Self-cert risk lower than some buy-to-let, says rating agency


The risk of self-certified mortgages is overblown and is safer than lending to portfolio landlords and those with county court judgments, according to rating agency DBRS. 

DBRS says it has analysed the performance of different kinds of UK mortgages and found that self-cert loans had an average 19 per cent higher risk score than income-verified loans. 

But it also found that self-cert back books, often seen as risky, were safer than many other sorts of lending (see chart).

The rating agency says: “Any concern from the European Commission and European Parliament over risks associated with self-certified mortgages is largely exaggerated in DBRS’s view, based on historical performance, and has far-reaching implications.” 

DBRS says recent rewriting of the European Union securitisation framework means self-cert loans cannot be repackaged and sold from January 2019. 

It adds: “This raises several issues with regard to existing securitisations, pipeline transactions scheduled for before 2019 and the prospects for refinancing outstanding transactions. 

“The refinancing of self-certified mortgages could end up in covered bond pools, as there are no restrictions for inclusion in UK covered bonds.”


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