Prime fast-track deals get green light from Fitch
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Fast-track mortgages do not pose more of a risk than income-verified loans, research from Fitch Ratings suggests.
The ratings agency analysed the factors causing arrears on more than 700,000 prime mortgages as part of its Default Drivers Among UK Residential Mortgage Loans report.
It found that many of the reasons for borrowers defaulting on prime mortgages are also relevant to sub-prime borrowers including the original LTV, whether the deal is interest- only and whether the customer is self-employed.
But Fitch says this is not the case when it comes to income verification.
It says that “fast-track mortgages in the prime sector do not appear generically more risky than income-verified loans”.
But self-cert sub-prime loans often carry greater risk than loans with certified income.
The report states: “It looks doubtful that fast-track processing in UK prime lending is generically comparable to self-cert in the non-conforming sector.”
The Financial Services Authority has proposed that income verification will be required on all mortgages in future under recommendations in its Mortgage Market Review.
