18 / 11 / 2019 mortgage arrears | speeches | rba speech mortgage arrears guy debelle [ * ] deputy governor remarks at finsia signature event : the regulators sydney – 15 november 2019 today i am going to talk about mortgage arrears. arrears are an important indicator of the financial health of households and so have implications for our assessment of current economic conditions and the economic outlook. they clearly are also an important indicator of the financial health of those writing mortgages, be it banks or non - banks. i will draw on material published in the october financial stability review and a speech given by my colleague jonathan kearns. the mortgage arrears rate, at 1 per cent, is low by both historical and international standards. arrears in the us peaked at around 10 per cent in the financial crisis. non - performing loans currently pose little risk to the health of financial institutions. this is not surprising in an environment where the unemployment rate is low and interest rates have been declining. nonetheless, the arrears rates have been increasing steadily over recent years to the highest it has been for around a decade, and so warrants some scrutiny. while the national arrears rate is low, in some parts of the country households have found it harder to keep up with their mortgage repayments. the largest increase in housing loan arrears has occurred in western australia and the northern territory, where economic conditions have been weak and the unemployment rate has risen ( graph 1 ). developments in those two regions show how arrears can evolve in adverse economic circumstances. in western australia the unemployment rate has risen from 4 to 6 per cent, housing prices have fallen by 20 per cent, incomes have declined and strong inward migration turned to outward migration such that population growth declined from over 3 per cent to under 1 per cent. these conditions have seen the mortgage arrears rate rise from 0. 7 per cent to 1. 8 per cent. this is a significant rise and associated with financial stress for a number of households. but it is still not that high given the economic circumstances. https : / / www. rba. gov. au / speeches / 2019 / sp - dg - 2019 - 11 - 15. html 1 / 6 18 / 11 / 2019 mortgage arrears | speeches | rba graph 1 borrowers can fall behind on their mortgages for a number of reasons. the vast majority of people who fall behind on their mortgages do so because of

, there is room for private credit to provide non - dilutive financing that can complement equity and debt financing, by providing flexibility through customised deal structures. 3. ultimately, we need a variety of funding instruments – including seed funds, short - term loans, venture debt and equity financing – to build and sustain the wide range of early - and late - stage companies in the region. singapore – a hub for enterprises and financing just as how changi airport plays a key role as a hub for regional and global air connectivity, singapore plays a key role in intermediating capital flows and investment opportunities. we have a strong ecosystem here in singapore, which can help the private markets community tap on and unlock asia's potential. 5 / 7 bis - central bankers'speeches a. first, we will continue to maintain a conducive environment for businesses to set up in singapore. i. over the years, we have built up a reputation for our regulatory environment, stable and efficient infrastructure, access to financial intermediation and services, and strong rule of law. ii. we hope this will not only attract more companies in our region to set up in singapore, but also encourage private equity managers to promote singapore as a springboard into the region for their portfolio companies. 1. one such example is straive, which the partners group had a majority stake in from 2017 to 2021. 2. under the ownership of partners group, straive transformed from a provider of content services into a technology - driven content, data and edtech solutions company. 3. as part of its transformation, straive moved its headquarters to singapore, and now serves over 300 customers in 30 countries worldwide. b. second, we will continue to offer various fund structures and investment platforms to reduce costs and improve efficiency for both investors and fund managers. i. for example, in 2020, we launched the variable capital company ( vcc ) structure, a flexible corporate structure for investment funds. ii. the vcc has given fund managers greater flexibility, as it allows different investment strategies – such as real estate, private equity, and public and private credit – to be employed in different sub - funds, but overseen by a single board of directors. iii. to date, we have more than 1, 100 vccs set up by traditional and private market managers for a variety of use cases and fund strategies. iv. the availability of vccs also facilitates the co - location of fund vehicles with their singapore - based