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Australian home loan arrears for prime residential mortgage-backed securities (RMBS) have fallen to 1.04 per cent in October from 1.08 per cent in September.
Standard & Poor’s (S&P) Global Ratings has attributed the decline to continually low interest rates and improved employment conditions.
The RMBS Arrears Statistics: Australia report noted that the current trend is below the 1.13 per cent average for the month of October and is well below the 1.25 per cent average of the past decade.
Home loan arrears, which were more than 90 days overdue, experienced the most significant improvement in October, falling from 2.07 per cent to 1.71 per cent.
Arrears dropped in most Australian states in the reported month, with the Australian Capital Territory (ACT) recording the lowest arrears level at 0.58 per cent.
Queensland and Western Australia, where arrears are most elevated, also experienced a month-on-month decline, with arrears falling to 1.39 per cent from 1.47 per cent in Queensland, and dropping to 2.12 per cent from 2.21 per cent in Western Australia.
Mortgage arrears in New South Wales (NSW) and Victoria experienced slight reductions, with arrears falling to 0.75 per cent from 0.79 per cent in NSW and to 0.94 per cent from 0.96 per cent in Victoria.
Moreover, S&P has reported that non-conforming mortgage arrears fell in October to a “near historic” low of 3.99 per cent.
S&P has also warned that high household debt may cause mortgage arrears to increase in the future, but it does not believe that arrear levels will significantly exceed current levels.
It also does not expect recent property price reductions to affect arrears on RMBS.
[Related: Banks ‘need to win back community trust’]
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