Fitch: Australian Mortgage Arrears at Decade Lows in 3Q15

(The following statement was released by the rating agency)Link to Fitch Ratings' Report: Mortgage Market Index- The Dinkum RMBS Indexhttps://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=875638SYDNEY, December 22 (Fitch) In its report released today, Fitch Ratings says Australian mortgage arrears have reached a decade low after declining 18bp to 0.91% during 3Q15. Two-thirds of the improvement was due to the inclusion of AUD8.7bn worth of new issuance from 1Q15. Fitch's Dinkum Index would still have reached a decade low, even after removing the impact of these transactions. House prices in Australia's capital cities have strengthened 11.02% yoy to September 2015 and have had a two-fold impact on mortgage performance. Strong house prices have enabled borrowers to sell their properties to cure arrears, reducing the 90+ days to 0.41% - the lowest level since February 2006. Additionally, prices served to reduce principal losses on sale, maintaining the annualised loss rate unchanged qoq at a low 0.02%. Self- employed borrowers continue to experience financial difficulties; Low-Doc 30+ arrears increased to 6.97% in 3Q15 from 5.72% in 2Q15. This is despite serviceability factors being as a good as it gets with stable unemployment over the quarter, a low stable cash rate and standard variable rate, and low CPI. Fitch believes material improvements in 2016 are unlikely and in the current borrower environment, arrears can be attributed to factors outside the economy such as divorce, extraordinary expenses and illness. Fitch's Dinkum RMBS Index tracks the arrears and performance of the mortgages underlying Australian residential mortgage-backed securities (RMBS).Current and historic Dinkum Index data is available in excel form for reference through the full report entitled, 'The Dinkum RMBS Index - 3Q15', available at www.fitchratings.com, or by clicking the link above.Contacts:Katie BrookesAnalyst+612 8256 0364James ZanesiDirector+612 8256 0306Fitch Australia Pty Ltd. Level 15, 77 King Street, Sydney, NSW 2000, Australia.Natasha VojvodicSenior DirectorHead of Australian and New Zealand Structured Finance+612 8256 0350Media Relations: Leni Vu, Sydney, Tel: +61 2 8256 0304, Email: leni.vu@fitchratings.com.Additional information is available at www.fitchratings.com.ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S FREE WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Australia Pty Ltd holds an Australian financial services licence (AFS licence no. 337123) which authorises it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.