Arrears eased slightly in October 2010, new research has revealed.
According to the latest arrears report by Standard and Poor’s, loans underlying Australian prime Residential Mortgage Backed Securities (RMBS) that are greater than 30 days in arrears eased slightly to 1.38 per cent in October 2010, from 1.41 per cent in September 2010.
“While arrears levels remained relatively stable over the last three months, Standard and Poor’s credit analyst Vera Chaplin said she expects delinquencies to rise in 2011 as the impact of higher mortgage rates, Christmas spending, and Australia’s extensive floods on some borrowers’ financial position begin to filter through.
“In particular, in our opinion, self-employed borrowers whose cash flows may be sensitive to business conditions could be exposed to greater financial pressures. As a result, low-documentation loan arrears may rise further in the new year, following the increase to 4.35 per cent in October 2010, from 4.22 per cent a month ago.”