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Prime securitised arrears double

Three-month arrears within prime UK residential mortgage-backed securities doubled over the last 12 months and are set to continue rising, according to figures from Moody’s.

The rating agency found that, within UK prime RMBS, loans in arrears of 90 days or more accounted for 1.8 per cent of all loans, up from 0.9 per cent in the second quarter of 2008.

It says: “With the UK economy in recession and unemployment, personal insolvencies and house possessions all rising sharply, the performance of prime mortgages is likely to continue to deteriorate.”

Moody’s also found that despite the rise in arrears, repossessions within the securitised loans fell marginally, which it attributes to greater forbearance by lenders.

Three-month arrears in Granite, Northern Rock’s securitisation vehicle, almost quadrupled to 4.67 per cent of all loans in the second quarter of this year from 1.27 per cent in Q2 2008.


Old Mutual friend

The bond market remains a hot topic in investment circles and I have recently had two very interesting conversations with Stewart Cowley, head of fixed interest at Old Mutual and manager of the Old Mutual global strategic bond fund.


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