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RMBS arrears drop in July

by Huntley Mitchell9 minute read
The Adviser

Housing loans in arrears decreased in July for prime and non-conforming residential mortgage-backed securities (RMBS), according to Standard & Poor’s Ratings Services.

According to S&P’s recently released RMBS Arrears Statistics: Australia report, arrears levels for prime RMBS fell below 1.00 per cent to 0.96 per cent during the month – down from 1.07 per cent in June.

S&P said that while this represents a drop of around 10 per cent, some of it reflects an increase in total outstandings during the month of around 6.7 per cent.

“Major banks and non-bank financial institutions (NBFIs) experienced the largest month-on-month decrease in prime housing-loan arrears,” it said.


“The NBFIs experienced around a 13 per cent decrease in arrears, despite a decrease in total outstandings for this sector in July.”

Meanwhile, non-conforming RMBS in arrears fell to 4.69 per cent in July from 4.83 per cent in June.

S&P said the decrease occurred despite a month-on-month decline in total outstandings.

“There has been an overall downward trend for non-conforming housing loan arrears during the past three years or so. We believe part of this trend can be attributed to the changing pool composition of non-conforming transactions,” it said.

“In recent years, we have seen non-conforming transactions issued with a mixture of prime or near-prime loans in addition to the more traditional non-conforming loans.”

[Related: Stats reveal mixed results for loan arrears]

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