"Nonconforming Arrears Hit Near-Record Low," chirped the headline in a Standard & Poor's monthly release yesterday.It's a well-timed pick-me-up for the lending sector, which has been the target for cynical promotion of a select range of risks. The best risk, that hard working citizens will back themselves to keep above water, is easily underplayed. S&P shows us data that they are. There are inevitably non-payments and losses on lending, a risk more likely to be found in nonconforming lending. Arrears rates that reach into double digits are on the record. Not this time. Not yet, anyway. Nonconforming loan arrears fell in October 2016 to 3.99 per cent, their second-lowest level, down from 4.36 per cent in September, S&P said. These are, nevertheless, four times the arrears rates of prime lending pools, the core business of banks. "The decline is partly due to an increase in loan balances outstanding, but the overall improvement during the past four years reflects the better collateral quality of nonconforming portfolios with a greater proportion of full-documentation loans and near-prime loans in current outstanding nonconforming transactions." So the business mix of Pepper Homeloans, Bluestone, Latrobe, RedZed and others is crowding into the 'traditional' banks' core terrain. Nonconforming lenders are a more mature, much larger and potent cohort than they were since Latrobe Financial ploughed the field decades ago, dragging modern followers along, riding the securitisation corner of the capital market. Above all, these non-banks have had the wit to lend, on the whole, to customers with a work ethic. Loan arrears across the sector play up the thrust of non-banks into banking heartland. Nonbank financial institutions continued to have the lowest arrears, at 0.69 per cent, S&P said. Mutual banks followed at 0.98 per cent, and nonbank originators, at 1.07 per cent. This group white-label, often big bank money. Major bank arrears increased to 1.14 per cent in October from 1.11 per cent in September.  "Nonbank originators have recorded the greatest improvement in arrears during the past five years," S&P said, "falling 60 per cent from a five-year peak of 2.67 per cent to 1.07 per cent in October, despite falling loan balances." "Loans more than 90 days overdue at major banks accounted for more than 48 per cent of their total arrears in October, up from around 40 per cent a year earlier." Large banks faced "the largest movement in the advanced arrears category."