S&P released its latest data to the end of March 2010 for prime and subprime RMBS arrears. S&P observed that prime RMBS arrears rose to 1.44 per cent of outstandings, an increase of 0.19 percentage points over the quarter. However, the monthly data show that arrears for the month of March are down from where they were at the end of February, at 1.48 per cent. While the decline on a monthly basis is mitigated by a slight increase on mortgage outstandings to A$94.3 billion from A$94.0 billion, it provides evidence that the seasonal increase in arrears is passing through, as usual.   However, the same cannot be said about subprime arrears. Subprime arrears increased by 0.67 percentage points to 12.24 per cent over the quarter and are up by 0.50 percentage points from the end of February. At the same time outstandings have fallen steadily to A$2.88 billion from A$3.07 billion at the end of December. This suggests the rise in subprime arrears over the first quarter is due to more than just seasonal factors, adverse selection being one of them.