...New Transactions Mask Arrears Rise: Prime 30+ day arrears fell 5bp qoq to 1.13% in 2Q26, while 90+ day arrears rose 1bp to 0.60%. Excluding new transactions, prime 30+ and 90+ day arrears would have increased to 1.22% and 0.66%, respectively. Non-conforming 30+ day arrears rose 79bp to 4.72%, while 90+ day arrears fell 3bp to 1.79%; excluding new transactions, these would have risen to 4.81% and 1.91%, respectively. Rate Hikes to Hit Non-Conforming Arrears: The Reserve Bank of Australia (RBA) increased the cash rate by 25bp in September 2026, the fourth rise this year. Fitch Ratings updated its outlook for non-conforming RMBS performance to `deteriorating', reflecting these borrowers' sensitivity to interest rates. Prime Arrears to Remain Steady: We expect unemployment, a key driver of mortgage performance, to remain stable at 4.6% and 4.7% in 2027 and 2028, respectively. This should limit any material deterioration in 90+ day arrears. While higher-for-longer interest rates may continue...
