View more on these topics

CML pins hopes on ratings

The Council of Mortgage Lenders says it hopes positive news from Fitch Ratings about the long-term outlook for UK sub-prime securitisations will boost confidence in the sector.

The ratings agency published a report last week claiming it was confident adverse residential mortgage- backed securities market can weather the ongoing economic storm affecting the financial industry.

Fitch says it tested outstanding UK securities against several scenarios, ranging from increasing defaults to falling house prices.

It examined 876 collateralised tranches in 107 adverse transactions from 2003 to 2007 with ratings outstanding as of December 31 2007. It says it found the securities could withstand significant stress.

Gregg Kohansky, senior director and head of Europe, Middle East and Africa RMBS at Fitch, says: “Challenging conditions in the mortgage market will result in stretched affordability and payment shocks for many borrowers during 2008, especially in the sub-prime sector.

“But our tests showed that most of the ratings are stable in all scenarios. Widespread rating migration is only likely when a severe scenario is applied that envisages 25% house price falls in the next year, far in excess of market expectations.”

Fitch warns that if the housing market is exposed to a sharper downturn, ratings may dip more extensively.

But it says most commentators predict a flat to 10% decline in house prices during the year.

A spokesman for the CML says: “This is encouraging. It helps to reinforce the differences between The US and UK sub-prime markets.

“We hope that this news will serve to underpin confidence in the RMBS market.”


NR plans to focus on direct channels

Northern Rock is to slash lending via brokers this year as it launches a major downsizing programme.The bank’s proposals, set out in its post-nationalisation business plan published last week, reveal it will have a smaller presence in the broker sector.NR says it will concentrate on its most important partners as well as writing mortgages direct.As […]

Former Stroud & Swindon commercial director joins M2 Financial

Former Stroud & Swindon commercial director Paul Chafer is to join M2 Financial in May.Chafer will take up the position of commercial director at the financial advice firm just after the May bank holiday weekend of May 24 and May 25.The headquarters of M2 Financial are based in Nottingham and the firm provides independent advice […]

Buy-to-let investors’ gearing declines

Buy-to-let investors’ gearing has declined to 36% – its lowest level since May, reveals Paragon Mortgages. New research from the specialist lender out today reveals that the average gearing across 200 landlords’ portfolios is down from 38% in Q4 2007.Paragon says this reflects investors’ cautious approach in an environment of volatile borrowing costs, as well […]

Fitch says tightened criteria may affect RMBS

Fitch Ratings is warning that tightening lending criteria could have a negative impact on residential mortgage-backed securities.The agency has stipulated however that the developments are not likely to have any immediate impact on UK RMBS ratings.Fitch says the liquidity crisis is starting to have an impact on the mainstream mortgage market with conforming lenders tightening […]

In Focus Ebola cover - thumbnail

White paper — In Focus: Ebola Virus Disease

Jelf Employee Benefits focuses on Ebola Virus Disease (EVD) and what this means for businesses with operations in West Africa. This will be of particular interest to those with employees either travelling to, or living within, West Africa, the area affected by the most catastrophic outbreak of Ebola to date.


News and expert analysis straight to your inbox

Sign up