MELBOURNE (S&P Global Ratings) Aug. 15, 2019--Australian prime home-loan arrears remained steady in June, with the Standard & Poor's Performance Index (SPIN) for Australian prime mortgages slipping 1 basis point to 1.51% from a month earlier. That's according to S&P Global Ratings' "RMBS Arrears Statistics: Australia," published today.
Arrears typically decline in June and throughout the third quarter. Mortgage arrears were up 13 basis points year on year in June and above the five-year average of 1.25%.
Arrears fell in Queensland, South Australia, Northern Territory, and Australian Capital Territory, but rose in Western Australia, Tasmania, New South Wales, and Victoria. Arrears continued to rise in Western Australia, despite a small improvement in May, increasing to 3.05% from 3.00% a month earlier. South Australia recorded the largest month-on-month improvement, with arrears falling 5 basis points to 1.52%.
Investment arrears were almost unchanged in June, falling 1 basis point to 1.47%, and owner-occupier arrears rose 1 basis point to 1.74% from a month earlier. Owner-occupier arrears have continued to rise toward their long-term peak of 1.83%, despite interest rates being around 3.00% lower. This reflects borrowers' increased debt-serviceability pressures in a low wage-growth environment.
We expect arrears to stabilize in the next quarter, in line with the seasonal pattern and assisted by cuts to interest rates and taxes. These stimuli will have a greater effect on the less-severe arrears categories, which historically have been more sensitive to interest-rate cuts. Improvements in housing market conditions also should help bolster lending conditions and improve borrowers' refinancing prospects.
We publish monthly arrears data for investor and owner-occupier loans. These data cover the entire Australian RMBS portfolio of loans.
The SPIN measures the weighted-average of arrears more than 30 days past due on residential mortgage loans in publicly and privately rated Australian RMBS transactions. We calculate the SPIN for prime and nonconforming residential mortgage loans. The indices identify the proportion of loans 31-60 days, 61-90 days, and 90-plus days in arrears. S&P Global Ratings calculates the SPIN on a monthly basis, using information provided by the issuers of RMBS transactions.
"RMBS Arrears Statistics: Australia" provides a comprehensive analysis of arrears statistics on loans underlying Australian RMBS. Part 1 and Part 2 of the report can be found at http://www.spglobal.com/sfsurveillance and http://www.capitaliq.com. Members of the media seeking a copy can contact Richard Noonan at (61) 3 9631 2152 or firstname.lastname@example.org.
This report does not constitute a rating action.
S&P Global Ratings Australia Pty Ltd holds Australian financial services license number 337565 under the Corporations Act 2001. S&P Global Ratings'credit ratings and related research are not intended for and must not be distributed to any person in Australia other than a wholesale client (as defined in Chapter 7 of the Corporations Act).
The report is available to subscribers of RatingsDirect at www.capitaliq.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to email@example.com. Ratings information can also be found on S&P Global Ratings' public website by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided.
|Primary Credit Analyst:||Erin Kitson, Melbourne (61) 3-9631-2166;|
|Secondary Contact:||Narelle Coneybeare, Sydney (61) 2-9255-9838;|
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