The number of delinquent housing loans underlying Australian prime residential mortgage-backed securities (RMBS) increased to 1.21% in April from 1.16% a month earlier, according to a recent report by S&P Global Ratings. Part of the increase reflects a decline in outstanding loan balances, but we believe interest-rate rises announced by different lenders during the past few months affected the Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages, given that most of the loans are variable-rate mortgages.
Home loan arrears rose nationwide except for the Australian Capital Territory, Northern Territory, and Tasmania, according to the “RMBS Arrears Statistics: Australia” report. New South Wales, Victoria, and Queensland, which account for around 80% of total loan balances, all recorded increases in arrears during the month. Queensland recorded the nation’s largest increase, with arrears increasing to 1.66% from 1.58% in March, followed by New South Wales, where arrears rose to 0.91% from 0.85% a month earlier, and Western Australia, where mortgage delinquencies hit 2.32%, up from 2.27% the previous month. Arrears in New South Wales and Victoria remain below the weighted-average SPIN for prime mortgages.
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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.
