UK prime RMBS stable in August
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The performance of the UK prime residential mortgage-backed securities market continued its stable trend during August 2010, according to the latest indices published by Moody’s Investors Service.
In August 2010, the 90-days plus delinquency trend was stable at 1.9%, the repossessions trend unchanged at 0.07% and the cumulative losses trend remained stable at 0.14%.
The Moody’s annualised total redemption rate trend decreased to 12.40% during the month, which is down from 13.81% in August last year.
Moody’s reports that there were three new issuances in the UK Prime market since July 2010. Fosse Master Trust issued Series 2010-4 notes and Langton Securities Master Trust Series 2010-1, totalling £10.16bn, both originated by Santander UK plc.
Arran Residential Mortgages Funding 2010-1 Plc issued approximately £4.1bn of rated notes, originated by Royal Bank of Scotland plc and National Westminster Home Loans Limited.
As of August 2010, the total outstanding pool balance in the UK Prime RMBS market was £353.9bn, compared to £332.9bn a year ago, which constitutes a year-on-year increase of 6.3%.
From 1 October 2010 onwards, the interest rate used to calculate Support for Mortgage Interest will be paid at the Bank of England’s average mortgage rate, currently 3.63 %, whereas previously the interest rate used had been fixed at 6.08%.
Moody’s says this change will generate a significant drop in the amount of benefit received by existing claimants. SMI is a benefit paid by the UK Government directly to lenders on behalf of mortgage borrowers who receive income support.
However the impact on UK Prime RMBS performance is expected to be minimal considering the limited number of borrowers eligible for this scheme.
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