RMBS arrears improve but Moody's warns rate rise may hit transactions
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Arrears in the buy-to-let residential mortgage-backed securities market improved in February, with 90-plus-day arrears down to 1.96%.
In the three months to February, the 90-plus-day delinquency trend was down from 2.14% in November 2010.
During this period, outstanding repossessions and cumulative losses also remained stable at 0.14% and 0.38% respectively. But Moody’s warns that it expects interest rates to start climbing in June, which could hamper the performance of RMBS transactions.
In its report Moody’s says: “The increase in interest rates will hurt buy-to-let borrowers’ performance because of the number of interest-only borrowers in these pools.”
In February the 25 Moody’s-rated buy-to-let RMBS transactions had an outstanding pool balance of £26.1bn.
Compared with the £23.8bn for the same period in the previous year, this is a year-on-year increase of 9.4%.
The buy-to-let market continued to show signs of recovery last week with the return of Mortgage Trust.
The intermediary-only brand is part of Paragon Mortgages but stopped lending in February 2008. It has launched a range of products including a two-year tracker at 3.99% and a two-year fixed rate deal at 4.99%, both of which are for remortgage customers only and available up to 75% LTV.
The products come with a fixed fee of £999 and free valuation and legal fees.
John Heron, director of mort-gages at Mortgage Trust, says: “By using technology to a greater extent in the application process, we will be giving initial lending decisions in minutes. This will deliver an efficient process for intermediaries and their landlord clients.”
Heron adds the brand will be focussed on what it is known for catering to landlords with less complex needs and who own four to five properties.
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