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Repossessions stabilise for prime and sub-prime

Repossessions across both the prime and sub-prime sectors are continuing to stabilise with sub-prime repossessions down 50% from their peak.

Moody’s Investors Service has published its latest indices on the UK prime and sub-prime residential mortgage-backed securities market, an indicator of the strength of the UK mortgage market overall.

The ratings agency found that the repossessions trend among UK prime mortgages remained constant in December at 0.07%.

The number of prime mortgages in arrears by over three months rose slightly from 1.8% in November to 1.9% in December.

The total redemption rate for the past 12 months also continued to stabilise and is now at 13.7%, down from 19.1% in December.

In separate research from Moody’s, sub-prime mortgages were also shown to be stabilising though are still much weaker than prime mortgages.

The proportion of sub-prime arrears has stayed flat at 19.7% since November, slightly up from the 19.4% rate seen six months previously but significantly up on the 13.7% recorded at the same time in 2008.

The trend for sub-prime repossessions fell to 1.7% in December from 2% in November and 3.5% in December 2008.

The total redemption rate fell significantly to 9.7%,from 20.7% recorded in December 2008.

Moody’s says that if redemption rates continue to be so low less than 10% of the currently outstanding sub-prime mortgage debt will be repaid in one year.

The ratings agency says this percentage has been much higher in the past owing to refinancing opportunities which allowed borrowers to pre-pay their mortgages while switching to another lender.

But despite the stable performance of its pool of prime and sub-prime mortgages Moody’s has a negative outlook for both sectors, as it predicts unemployment to continue to rise and house prices to fall.

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  • Peter 19th February 2010 at 5:16 pm

    Anonymous. It is a shame that your knowledge of the origin of phrases is not as good as your knowledge of the English language itself. Repossession is correct. It stems from the time when mortgagees literally took title to the property when they granted a mortgage, and then allowed the mortgagors to remain in the mortgaged property for a pre-determined number of years. The mortgagee would then have re-taken possession of the property if the mortgagors default. Maybe just one of those words that technically does not seem right, but then is the English language not littered with such words?

  • valleyboy 17th February 2010 at 2:37 pm

    possession in the sub-prime market will be falsely low at the moment as most sub prime borrowers are on very low reversionary rates. The danger comes when Libor increases, as the FSA or any of the Lenders have made any provision for the sub prime market i fear we will see a huge hike in this sector in the not to distant future, unless sub prime lending returns (sensibly)

  • chris powell 17th February 2010 at 2:16 pm

    There is no such thing as the repossession of a property unless it had been previously owned by the person who is taking action. Can you please get this right – a property is taken into possession because the lender has never owned it. Just another abuse of the English Language that has been perpetuated by the media