceability of some recent first-home buyers, as well as self-employed borrowers, whose cash flows are sensitive to increases in financing costs,” she said.
“The overall performance of the collateral underlying Australian RMBS has been sound and is likely to continue into 2011. This is underpinned by an increasingly positive economic outlook."
