RMBS arrears fall to 10-year low

26 October 2015

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Australian housing loans in arrears for prime residential mortgage-backed securities (RMBS) dropped to the lowest level in more than a decade, according to Standard & Poor’s.

New research by the credit ratings agency revealed that arrears levels for prime RMBS fell to 0.93 per cent in August – down from 0.96 per cent in July.

S&P noted that this is the lowest level of arrears for the prime RMBS sector since 2004.

Additionally, loans in arrears for more than 90 days, categorised as ‘severe’ fell to the lowest level since 2009.

Meanwhile, non-conforming RMBS in arrears recorded a fifth consecutive month of decline in August, dropping to 4.60 per cent from 4.69 per cent a month earlier.

“While we tend to see falling arrears after the first quarter due to seasonal factors, both prime and nonconforming arrears are lower than they were a year earlier,” S&P credit analyst Narelle Coneybeare said.

“In our view, the current arrears trend reflects the historically low interest-rate environment and general macroeconomic conditions, including relatively stable employment levels.”