Mortgage arrears improve over June quarter

Moody's Investor Service last week published arrears data for prime and non-conforming mortgage-backed securities to the end of June 2009. Arrears in excess of 30 days on prime RMBS fell to 1.32 per cent at the end of June from 1.45 per cent at the end of the first quarter.

Falling mortgage rates have more than offset any adverse impact from increasing unemployment. Cash handouts to most households from the Australian government will also have helped.

Non-conforming arrears in excess of 90 days also declined, falling to around nine per cent from 10.39 per cent at the end of the first quarter. However, Moody's says this rate is unlikely to fall to historically low levels any time soon, as non-conforming borrowers continue to face difficulties in an uncertain economic environment.   

S&P data to the end of May shows arrears on prime RMBS greater than 30 days running at 1.50 per cent, down from 1.66 per cent at the end of March and arrears greater than 90 days on non-conforming RMBS running at just over 15 per cent, down from 16.5 per cent at the end of March.