S&P signals drop in loan delinquencies

The global ratings agency has reported a decrease in residential mortgage arrears driven by an uptick in loan balances

S&P signals drop in loan delinquencies



The volume of delinquent housing loans underlying Australian prime residential mortgage-backed securities (RMBS) has dropped from 1.21% to 1.15% between May and June, according to S&P Global Ratings.

While S&Ps report, RMBS Arrears Statistics: Australia, stated that arrears usually fall month-on-month at this time of year, analysts also attributed the decline to an increase in outstanding loan balances in June.

Declines were experienced across the board with the Standard & Poor’s Performance Index (SPIN) falling for prime Australian mortgages in arrears by over 30, 60 and 90 days.

Queensland experienced the largest decline in arrears in percentage terms falling from 1.72% to 1.62% between May and June. At the other end of the spectrum, Western Australia retained top place with arrears at 2.32%.

Looking at the type of lenders, arrears fell in all categories except ‘regional banks’ which recorded an increase in the number of delinquencies from 2.27% to 2.30%.

“The SPIN for nonconforming home loan arrears fell to 4.84% in June from 5.16% in May against a backdrop of increasing loan balances. The largest improvement was for loans 60-90 days in arrears, which fell 0.31 percentage point to 0.78% in June. Mortgages more than 90 days in arrears increased to 2.20% in June from 2.10% the previous month, however.”

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