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Non-conforming arrears rise

Standard & Poor’s has seen an increase in non-conforming borrowers struggling to meet their mortgage payments in the first quarter of this year.

The firm’s report on data for loans supporting mortgage-backed securities rated by the agency shows that delinquencies, defined as arrears of more than 30 days, climbed to 21.7 per cent in the first three months, up from 19.4 per cent in the final quarter of 2007.

Borrowers with 90-plus-day delinquencies increased to 10.6 per cent from 8.8 per cent in the previous quarter.

S&P says: “A reduction in refinancing opportunities for borrowers, the large proportion of loans (approximately 25 per cent) due to revert from fixed or discount rates in the first half of 2008 into an environment of reduced credit availability, and the slowing economy, are likely to keep delinquency figures high for the foreseeable future.”

It data also shows delinquencies have risen “sharply” for UK prime borrowers from 2.11 per cent to 2.41 per cent, while 90-plus-day delinquencies rose to 0.79 per cent from 0.62 per cent.

The firm said that 2007 witnessed a drop and levelling off for both of these statistics but this quarter points to a return to similar levels as those seen in 2006.


Direct access

Dual pricing has landed borrowers not only with the research but all the administration involved in arranging their mortgage if they choose to apply for a direct deal. Brokers across the country will be asking themselves whether to offer a service to advise on and administer direct applications for an extra fee. In the current climate, it would make business sense to adapt to whatever service we can charge for and providing a choice would certainly be treating customers more fairly than we are expected to.

Ussher will be Aifa keynote speaker

Treasury Economic Secretary Kitty Ussher will be the keynote speaker at the Aifa AGM and annual dinner on Wednesday, November 19.

Value remains within European equities

By Rob Burnett, Neptune European Opportunities Fund

In recent months, investors have become more pessimistic about both the European and the US economic outlook and yet stockmarkets have pushed on to new highs. Some would argue that this is a worrying divergence. We would take the opposite view. This appears to be classic bull market behaviour. A wall of worry has been rebuilt, and stockmarket resilience should be taken as a sign of strength. The market is discounting an improving economic outlook ahead, particularly in the south of Europe.


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