August 26, 2009
Buy To Let Performance Stabilises
Standard & Poor's provided more positive news on the UK housing market on Friday, saying there were signs of stabilisation in the performance of securities backed by buy-to-let mortgages.
Delinquencies on UK residential mortgage-backed securities (RMBS) fell for the first time in two years in the second quarter, a sign that interest rate cuts are having some positive effect on credit performance, S&P said.
The recession and surging unemployment have put pressure on household finances, leaving thousands of homeowners unable to keep up with mortgage repayments. Average total delinquencies for UK prime BTL RMBS fell to 6.1 percent in the second quarter from 6.2 percent in the previous quarter, while riskier nonconforming BTL RMBS delinquencies fell to 17.1 from 18.6 percent, S&P said.
Delinquencies of 90 days or more, however, continued to rise.
Other data on Friday showed that UK home repossessions eased in the second-quarter.
The number of homes repossessed by lenders in Britain fell to 11,400 in the three months to June, compared with 12,700 in the first quarter, the Council of Mortgage Lenders (CML) said.
Of most importance was that lenders are showing forbearance to borrowers that are trying to resolve their payment problems and have a realistic chance of doing so, the CML said.
Both the rating agency and the CML remain cautious about the outlook.
"U.K. house prices may be stabilizing. However, we estimate that the number of borrowers in negative equity would rise significantly even for comparatively small further falls in house prices," S&P said.
