Mortgage arrears ease again

Advertisement

Via S&P:

Mortgage arrears across Australian prime residential mortgage-backed securities (RMBS) fell to 1.08% in September from 1.10% in August, according to a recent report by S&P Global Ratings. Arrears typically have fallen from August to September during the past five years. The arrears average for the past decade is 1.25%, and the average for September is 1.15%. Improving employment conditions and low interest rates have kept arrears low in 2017.

While rates have been raised on riskier loan products to bring lending growth in line with regulatory limits, the impact on Australian RMBS transactions has been somewhat muted because most loans underlying transactions are variable-rate amortizing loans to owner-occupiers. The Reserve Bank of Australia recently said employment has increased in all states and has been concentrated in full-time jobs. This economic setting is positive for mortgage arrears, which generally have declined in most states and territories in 2017.

The full text of this article is available to MacroBusiness subscribers

$1 for your first month, then:
Cancel at any time through our billing provider, Stripe
About the author
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.