Deterioration in the housing market last year may have been a contributor to rising arrears, ratings agency Fitch said yesterday.Fitch reported a small increase in delinquency rates in its latest Australian Residential Mortgage Performance Report - the Dinkum Index.Loans that are past due by 30 days or more in mortgage-backed securities trusts rose from 1.52 per cent in the September quarter to 1.57 per cent in the December quarter.Fitch said: "Median house prices fell nationally by 4.8 per cent in 2011 [based on Australian Bureau of Statistics figures]."Stagnation in the housing market limits the refinance and sale options for borrowers in financial distress."Stressed borrowers may choose to sell their houses before getting into arrears, but if the value of the house has fallen below the amount of the mortgage that option becomes less appealing. Also, lenders will be less inclined to offer refinance if the property is losing value.Fitch said the usual drivers of delinquency in Australia were rising unemployment, life events (sickness and divorce) and serviceability (interest rates). It said: "To the extent measurable, none of these parameters changed significantly in 2011. Everything was stable but house prices."Fitch said low-doc loans were experiencing "considerable deterioration". Delinquencies increased from 5.2 per cent in the September quarter to 5.5 per cent in December.Non-conforming low-doc delinquencies rose from 11.6 per cent to 13.1 per cent over the same period.