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Kooky
Builder of Shaka, the payment router that pays every agent their commission on closing date.
About Kooky and Shaka →Queensland borrowers are less likely to be behind on a home loan than those in any other large state, according to figures from S&P Global Ratings reported by the trade publication MPA on Friday 28 August. The ratings agency's measure of arrears on prime home loans stood at 0.55 per cent in Queensland in June 2026. The national figure was 0.85 per cent, and Victoria's was 1.0 per cent.
The same report shows arrears edging higher across the country and borrowers repaying their loans ahead of schedule at a faster pace, a sign of refinancing and of sales. S&P's analysts name unemployment, not interest rates, as the thing to watch from here.
S&P Global Ratings figures for securitised home loans, June 2026, as reported by MPA on 28 August 2026.
What the agency measures
S&P does not see every home loan in the country. It tracks the loans that lenders have bundled into residential mortgage-backed securities, known as RMBS: pools of mortgages sold to investors, who receive the repayments. Because S&P rates those securities, it receives monthly data on every loan in the pools and publishes the share that is behind.
Two details set this measure apart from the figures banks publish. The first is the threshold. S&P counts a loan as in arrears once it is more than 30 days past due, about one missed monthly repayment. Banks usually quote loans 90 days or more behind. The 30-day measure is wider and earlier: it picks up households that have slipped once and may yet catch up.
The second is the split between prime and nonconforming loans. Prime loans are standard mortgages written to borrowers with documented income and a clean credit history, and they make up most of the market. Nonconforming loans go to borrowers who fall outside those standards, such as people with past credit problems or irregular income, usually through specialist lenders at higher rates. S&P put arrears on nonconforming loans at 3.42 per cent in June, four times the prime figure, which is what the higher risk and the higher price of those loans would lead anyone to expect.
Related readOne borrower in 50 is short each month, the RBA's stability review findsA 30-day arrears rate and a 90-day rate are not the same measure
S&P's 0.85 per cent counts prime loans more than 30 days behind. A bank's figure of 0.73 per cent, such as Commonwealth Bank reported on 12 August, counts loans 90 days or more behind. The two cannot be set side by side.
Queensland against the other states
MPA's report gives the prime arrears rate for the jurisdictions at the top of the table and for Queensland at the bottom of the large states.
| State or territory | Arrears rate | Against the national rate |
|---|---|---|
| Victoria | 1.00% | 0.15 points higher |
| Australian Capital Territory | 0.98% | 0.13 points higher |
| New South Wales | 0.91% | 0.06 points higher |
| Australia | 0.85% | - |
| Queensland | 0.55% | 0.30 points lower |
S&P Global Ratings, as reported by MPA on 28 August 2026. The report describes Queensland's rate as the lowest among the larger states; rates for other states are not given.
Put in plain numbers, about 55 in every 10,000 securitised prime loans in Queensland had missed a repayment by more than 30 days, against 100 in Victoria. The Queensland rate is a little over half the Victorian one.
S&P's report as carried by MPA does not explain the gap state by state, and the reasons below are context, not the agency's findings. Home values rose much faster in Queensland than in Victoria over the past five years. A borrower with rising equity who gets into difficulty has choices that a borrower with flat equity does not: refinance to a cheaper loan, release some equity, or sell and clear the debt. Each of those removes a loan from the arrears count before it has been behind for long. A state where prices have stood still for several years offers fewer of those exits, and loans stay in arrears longer.
Employment matters as much. Arrears follow job losses and cuts to hours more closely than they follow interest rates, because a household can usually trim spending to meet a higher repayment but cannot meet any repayment without income.
Why arrears are rising at all
The national direction is upward. MPA's headline describes arrears as edging higher as economic headwinds mount, and the wider evidence of the month agrees. Commonwealth Bank reported on 12 August that its home loans 90 days or more behind rose from 0.63 per cent in December to 0.73 per cent in June. The credit bureau Equifax, in figures reported by The Adviser on 4 August, recorded a 5.3 per cent rise in mortgage hardship cases in the June quarter.
Related readRefinancing a home loan: the steps, the costs and the lender's checksThe cause is not hard to find. The Reserve Bank raised the cash rate three times in 2026, to 4.35 per cent, and the minutes of its August meeting, published on 25 August, say scheduled mortgage payments as a share of household income had risen to near their 2024 peak and were expected to rise further. The same minutes note that many households hold sizeable buffers of money paid ahead on their loans.
Those two facts explain why arrears are rising slowly instead of quickly. Most borrowers have a cushion, and the minority who do not are the ones appearing in the figures.
Loans are being paid out faster
The second number in the report gets less attention and says something about how borrowers are responding. The prepayment rate measures how quickly the loans in a pool are being repaid ahead of schedule, expressed as an annual rate. A loan leaves a pool early when the borrower refinances with another lender, sells the home, or pays the debt down with lump sums.
S&P put the prepayment rate on prime loans at 21.88 per cent in the June quarter, up from 20.24 per cent in the March quarter. For nonconforming loans it was 30.67 per cent, up from 29.80 per cent. At the prime rate, a little over a fifth of the money in these pools would be repaid early over a year.
A rising prepayment rate while rates are rising usually means borrowers are moving. The Australian Bureau of Statistics counted 66,449 owner-occupier loans refinanced with a different lender in the June quarter, close to the March level, and the Reserve Bank's minutes describe competition among lenders for good-quality borrowers as strong. The higher rate on nonconforming loans has its own logic: a borrower who took a specialist loan while their credit record was repaired has every reason to move to a cheaper prime loan as soon as a mainstream lender will have them.
Related readJune minutes: mortgage payments are up, but lighter than last timeFor the arrears figures this matters because the borrowers who can refinance are the stronger ones. When they leave a pool, the loans that remain are, on average, those of households with fewer options, which pushes the measured arrears rate up even if no one's circumstances have changed.
What S&P is watching
The agency's comments, as quoted by MPA, point to jobs. Erin Kitson, a director of structured finance at S&P Global Ratings, said: "Unemployment remains the most significant leading indicator for household consumer finances, including residential mortgages." S&P's forecast is for the unemployment rate to average 4.3 per cent in 2026 and 4.5 per cent in 2027, a gradual rise, and it rates the outlook for Australian RMBS as stable.
Ms Kitson also drew the link to house prices, saying falling property values would narrow the window for voluntary debt management for some borrowers. Voluntary debt management is the set of exits described above: refinancing or selling by choice before a lender has to act. They depend on the home being worth comfortably more than the loan.
That is the point at which the Queensland figure deserves some caution. The state's low arrears rate was earned in a rising market. Cotality's index showed Brisbane home values down 0.6 per cent in July, the first clear monthly fall after a long run. One month does not undo five years of growth, and most owners hold far more equity than debt. But the borrowers who bought last, with the largest loans and the smallest deposits, have the least of that protection. The Australian Bureau of Statistics reported on 14 August that the average new owner-occupier loan in Queensland reached a record $751,000 in June.
For borrowers who are behind, or close to it
The figures describe a state in which more than 99 prime borrowers in 100 are up to date, and that is the fair summary. For the household in the other group, the practical point from the data is about timing. The options that keep Queensland's arrears low, a cheaper loan, an agreed change to repayments, a sale on the owner's terms, are all easier early than late.
Every lender is required to consider a request for a hardship arrangement, and Moneysmart, the federal government's consumer finance site, says a lender must respond within 21 days. Free financial counselling is available through the National Debt Helpline on 1800 007 007. What suits a household depends on its own circumstances, and this article is not advice.
The next readings
S&P publishes its arrears index through the year, and the September quarter figures will be the first to cover three full months after the Federal Budget and the first to show whether Queensland's rate moves as Brisbane prices soften.
Before then, the Australian Prudential Regulation Authority is due to release its June quarter statistics on banks' property lending in September, which cover all home loans held by banks, not only those in securities. The Reserve Bank's Financial Stability Review, due in early October, will give the central bank's own assessment of how many borrowers are short of income to meet their repayments.
Kooky, from Shaka
Kooky edits Queensland Estate and builds Shaka, the payment router he made for Queensland property professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.
