COVID’s impact on debt serviceability is yet to surface with mortgage arrears declining year on year across the prime Australian RMBS sector. This reflects the resilience of household balance sheets bolstered by fiscal stimulus measures, access to superannuation payments and low interest rates. The buildup of repayment buffers for many borrowers during the pandemic will also provide a level of resilience to weather the unchartered challenges of lockdowns without JobKeeper. While a small proportion of borrowers will transition from mortgage deferral arrangements to formal arrears hardship in the second quarter, this is unlikely to put any significant pressure on arrears while jobs growth momentum is strong and interest rates low. Looking ahead, the impressive economic recovery and historically low interest rate environment bode well for the continued strong performance of the Australian RMBS sector. View the full report here >