The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Wednesday, March 28, 2012

RBA: Aussie home loan arrears *fell* over second half of 2011 (did not rise--chart)

In contrast to the sometimes hysterical media coverage yesterday of a minor Fitch report claiming that Australian home loan delinquencies had risen over the second half of 2011, the RBA’s Financial Stability Review released today corrects this error and finds quite the opposite.

The difference between the two reports is explained by what they cover. The RBA’s analysis includes all home loans on bank balance-sheets plus “securitised” loans: over $1.2 trillion worth in total. In contrast, Fitch’s research only covers securitised loans, which amount to less than $100 billion. To be clear, these loans are included in the RBA’s sample, but represent less than 10% of the total.

The RBA concludes that total home loan arrears in Australia declined—not increased (as Fitch argued)—in the second-half of 2011. Specifically, the RBA comments:

“The arrears rate for housing loans (on banks’ domestic books plus securitised housing loans) declined to 0.6 per cent in December, from 0.7 per cent in mid 2011. The non-performing rate for credit cards has also improved, falling from 1.4 per cent in June 2011 to 1.2 per cent in December, while the rate for other personal loans has been broadly unchanged since mid 2011 at around 2 per cent.”