View more on these topics

Buy-to-let RMBS arrears rocket

UK buy-to-let delinquencies on mortgage backed securities increased significantly during Q1 2009, according to Moody’s Investors Service.

In its latest index report for the UK buy-to-let residential mortgage-backed securities sector, the credit rating agency found that three-month arrears were up to 3.55 per cent, from 2.42 per cent in December 2008.

However, Moody’s found that the arrears figures were severely hampered by Bradford & Bingley’s Aire Valley Master Trust, which if excluded from other RMBS arrears rates, would mean the overall rate fell to 1.71 per cent this quarter.

Moody’s warns that with the economy in recession and unemployment rising, tenant demand and tenant’s ability to make timely payments will be tested over the coming quarters.

Moody’s economist Nitesh Shah says: “Whilst the UK buy-to-let sector has historically maintained a strong performance, this is the first time the sector has experienced a recession with falling house prices and rising unemployment.

“However, although the level of arrears is rising, it remains within expected levels. Given that buy-to-let properties are not primary residences of the owners there may be a rise in prepayments as buy-to-let investors decide to cash in their investment and lock into the capital gain. However, the total redemption trend does not yet show any signs of buy-to-let borrowers exiting the market.”


Recommended

Light relief

Last week, I considered proposals for a 50 per cent income tax rate, the restriction of higher-rate tax relief on pension contributions for those with a taxable income of over £150,000 and the removal of personal allowances for those with an income exceeding £100,000.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com