Fitch confirms rating of RMBS from sub-prime lenders

Fitch Ratings has affirmed the rating of a residential mortgage-backed security originated by Advantage Home Loans, Amber, GMAC-RFC and Victoria Mortgage Funding due to its stable arrears levels.

Fitch says the affirmation of ResLoC UK 2007-1’s rating is a reflection of the relatively stable performance of the non-conforming RMBS’ underlying assets in the past year, despite a small rise in the volume of loans in arrears.

As of June 2011, the volume of loans in arrears of three months or more was 12.2% of the book, compared with 11.5% a year ago, with the balance unchanged.

Fitch says arrears have not deteriorated further due to the low interest rate environment.

As a result repossession levels have remained fairly stable over the past year, with outstanding repossessions at 0.7% of the outstanding collateral balance in June 2011.

But it adds: “Fitch remains cautious about the possibility of rising arrears and repossessions, especially if interest rates rise in the next 18 months. For this reason, the notes have been affirmed.”