Standard & Poor's last week released its latest mortgage arrears data for the month of October 2008.  S&P noted that arrears on the mortgages underlying prime Australian RMBS had risen to 1.58 per cent of the value of the pool, the highest level since monitoring commenced in January 1996. Similarly, arrears on the mortgages underlying sub-prime Australian RMBS had risen to 16.11 per cent, the highest level in almost eight years.However, looking at simple percentages can be misleading and in this case S&P appears to be ringing the alarm bells too late. But first some points of clarification: it is only arrears on mortgages that have been sold into RMBS transactions that are being considered here and not the Australian mortgage market as a whole. And then it is only those RMBS transactions that S&P has rated, albeit it has rated the majority of Australian RMBS issues.That said, prime RMBS outstandings, as rated by S&P, have been declining since reaching a peak of $168.7 billion at the end of June 2007, while sub-prime RMBS outstandings peaked at $7.5 billion, at the end of March 2007. Since then on-going amortisation, minimal issuance and, presumably, payouts forced through some mortgagee auctions, have seen prime RMBS outstandings fall to $126.3 billion and sub-prime outstandings fall to $4.6 billion.Arrears do not accrue to mortgages that have been repaid and are less likely to accrue to mortgages with reasonable amortisation.  Typically, arrears are seen on relatively new mortgages and it is for this reason that looking at arrears as a percentage of a declining pool of mortgages is misleading. It is more instructive to look at arrears in absolute terms.According to S&P's figures, arrears on prime RMBS peaked at just over $2.0 billion at the end of March 2008 and by the end of October were little changed at just under $2.0 billion. Arrears on sub-prime RMBS peaked at just over $1.0 billion at the end of May 2007 and have since dropped by more than 26 per cent.