Steady arrears rate, but low docs cause headache

by Caroline Dann03 Sep 2012

A ratings agency has revealed the arrears rate in Australia remains ‘steady’ but strong variations exist in low doc loans.

Moody’s second-quarter report showed the prime 30-plus arrears rate at 1.66%, almost identical to 2011’s 1.67% rate.
However, it warned 100% low doc loans were rising in delinquency rates, which is currently at 5.72%. It said the percentage could reach 6% “in the coming months.”
“Excluding 100% low doc deals, the prime 30-plus arrears rate would have been nine basis points lower, at 1.57% in June,” it said.
The non-conforming 30-plus arrears rate increased to 12.47%, from 12.06% in the first quarter.
Meanwhile, Moody’s blamed “limited refinancing opportunities” for a fall in redemption rates for the non-conforming deals, which dropped to 25.20%.


  • by Country Broker 3/09/2012 10:17:17 AM

    It would be really interesting to know how much 100% Lo Doc loan were ever written ?? and what % they are of the total Lo Doc market and the total market ?? Was there ever such a deal, I cannot recall one !It would also be intresting to know what percentage of these loan are loacated in WA & QLD .

  • by Will 3/09/2012 10:24:43 AM

    Agree with "Country Broker". As far as I acn recall there NEVER was a 100% Lo Doc product in Australia. So before we take any credence in these stats, lets have soem real hard facts about how many were ever written before we start another unnecessary drama episode !! It is pleasing to note the general Lo Docs have less arrears than normal loans!!

  • by 1martym1 3/09/2012 10:36:07 AM

    I think by 100% low doc they mean 100% self certified? Not 100% LVR?