Subprime Delinquencies Rising Down Under Too.

SYDNEY -- Securitized loan performance show that delinquencies in the Australian nonconforming housing sector have exceeded 6%, according to Moody's Investors Service.

During the second quarter, average nonconforming RMBS delinquencies greater than 90 days past due jumped to 6.5%, compared with 5.97% and 4.63% for the same period in 2006 and 2005, respectively.

"Australia's nonconforming RMBS market experienced a record year of issuance in 2006, with securitization volumes reaching A$5.5 billion ($4.52 billion), compared with A$4.2 billion ($3.45 billion) in 2005.

"The [Australian] nonconforming sector continues to evolve with its product offering becoming more and more diverse," said Ilya Serov, a Moody's analyst and author of a second-quarter review on the topic, in a company press release.

"Delinquency rates have trended upwards for the past 18 months as a result of rising interest rates, riskier trends in mortgage origination and high levels of household indebtedness," the analyst said.

"The impact of the August 2007 interest rate rise has not yet become reflected in borrower behavior," the analyst also said. "There is a natural lag between rate rises and changes in borrower behavior and, as such, we expect the negative performance trend to continue."

However, "balancing this trend is Australia's record low unemployment rate, which ensures that while some borrowers are coming under increased pressure, the absolute ...