March 21 (Reuters) - Moody’s on Thursday said the Australian residential mortgage-backed securities (RMBS) delinquency rates would continue to increase moderately over the coming quarters mainly due to declining house prices.
The 30+ day delinquency rate for prime Australian RMBS increased slightly to 1.58 percent in December 2018 from 1.49 percent in September.
The ratings agency also cited high debt levels and the conversion of interest-only mortgages to principal and interest mortgages for the expected moderate rise in delinquency rates, adding that defaults and losses would remain low, given stable gross domestic product (GDP) growth and low unemployment.
Moody’s projected real GDP growth of around 2.5 percent this year and next, and expected the unemployment rate to remain relatively stable at 5.5 percent by the end of 2019 and 2020.
Australia’s once high-flying property market has nosedived over the past year or so. The downturn has become a significant uncertainty for the nation’s central bank which cut its growth and inflation forecasts last month and moved away from a previous tightening bias. (Reporting by Aby Jose Koilparambil in Bengaluru Editing by Shri Navaratnam)