Fitch: Less Low Docs Assist Arrears Reaching Floor

(The following statement was released by the rating agency)Link to Fitch Ratings' Report: Asia-Pacific Structured Finance Chart of the Month - January 2016https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876434SYDNEY, January 28 (Fitch) Fitch Ratings says in a new report released today, that over the last decade a significant portion of arrears was due to low-doc loans. Arrears have been trending down due to the declining portion of low-doc loans in the market and improved economic and housing market conditions. In January 2009, low-doc loans accounted for 14% of the Dinkum index and arrears were at a high of 1.84%. As of September 2015, full-doc loans accounted for 98% of the Dinkum, and arrears reached a decade low of 0.91%. Regulation means lenders are taking more steps to ensure borrowers have the capacity to service the loan, primarily through income verification. As the origination of low-doc loans is limited and the existing loans are amortising, the Dinkum Index could approach a floor of approximately 0.8%. In the current positive serviceability environment, mortgage delinquencies are largely due to factors outside of the Australian economy such as divorce, illness and extraordinary expenses. The only way from this low base is up. However, for arrears to deteriorate above the previous peak witnessed in January 2009, the economy and the local housing market would need to be worse than what they have been during the last decade due to the improved asset quality. The full report, which is part of Fitch's "Asia-Pacific Structured Finance Chart of the Month" series that highlights topical issues in the region, can be found at www.fitchratings.com or by clicking the link above.Contacts:Katie BrookesAnalyst+612 8256 0364Fitch Australia Pty Ltd. Level 15, 77 King Street, Sydney, NSW 2000James ZanesiDirectorStructured Finance+612 8256 0306Media 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.