View more on these topics

Sub prime securities continue to deteriorate

Non-conforming residential mortgage backed securities are continuing to deteriorate as the economy slows.

According to a Moody’s report, the weighted-average delinquency trend for the UK Non-Conforming RMBS sector continued to rise during Q3 2008 increasing to 11.2 per cent of the current outstanding balance, up from 10.0 per cent in Q2 2008.

The weighted-average repossessions trend jumped to 2.7 per cent, and the
cumulative loss trend over original pool balance reached 0.48 per cent in Q3
2008.

Moody’s economist and co-author of the report entitled ‘UK
Non-Conforming RMBS Q3 2008 Indices’ Nitesh Shah says: “Transaction activity in the housing market is low and consumer confidence is depressed — pointing towards continued falls in house prices.”

“Falling property prices put additional pressure on the mortgage servicers, and create an incentive for them to repossess and sell the properties early. There is a risk of a second round impact on the house prices, if ceteris paribus the supply of property on the market increases when the repossessed properties are offered for sale.

Moody’s also found that, despite current low re-mortgage activity and tighter credit conditions there has not been any significant drop in total redemption rates so far. With a TRR of 29.8 per cent, the 2006 vintage is performing in line with historical experience.

“However, it is unlikely that the 2007 vintage will show repayment rates comparable to those recorded for older vintages,” says Moody’s senior associate Georgij Ludmirskij.

Recommended

Insurance should stay as focus for CII

The decision to change the CII name to the Institute of Financial Services is a despicable act to relegate the insurance industry to an afterthought.

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