According to S&P Global Ratings, mortgages in arrears underlying prime Australian RMBS transactions were up 19 per cent year-on-year in Q4 2016.
Arrears levels rose quarter-on-quarter to 1.15 per cent at the end of Q4, up from 1.14 per cent in the prior corresponding period.
However, S&P emphasised that arrears levels remain “well below” the historical peak of 1.69 per cent, and that the increase is in line with its expectation of a cyclical rise toward the end of each year.
Nonconforming loans more than 30 days in arrears increased to 4.43 per cent in Q4 from 4.36 per cent in Q3, but were down from 4.63 in Q4 2015, and significantly less than their post-GFC high of 17.09 per cent.
“This partly reflects the improved collateral quality of more recent vintages, evidenced by a lower proportion of low-documentation loans,” S&P said.
Eight of the nation’s top 10 postcodes with the greatest percentage of home loans in arrears in Q4 were in Queensland and Western Australia, where property price growth has slowed or fallen.
Mortgage arrears in Western Australia climbed 40 per cent year-on-year to 2.10 per cent in Q4.
“The downturn in mining investment has also affected other parts of the states’ local economies and raised the degree of mortgage stress,” S&P said.
Meanwhile, in Victoria and NSW where property prices have increased strongly, mortgage arrears have remained low.
[Related: Loan arrears in December up by a fifth]