The number of Australian housing loans in arrears extended their rise in May for the seventh consecutive month for prime residential mortgage-backed securities (RMBS), as measured by Standard & Poor’s Performance Index (SPIN). The prime RMBS SPIN increased to 1.21% in May from 1.14% in April and 1.07% a year earlier, according to a recent report by S&P Global Ratings. Most of the increase in arrears for the month was in the more severe category of 90-plus days overdue.
Clearly the downtrend is caput. How high we go is the next question. There is seasonality at work here in H1 and RMBS is no more than 5% of major bank mortgage books but presumably representative so it is noteworthy that we’re at the highest arrears levels since 2001 for the majors and a lot of it is in the real distress 90-day bucket:
I expect these numbers to surprise to the upside next year.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
