Mortgage arrears underlying Australian residential mortgage-backed securities appear to be heading lower nationwide, though performance has diverged between regional areas and capital cities as well as resource and non-resource states. This trend is reflected by changes in Standard and Poor's Performance Index for Australian prime mortgages, which fell seven per cent year-on-year to 1.07 per cent in December.  It shows arrears are higher in areas more exposed to the resource sectors: Western Australia or Queensland. Fewer new loans are going into arrears in most states, however, thanks to improving employment conditions and low interest rates. "We expected arrears to remain at low levels in Australian RMBS portfolios, given interest rates are low and employment conditions stable," S&P said.