Arrears soar under financial strain
Loans underlying Australian prime residential mortgage-backed securities that are greater-than-30 days in arrears have climbed to a near all time high.
According to the latest data from Standard & Poor’s Ratings Services, arrears climbed to 1.83 per cent in April, from 1.81 per cent in March 2011.
This is near the all-time peak of 1.84 per cent reached in January 2009.
Meanwhile, subprime RMBS arrears jumped by 83 basis points to 12.05 per cent during the same period.
“The number of borrowers who were already more-than-90 days in loan arrears crept up by 4 basis points to 0.75 per cent, largely contributing to the rise in the proportion of loans that are more-than-30 days in arrears for April 2011,” Standard & Poor’s credit analyst Vera Chaplin said.
“We believe borrowers in severe arrears continue to face financial pressure arising from higher costs of living. Although more new issuance in the coming months would likely dilute the overall arrears level, we believe the underlying financial pressures would remain.”