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RMBS arrears rise, further losses expected

Staff Reporter 2 minute read

Arrears on prime residential mortgages rose in January this year to 1.24 per cent from 1.09 per cent in December 2007, Standard & Poor’s revealed yesterday.

Vera Chaplin, Standard & Poor’s RMBS credit analyst, said the change was not uncommon due to the seasonal impact of the Christmas/New Year period.

“RMBS arrears have risen during the same period in the past three years by an average 14 basis points, and the rise will be compounded by the recent falls in RMBS issuance volumes this year,” she said.

Ms Chaplin added that the two official rate rises in February and March were also expected to have an impact on the level of arrears.

“We expect arrears to continue to rise throughout the first quarter of 2008,” she said.

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The proportion of arrears on sub-prime loans also rose in January to 13.38 per cent, from 12.29 per cent in December. Those with loans more than 90 days in arrears also climbed back above seven per cent of all securitised loans, to 7.09 per cent.

Ms Chaplin said the level of loans in arrears of more than 90 days was a leading indicator of potential further losses, and that Standard & Poor’s would closely monitor both prime and sub-prime RMBS arrear trends.

Published: 15-05-08

RMBS arrears rise, further losses expected
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