The number of delinquent housing loans underlying Australian prime residential mortgage-backed securities (RMBS) fell to 1.23% in February from 1.29% in January, according to a recent report by S&P Global Ratings. We normally expect arrears to increase month on month in February, reflecting the seasonal effects of Christmas spending and summer holidays. The month-on-month decline was unexpected, particularly at a time of rising interest rates.
The report, “RMBS Arrears Statistics: Australia,” shows mortgages 31-60 days in arrears recorded the greatest improvement in February after recording the largest increase in January. The major banks recorded the largest decline in mortgages 31-60 days in arrears. Outstanding loan balances originated by major banks make up more than half of total RMBS loan outstandings, and their arrears performance has a significant influence on the Standard & Poor‘s Performance Index (SPIN) for Australian prime mortgages.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
