Australian Mortgage arrears have remained at levels higher than normal as a result of ongoing interest rate increases.
Based on information collated by the Standard & Poor’s latest Mortgage performance Index,there has been a slight drop on home loan arrears underlying Australian prime residential mortgage-backed securities (RMBS).
Standard & Poor’s credit analyst Vera Chaplin said this figure was in stark contrast to historical trends, where arrears tend to decline as the impact of Christmas spending wears off.
Home loans that are greater-than-30 days in arrears have remained at or above 1.44 per cent over the last four months, following a series of interest rate rises since October 2009.
However Home Loan arrears on subprime mortgages have grown by59 basis points to 11.94 per cent in May 2010, from 11.35 per cent in April 2010.
“As the outstanding balances of home loans underlying subprime and nonconforming RMBS amortize, we expect higher volatility in the arrears percentages reported,” Ms Chaplin said.