Moody's Investors Service says existing Australian residential mortgage-backed securities are well placed to withstand a rise in interest rates by as much as three percentage points, because monthly payments in underlying loans would on average remain below underwritten payments. Interest rates on home loans in Australia could "rise by three percentage points … [leaving] the average borrower [with] excess capacity to repay their loan," Moody's said yesterday."There is a significant buffer between current monthly payments and underwritten payments," it said."Most loans in mortgage-backed bonds were originated when interest rates were higher, so underwritten payments were therefore higher than current monthly payments."Virtually no borrower would approach any form of mortgage stress, on this view.Only five mortgage bonds "have more than three per cent in current balance exposures to loans where monthly payments would increase by $100.""These RMBS all have high levels of delinquent loans with 90+ day delinquencies more than double the market average. They are more vulnerable to interest rate rises because borrowers already pay rates higher than at origination."Challenger is the manager of the most vulnerable pools, many of them dating from Interstar days.