The rating agency’s SPIN for June reported that 1.15 per cent of Australian households are in arrears. S&P measures this as arrears that are more than 30 days past due on residential mortgage loans in both publicly and privately rated Australian residential mortgage backed securities transactions (RMBS).
S&P attributed the fall to a rise in outstanding loan balances in June as well as the June period of the annual cycle which typically sees month-on-month falls.
Western Australia continues to be home to the largest percentage of households in arrears (2.32 per cent), but that figure reflects a 5 basis point drop since May 2017.
Those in the Australian Capital Territory have the lowest rate of arrears: 0.60 per cent, down from 0.62 per cent in May.
New South Wales follows with 0.83 per cent, Victoria with 1.02 per cent and Tasmania with 1.08 per cent.
The Northern Territory has the second largest proportion of households in arrears with 1.77 per cent, but that figure reflects a fall of 15 basis points on May figures.
Tasmania also experienced a 0.15 per cent fall.
S&P Global Ratings added: “The SPIN for nonconforming home loan arrears fell to 4.84 per cent in June from 5.16 per cent in May against a backdrop of increasing loan balances.
“The largest improvement was for loans 60–90 days in arrears, which fell 0.31 percentage point to 0.78 per cent in June.
“Mortgages more than 90 days in arrears increased to 2.20 per cent in June from 2.10 per cent the previous month, however.”
The total current loan balance (TCLB) is $127.49 billion, up from $123.11 billion in May. The TCLB is at its highest value since December 2016 ($127.02 billion).
The June SPIN also reported that all originators, bar regional banks, saw a fall in arrears. Regional banks’ rates grew 3 basis points to 2.30 per cent.
Major banks’ ratio of arrears ticked down by 3 basis points to 1.08 per cent while other banks saw arrears fall by 13 basis points to 0.94 per cent.
Non-bank financial institutions reported a SPIN of 0.49 per cent, down by 0.10 per cent on May and non-bank originators’ rates of arrears fell from 0.97 per cent to 0.88 per cent in June.