Mining town home loans defaults on the rise 29 May 2015 3:36PM Bernard Kellerman Factors such as falling prices for iron ore are having an effect on the arrears levels of the loans underlying residential mortgage-backed securities transactions in mining areas nationwide.In a formal acknowledgement of widespread anecdotal opinion, a recent report by Standard & Poor's Ratings Services has confirmed that housing loan arrears are rising in mining areas across Australia.In the report, "RMBS Performance Watch: Australia," S&P also consider RMBS portfolios' exposure to interest-only loans and arrears trends across the states and territories.Lower interest rates have affected loan product types in different ways. Arrears levels for housing loans underlying prime residential mortgage-backed securities increased marginally during the first quarter of 2015. Arrears rose eight per cent for low-documentation loans and 13 per cent for nonconforming loans in the first quarter of 2015, coming off declining bases, with softer employment conditions and economic growth prospects apparently offsetting the effects of lower interest rates.