Mortgage arrears decline once again

by Miklos Bolza24 May 2017
Home loan arrears have decreased for the second month in a row with part of the improvement attributed to better outstanding loan balances.

S&P Global Rating’s monthly report, RMBS Arrears Statistics: Australia, shows that the number of delinquent housing loans underlying Australian prime residential mortgage backed securities (RMBS) fell from 1.23% to 1.16% between February and March. 

This continues a two-month decline with delinquencies sitting at 1.29% in January.

While the overall level of arrears was higher than the 1.13% found in March last year, the current month’s figures are below the decade average for March of 1.32%.

“We attribute part of the improvement to an increase in outstanding loan balances, but arrears fell in percentage and dollar terms in March. Mortgages 31-60 days past due recorded the greatest improvement,” analysts wrote.

Non-banks recorded the greatest decrease in home loans over 30 days in arrears with levels dropping from 1.05% to 0.87% from February to March. 

Across the states, Tasmania recorded the largest drop, with arrears falling from 1.51% to 1.29% across the one month period. Delinquent loans also dropped in New South Wales, Victoria and Queensland – three states which make up 80% of all outstanding loan balances.

Overall, mortgages more than 90 days in arrears sat at 0.62% in March, above the decade average of 0.50%. Again, non-banks bucked the trend, recording monthly levels of 0.43%. This was around half the decade average for the sector of 0.88%.

Arrears in non-conforming mortgages also declined from 6.19% to 6.17% from February to March with the greatest improvement in loans 31-60 days in arrears (falling by 0.38%). Home loans over 90 days in arrears increased from 2.36% to 2.59% however.

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