RBA rings alarm on high debt levels
Risks to financial stability could be building as house prices and debt levels keep rising, the Reserve Bank has caution...
Arrears on loans underlying Australian prime residential mortgage-backed securitisation (RMBS) transactions dropped by 0.02 per cent in the third quarter of 2010.
Arrears now sit at 1.41 per cent, according to a new report by Standard & Poor’s.
During the same period, arrears for subprime RMBS also decreased, by 0.17 per cent to 11.90 per cent. Total new issuance of Australian RMBS was just below $5.1 billion in Q3 2010—2.3 times the total issuance in the previous quarter.
"Arrears levels for prime RMBS continue to remain low, hovering between 1.4 per cent and 1.5 per cent since the beginning of 2010. We believe potential rises in mortgage rates and the current softening in property prices will likely reduce borrowers' ability to remedy their arrears," Standard & Poor's credit analyst Vera Chaplin said.
"Nevertheless, in our opinion, Australia's positive economic prospects and continued strong labor market supporting debt serviceability, would underpin the stable performance of Australian RMBS mortgage portfolios."
Mortgages are loans that are used to buy homes and other real estate where the property itself serves as collateral for the loan.
Mortgages are loans that are used to buy homes and other real estates where the property itself serves as collateral for the loan.