Australian prime and nonconforming home-loan arrears rose in January 2023. The Standard&Poor's Performance Index (SPIN) for Australian prime mortgages excluding noncapital market issuance rose to 0.90% in January from 0.76% in December. Nonconforming arrears also continued to rise, reaching 3.91% compared with 3.20% a month earlier. January and February mark the peak of the arrears cycle because spending commitments are higher. The month-on-month increase in arrears as of January is one of the highest in the RMBS data set (in percentage terms) over the past 10 years. Arrears increases are indiscriminatory. Among originators, nonbanks continue to record the largest increases in arrears, but nonbank prime arrears are still below the prime SPIN, at 0.80% as of January 2023. This is due to the sector's lower seasoning profile and its higher exposure to borrowers with shorter repayment histories.
