There has been a marked increase in Australian Home Loan Arrears in the first quarter of 2010.
According to a report released by Standard & Poor’s Ratings Services, arrears rose by 0.19 per cent to 1.44 per cent in the March quarter, while subprime RMBS arrears grew 0.67 per cent to 12.24 per cent.
“While we observe that the RBA has increased the official rates 6 times in a row and this may have contributed to higher overall arrears levels, we believe any worsening impact on RMBS collateral performance due to factors such as increased interest rates would likely be moderate and temporary,” Ms Chaplin said.
“In our view, if interest rates continue to rise, some first-home buyers who entered the property market when interest rates were historically low, and self-employed borrowers whose cash flows are more sensitive to economic conditions and borrowing costs, are likely to be most affected. Nevertheless, we believe the overall impact on defaults and losses is likely to be low if property values are preserved.”