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ISCOVER
Staff Reporter
Loans underlying Australian prime residential mortgage-backed securities that are greater than 30 days in arrears rose to their highest level in a year, according to new research.
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Data from Standard & Poor’s Ratings Services found RMBS that are greater than 30 days in arrears rose to 1.79 per cent in February 2011, from 1.64 per cent in January 2011.
Subprime RMBS arrears also increased, rising 3 basis points to 11.48 per cent during the same period.
“At 1.79 per cent, the proportion of loans that are greater-than-30 days in arrears for February 2011 is approaching January 2009’s level of 1.84 per cent, which is the highest level observed for the SPIN,” Standard & Poor’s credit analyst Vera Chaplin said.
"We expect prime arrears to rise further in the coming months due to the impact of the recent natural disasters on some borrowers’ debt serviceability. The disasters may have had a more immediate impact than Christmas spending because households have been prudent. Higher mortgage rates and rising living costs could see affected borrowers take longer to recover from their financial pressures."
“Self-employed borrowers have been hit hardest, with 5.12 per cent of loans to these borrowers being more than 30 days in arrears--surpassing the LoDoc SPIN peak of 4.45 per cent seen in January 2009.”
