UK prime RMBS remain stable, says Moody's
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The performance of the UK prime residential mortgage-backed securities market continued its stable trend lines during January 2010, according to the latest indices published by Moody’s Investors Service.
Moody’s repossessions trend was 0.06% in January 2010 a decrease from 0.07% since September 2009 and a further decrease from the peak of 0.12% experienced in November 2008. The 90-days plus delinquency trend was also stable at 1.9% in January.
This trend has been stable at around 1.9% since peaking at 2.1% in August 2009. Moody’s cumulative losses trend also remained stable at 0.11%, a level that it has maintained since August.
Moody’s annualised total redemption rate trend decreased to 11.3% in January from 13.7% in December.
The average house price in the UK fell in February 2010 by 1.5% month-on-month according to the Halifax house price index, following seven consecutive months of increases. Similarly the Nationwide house price index decreased by 1% in February after rising for the previous nine months. On a year-ago basis, the Halifax house price index was 4.5% and Nationwide index was 9.2% higher than in February 2009.
Moody’s Economy.com expects the downturn in UK property prices to continue in coming months and extend into 2011 against tight credit conditions and high unemployment.
Moody’s Economy.com also expects the UK economy to grow by 1.1% in 2010, noting, however, that the risk of a double-dip recession remains prominent as fiscal support is withdrawn.
In view of the slow recovery, the monetary policy is expected to remain accommodative for most of 2010 and thus households will continue to benefit form a low interest rateenvironment which in turn will contain the number of home repossessions.
As of January 2010, the total outstanding pool balance in the UK Prime RMBS market was GBP357.4 billion, which constitutes a year-on-year increase of 12.3%.
