Invest
Surprise as home loans in arrears figures fall
The number of delinquent housing loans declined surprisingly in February, despite rising interest rates across the lending marketplace.
Surprise as home loans in arrears figures fall
The number of delinquent housing loans declined surprisingly in February, despite rising interest rates across the lending marketplace.
The report RMBS Arrears Statistics: Australia by S&P Global Ratings found that the number of delinquent housing loans underlying Australian prime residential mortgage-backed securities (RMBS) fell to 1.23 per cent in February from 1.29 per cent in January.
According to S&P, the results were surprising as it normally expects arrears to increase month-on-month in February, reflecting the seasonal effects of Christmas spending and summer holidays, and particularly at a time of rising interest rates.
“The month-on-month decline in arrears in February could mean that some of the rise in arrears in January was partly due to the timing of mortgage-rate increases; the weighted-average variable rate increased for a number of more recent transactions in January,” S&P explained.
“Mortgage-rate increases can create an initial spike in arrears when first applied, particularly if they are introduced when more borrowers are likely to be on holidays. This might account for part of the increase we observed in January.”
The report shows mortgages 31 to 60 days in arrears recorded the greatest improvement in February after recording the largest increase in January. The major banks recorded the largest decline in mortgages 31 to 60 days in arrears.
Further, outstanding loan balances originated by major banks make up more than half of total RMBS loans outstanding, and their arrears performance has a significant influence on the Standard & Poor Performance Index (SPIN) for Australian prime mortgages.
“Several lenders’ recently announced interest-rate increases will continue to take effect in coming months,” S&P said. “We expect this to put further pressure on the SPIN. The borrowers most vulnerable to interest-rate rises are those with higher loan-to-value (LTV) ratios and less favourable refinancing prospects, particularly borrowers with low-documentation and nonconforming loans.”
Arrears in February remained unchanged in Queensland at 1.65 per cent, and rose in the ACT to 0.81 per cent from 0.78 per cent in January and in Tasmania to 1.51 per cent from 1.47 per cent a month earlier. Arrears declined in all other states.
Loans in Victoria and NSW make up more than 54 per cent of the total loans outstanding that underlie Australian RMBS transactions, meaning that the arrears performance of the two states has a large influence on the SPIN. Both states recorded a month-on-month decline in arrears in February, despite a decline in total loan balances outstanding during the month.
Property
How will border closures impact the property market?
Despite falling migration levels, property prices might not be impacted as much as investors think, an industry expert has explained. ...Read more
Property
Sydney, Brisbane, Melbourne tipped to surge: Westpac
One of Australia’s largest banks is forecasting strong growth in the housing market as low interest rates and availability of credit pushes prices up, despite the country being in its first recessio...Read more
Property
Is now the right time to make a tree or sea change?
The experience of isolating in our homes and suburbs has made many people reconsider what they actually value in a home, writes David Hancock. ...Read more
Property
Hot Property: Biggest headlines this week
Victoria’s COVID-19 restrictions have begun to lift as the rest of the country watches on: Here are the biggest property stories from this week. ...Read more
Property
Post-pandemic hotspots revealed
With investors eyeing investment opportunities, which hotspots are set to benefit? ...Read more
Property
Houses fall by nearly $100bn
The COVID-19 pandemic has seen a correction in the housing market, with capital cities falling by $98 billion in total value, official figures have shown. ...Read more
Property
Could changing tax law boost regional property prices?
Property investors are urging the Australian government to change tax deductions for travel expenses related to their investment property as a way to stimulate the regional housing market. ...Read more
Property
The importance of statistical weighting in property data
Investors are being urged to deep dive into the data, with statistical weighting likely to show property nationally has fallen despite many regions still performing strongly, according to research. ...Read more
Property
How will border closures impact the property market?
Despite falling migration levels, property prices might not be impacted as much as investors think, an industry expert has explained. ...Read more
Property
Sydney, Brisbane, Melbourne tipped to surge: Westpac
One of Australia’s largest banks is forecasting strong growth in the housing market as low interest rates and availability of credit pushes prices up, despite the country being in its first recessio...Read more
Property
Is now the right time to make a tree or sea change?
The experience of isolating in our homes and suburbs has made many people reconsider what they actually value in a home, writes David Hancock. ...Read more
Property
Hot Property: Biggest headlines this week
Victoria’s COVID-19 restrictions have begun to lift as the rest of the country watches on: Here are the biggest property stories from this week. ...Read more
Property
Post-pandemic hotspots revealed
With investors eyeing investment opportunities, which hotspots are set to benefit? ...Read more
Property
Houses fall by nearly $100bn
The COVID-19 pandemic has seen a correction in the housing market, with capital cities falling by $98 billion in total value, official figures have shown. ...Read more
Property
Could changing tax law boost regional property prices?
Property investors are urging the Australian government to change tax deductions for travel expenses related to their investment property as a way to stimulate the regional housing market. ...Read more
Property
The importance of statistical weighting in property data
Investors are being urged to deep dive into the data, with statistical weighting likely to show property nationally has fallen despite many regions still performing strongly, according to research. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
