than income growth, as was seen through much of the 1990s and 2000s, because that earlier period was one of adjustment to the structural decrease in nominal interest rates and liberalisation of the banking system." Importantly, mortgage arrears appear to have peaked and have retracted slightly from their 2011 high which was just above 0.6% to move below 0.6%.  The rate of mortgage arrears is low by international standards but high based on the historical levels recorded in domestically. The rate of mortgage arrears is highest in key areas of South East Queensland, with the RBA highlighting the Gold Coast, Sunshine Coast and Ipswich as regions where arrears rates have deteriorated.  It is important to note that although mortgage arrears are comparatively high across these regions, the rate remains below 1.5% of all securitised mortgages. The RBA also highlights that some areas of Melbourne may start to see higher rates of arrears over the short term. "Although arrears rates on housing loans in Victoria are currently quite low, there is some chance they could rise, due to a potential oversupply of property in some segments, particularly inner-city Melbourne apartments and houses at the south-eastern fringe." From a financial stability perspective, the Reserve Bank is of the opinion that the residential mortgage portfolios of the larger banks are geographically diversified enough that there isn't likely to be any level of distress on the financial system related to mortgage defaults or distress. In summary, the latest Financial Stability Review provides a positive