From Moody’s Investor Services:
Sydney, May 27, 2013 — Moody’s Investors Service says that the prime 30-days plus arrears rate for Australian RMBS rose during Q1 2013 to 1.66% in March from 1.44% in December and 1.59% in March 2012.
The increase was consistent across all issuer groups. Specifically, the arrears rate for the major banks rose to 1.39% in March from 1.16% in December, while for the regional banks, it rose to 1.87% from 1.65%, and for non-authorized deposit-taking institutions (ADIs), it rose to 3.46% from 3.24%.
Moody’s further notes that the 30-days plus arrears rate for RMBS deals with 100% low-doc loans has experienced continued increases over recent years, peaking at a record high of 6.24% in January, before ending Q1 2013 at 5.83% in March, up from 5.78% in December 2012.
Borrowers in low-doc deals provide little or, in the case of no-doc loans, no proof of income. Moody’s considers 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% low-doc deals, the prime 30-days plus arrears rate would have been much lower at 1.60% 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. To date, lenders mortgage insurance has covered the majority of these losses, with any residual covered by excess spread or by the lender. The non-conforming 30-days plus arrears rate rose to 7.85% in March from 7.39% in December, and was 85 basis points lower than March 2012 when it was 8.70%.
National unemployment remained relatively constant at 5.59% in March, but variations across states were significant. For example, the lowest unemployment rate of 4.75% was observed in Western Australia, and highest of 7.33% in Tasmania.
Home prices in the major cities ended Q1 2013 with year-on-year growth. Perth saw the strongest increase of 5.78% while Adelaide witnessed the weakest of 0.28%. Overall, prices across Australia rose 2.42%.
