Mortgage arrears move higher for seventh consecutive month

by Julia Corderoy20 Jul 2016
The number of home loans in arrears rose for the seventh consecutive month in May, according to new arrears data.

Standard & Poor’s Performance Index, commonly referred to as SPIN, shows that 1.21% of “prime” residential mortgage-backed securities (RMBS) were in arrears in May, up from 1.14% the previous month and 1.07% a year earlier. The index measures the weighted-average arrears more than 30 days past due on loans in RMBS transactions.

It also showed that arrears were higher amongst the banks, with non-banks being the only sector to see a decline in RMBS arrears.

Most of the increase in arrears in May was in the “more severe” category of 90-plus days overdue. The major banks’ 90 day-plus arrears rose four basis points to 0.48%, while non-banks fell a point to 0.17%. 

The SPIN of non-conforming loans in arrears also increased to 4.71% during the month, from 4.25% in April. 

However, S&P noted that the non-conforming measure tends to exhibit some volatility from month to month and remains low by historical standards and well below the peak of 17% in 2009.