Arrears down
Arrears fell sharply to 1.36 per cent in a seasonal improvement to September 2019 as tax cuts and interest rate cuts flowed through, according to S&P Global.
There are some residual longer terms arrears, especially in Western Australia as more lenient foreclosure policies have been applied, but 30 day arrears are now back down close towards their lows.
Since April 2019 the improvement has been slightly more marked for investment loans (down 17 basis points) than for owner-occupiers (with a decline of 14 basis points) as the mechanical interest-only reset has been lifted.
The size and timing of the improvement shows that interest rate and tax cuts are working, S&P has noted, housing market risks have declined, and arrears are expected to remain low as employment stabilises.
The decline was led by the AAA-rated states of New South Wales (1.21 per cent) and Victoria (1.26 per cent), with a 6 basis points decline in Queensland to 1.79 per cent.
S&P did politely point out that the economy is in the toilet, albeit in slightly different words.
You can pick out your own favourites from the Prime SPIN arrears by state map below.
Non-conforming arrears rates are close to record lows, although this is largely a function of recent issuance.
Notably, and reflecting what's been reported on the ASX, major banks have more elevated arrears rates than the regionals, possibly reflecting more ebullient 2014 and 2015 vintage lending into the resources jurisdictions.
Return of the first homebuyer
S&P Global reported that the return of the first homebuyer to 30 per cent of owner-occupier loans should see the FHLDS from 1 January 2020 being oversubscribed.
S&P Global reported that the return of the first homebuyer to 30 per cent of owner-occupier loans should see the FHLDS from 1 January 2020 being oversubscribed.
The scheme is initially capped at 10,000 places.
S&P cited Labor's election defeat as a key driver of the housing market rebound, alongside interest rate cuts, and favourable changes to the debt serviceability floor.
The ratings agency also sees a new dwelling shortfall looming in the foreseeable future as supply has slowed more sharply than previously expected.
