The stock of interest-only loans in total housing credit has declined from close to 40 per cent to almost 30 per cent, Christopher Kent, Assistant Governor (Financial) at the RBA said on Friday.The reduction in the stock of interest-only loans over the past year was substantial, Kent said. It represented about A$75 billion of loans (out of a total stock of interest-only loans of almost $600 billion in late 2016)."While many of the customers switching chose to do so in response to the higher rates on interest-only loans, there are likely to have been some borrowers who had less choice in the matter. "Some borrowers may have preferred to extend their interest-only periods but may not have qualified in light of the tighter lending standards. We don't have a good sense of the split between those borrowers that switched voluntarily and those that switched reluctantly."Also, the share of non-performing housing loans over the past year remains little changed at relatively low levels. Moreover, the growth of household consumption has been sustained; indeed it picked up a touch in year ended-terms over 2017."Kent yielded no ground to those convinced that economic relations in Australia are brittle and a housing crash expected."Given the large number of borrowers switching to P&I loans, it's not surprising that scheduled housing loan repayments have increased over the past year. Meanwhile, unscheduled payments have declined."With total payments little changed, Kent asserted "the rise in scheduled payments has had no obvious implications for household consumption."Around two-thirds of interest-only loans in the Reserve Bank's Securitisation Dataset are due to have their interest-only periods expire by 2020, Kent said."That is consistent with interest-only periods typically being around five years. Only a small share of loans have interest-only periods of ten years (or longer), with very few loans on these terms having been written (and securitised) since 2015. This is in line with the earlier measures to tighten lending standards."But not all mortgage market watchers share Kent's fairly relaxed view. In a report on the mortgage securitisation released this week, S&P warned that borrowers transitioning from interest-only to amortising loans "are vulnerable to the risk of repayment shock." "Half of the interest-only loans in portfolios of residential mortgage-backed securities in Australia will transition to a principal-and-interest repayment structure by 2019. Of these interest-only loans, around 12 per cent belong to owner-occupiers," S&P's analysts said.Thus far it's been mostly good news, with Australian home loan arrears falling to 1.16 per cent in February, after a notable uptick in January, according to a recent report by S&P Global Ratings.  Bu arrears are a lagging indicator, S&P's analysts said, meaning these improvements partly reflect stronger jobs growth nationwide, including in resource-oriented states, where arrears declined year on year in February to 1.53 per cent from 1.65 per cent in Queensland and to 2.27 per cent from 2.32 per cent in Western Australia. Where mortgage bears may find some support for their gloomier view is in the category of "loans most in arrears", as the stats