Arrears on prime residential mortgages reached an all time high in May, Standard & Poor’s Australian Prime SPIN showed today.
The SPIN, or Mortgage Performance Index, measures the weighted-average arrears more than 30 days past due on residential mortgage loans on Australian RMBS transactions.
In May it rose by one basis point to 1.49 per cent, the sixth consecutive monthly increase.
Within the prime mortgage pool, full doc loans continued to outperform low docs.
Standard & Poor’s credit analyst Vera Chaplin said the record low doc arrears mirrored the high level of arrears experienced by the non-bank sector.
“Non-bank originators tend to sell a large proportion of low documentation loans so it stands to reason that the Lo doc SPIN will be high when the non-bank originator SPIN is also high,” she said.
Arrears could continue to deteriorate as the year progresses, Genworth Financial’s Mortgage Trends Report yesterday indicated that more than one in four of its surveyed respondents expected to struggle to pay their mortgage at some time over the next year.
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