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Mortgage delinquencies on the rise: Moody’s

Moody's Investors Service says that the performance of Australian prime residential mortgage-backed securities (RMBS) deteriorated in Q4 2016.

According to Moody’s, the 30+ day delinquency rate rose to 1.57 per cent at the end-2016, from 1.50 per cent at end-September 2016.

Looking ahead, the ratings agency expects delinquency rates for Australian RMBS will continue to rise moderately in 2017.

"Weaker economic conditions in states reliant on the mining industry, rising underemployment, weak wage growth and less favourable housing market conditions will drive delinquencies higher," Moody's senior analyst Alena Chen said.

"Nevertheless, losses will remain low because of the buildup in home equity and deleveraging.”

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Moody's notes the rise in Q4 delinquencies is a common occurrence due to increased spending during the year-end holiday season.

Delinquency rates rose for all Australian prime RMBS issuer groups during Q4 2016, including major banks, regional banks, non-ADIs and other banks.

The 30+ day delinquency rate for non-ADIs was the highest, rising to 2.7 per cent at 31 December 2016 from 2.37 per cent at 30 September 2016.

[Related: Pepper chooses Moody's for securitisation tech]

Mortgage delinquencies on the rise: Moody’s
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