Login
ISCOVER
Staff Reporter
Arrears are on the rise once again, climbing during the March quarter.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
According to new data from Moody’s Investors Service, prime 30 days-plus arrears rose from 1.44 per cent in December to 1.66 per cent in March.
The increase was consistent across all issuer groups. Specifically, the arrears rate for the major banks rose to 1.39 per cent in March from 1.16 per cent in December, while for the regional banks, it rose to 1.87 per cent from 1.65 per cent.
Moody’s further notes that the 30 days-plus arrears rate for residential mortgage-backed securities (RMBS) deals with 100 per cent low-doc loans has experienced continued increases over recent years, peaking at a record high of 6.24 per cent in January, before ending the first quarter of 2013 at 5.83 per cent.
A statement from Moody’s noted that the higher delinquency rate of these loans can be explained by the cash flow volatility of the borrowers, who are typically self-employed.
After excluding 100 per cent low-doc deals, the prime 30 days-plus arrears rate would have been much lower, at 1.60 per cent in March.
Overall losses for Australian prime RMBS are still very low by international standards, with the worst performing 2004 vintage incurring 36 basis points of losses to date.
