Non-banks see biggest improvement in arrears

The number of delinquent housing loans underlying Australian prime residential mortgage-backed securities in March fell to 1.16 per cent from 1.23 per cent a month earlier, according to S&P Global Ratings.

In its latest report, S&P noted that non-bank originators recorded the largest improvement in mortgages more than 30 days in arrears, falling 18 basis points to 0.87 per cent from 1.05 per cent the previous month.

“We believe the improvement partly reflects an increase in outstanding loan balances,” S&P said.

Non-conforming mortgages in arrears declined in March to 6.17 per cent from 6.19 per cent in February against a backdrop of a decline in loans outstanding.

S&P found that mortgages more than 90 days in arrears, which have averaged around 0.50 per cent for the past decade, were 0.62 per cent in March.

“We believe this trend partly reflects a greater alignment in hardship reporting in recent years,” S&P aid.

“Non-bank originators have bucked the trend, with mortgages more than 90 days in arrears in March at 0.43 per cent, which is around half the average for the past decade of 0.88 per cent.”

[Related: On the Record: Mario Rehayem, Pepper Money]

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