Australian mortgage arrears fell 7% year on year to 1.07% in December, according to a recent report by S&P Global Ratings.
Improving employment conditions are helping to keep arrears low. While there are risks in this environment of cautious economic optimism, we expect arrears to remain stable, with small movements driven by changes in interest rates. Mortgage arrears, as measured by the Standard & Poor’s Performance Index (SPIN) for Australian prime mortgages, typically rise in December off the back of Christmas spending. This is a cyclical pattern. Year-on-year comparisons, which are more meaningful, suggest that things are mostly looking up, according to the report, titled “RMBS Arrears Statistics: Australia.”
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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.
