View more on these topics

Arrears fall in RMBS market

The performance of the UK non-conforming residential mortgage-backed securities market has been stable in the year to March 2011, according to Moody’s Investor Service.

Moody’s found the proportion of loans in arrears of 90 days or more across 75 outstanding non-conforming RMBS transactions decreased from 19.3 per cent to 17.3 per cent in the year to March, which is below the peak of 21 per cent in June 2009.

On an annual basis, redemption rates dropped to a historical low of 5.4 per cent from 7.9 per cent, indicating that the portfolios will remain outstanding for a longer period of time, which Moody’s says will “exacerbate future performance uncertainty”.

Poor economic growth, high but stable unemployment and a potential 0.25 per cent increase in bank rate before the end of 2011 and 1 per cent in 2012 has led Moody’s to believe the outlook for UK non-conforming RMBS is negative.

John Charcol senior technical manager Ray Boulger says: “Due to the prospect of a rate rise receding, I would say the outlook for sub-prime borrowers today is rather better than it was a few months ago. By definition, that class of borrower is more at risk of arrears but I do not think that risk has increased.”

Recommended

1

Networks back MPs’ call for delay to RDR

Big distribution firms have thrown their support behind the Treasury select committee’s call for a 12-month RDR delay suggesting it would ensure large numbers of consumers do not lose access to decent advice. Sesame believes the delay, called for in a TSC report published over the weekend, will ensure 500,000 clients continue to receive advice […]

Abbey launches two new one-week deals

Abbey for Intermediaries has launched two new key account exclusives which are available for seven days only. They include a two-year tracker at base rate plus 1.79 per cent up to 75 per cent loan-to-value. It is available for a £995 fee. It is also launching a five-year fixed rate mortgage at 4.99 per cent […]

Man looks to buy residual exposure to Lehman

Man Group is trying to acquire all the residual exposure to the Lehman estates from GLG managed funds. In May 2010, Man Group acquired GLG Partners in a deal worth £1.1bn. The group is aiming to acquire the estates at current net asset value, taking the total consideration for the transactions to £220m, which will […]

DB transfers – one more factor to consider

Jim Grant – Senior Product Insight & Technical Support Analyst We look at how higher DB transfer values could cause a lifetime allowance issue and how that affects the advice process. Advisers are receiving an increasing number of requests from clients looking to transfer their pension from final salary schemes to personal pensions. This is a […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. With high inflation, wage freezes and above average unemployment they don’t need higher interest rates to be in trouble.

Leave a comment