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REPEAT: RBA Avg Mortgage Rate Up Only +10bps Since Last Yr

Repeats Story Initially Transmitted at 23:35 GMT Aug 13/19:35 EST Aug 13
By Sophia Rodrigues
     SYDNEY (MNI) - Despite a noticeable increase in variable interest rates for
investor loans and interest-only loans over recent months, the average interest
rate paid on all outstanding loans has increased by only about 10 basis points
since late last year, Reserve Bank of Australia Assistant Governor Christopher
Kent said Monday.
     Kent made the comments in a speech at a Moody's Analytics Forum here where
he spoke about the insights the RBA has gathered from data on asset-backed
securities that it uses as eligible collateral in domestic market operations.
The vast bulk of the assets underlying these securities are residential
mortgages, with other assets, such as commercial property mortgages and car
loans, constituting only about 2% of the pools.
     Kent noted that banks have responded to the regulatory actions by
Australian Prudential Regulation Authority (APRA) and the Australian Securities
and Investments Commission (ASIC) by increasing interest rates on investor and
interest-only mortgages. But interest rates on principal-and-interest loans to
owner-occupiers are little changed and remain at very low levels. 
     "Pulling this all together, the average interest rate paid on all
outstanding loans has increased since late last year, but only by about 10 basis
points," he said.
     Another observation made by RBA is that despite many borrowers on
interest-only loan building up sizeable buffers in their offset mortgage
balances, their current loan-to-valuation ratios are larger than in the case of
principal-and-interest loans. 
     Kent said that non-performing housing loans have increased a little over
recent years but at around 0.75% as a share of all housing loans, they remain
low and below the levels reached following the global financial crisis.
     But a drill-down into the data reveals that while the arrears rates "have
increased slightly over recent years, they have increased more noticeably in
regions exposed to the downturn in commodity prices and mining investment," Kent
said.
--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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