Here in the full article from last Thursday…
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*The contracting economy and negative credit growth point towards further declining demand for housing and further drops in house prices. Moody’sEconomy.com expects house prices to fall another 18% before resuming growth in Q2 2013. *
Irish Prime RMBS Indices - March 2010
Frankfurt, May 20, 2010 – Delinquencies continued to increase in Irish Prime RMBS transactions in March, says Moody’s Investors Service in its latest index report for the sector. 3.8% of the outstanding Irish Prime RMBS portfolios were more than 90 days delinquent in March 2010. This compares with 2.1% in March 2009. Loans delinquent for more than 360 days accounted for 0.9% of the outstanding portfolios in March, up from 0.4% a year ago. The total redemption rate has shown little movement since March 2009 and ended March 2010 at 4.9%, while in 2007 and earlier the value was consistently above 15%.
Some portfolios have recorded up to 7.3% of loans that have been more than 90 days delinquent. Up to 2.8% of these portfolios have been delinquent for more than 360 days. Nevertheless, Irish prime RMBS transactions contain only small numbers of properties which have been repossessed by the servicers.
“While the two non-conforming RMBS transactions started recording losses in late 2008, Irish prime portfolios have not shown any substantial losses until recently. In March 2010, Celtic 12 recorded the first principal loss in the portfolio,” says Georgij Ludmirskij a Moody’s Associate Analyst. “However, the excess spread in the transaction was sufficiently high to cover the loss and to increase the reserve fund up to the new target balance. The reserve fund target in Celtic transactions increases by a proportion of the loans, which are more than 12 months delinquent,” explains Mr. Ludmirskij.
House prices have fallen by 33.1% from the peak reached in March 2007. The contracting economy and negative credit growth point towards further declining demand for housing and further drops in house prices. Moody’sEconomy.com expects house prices to fall another 18% before resuming growth in Q2 2013. Sustained gross domestic product (GDP) growth is not expected to return before late 2010 and Moody’sEconomy.com expects GDP to contract by 1% in 2010 as a whole. The unemployment rate is expected to peak at 13.8% in H1 2010.
While the low interest rates have helped many borrowers to stay current, Moody’sEconomy.com does not expect the demand for credit to increase until the labour market starts to recover in the second half of the year.
Moody’s outlook for the Irish RMBS market is negative (see the report “EMEA ABS & RMBS: 2009 Review and 2010 Outlook”, January 2010).
As of March 2010, 18 Irish prime RMBS transactions with a total pool balance of EUR42.6 billion were outstanding which compares with 15 transactions with a total pool balance of EUR38.6 billion 12 months ago. One Irish RMBS transaction closed and was rated by Moody’s in April. However, it contains more than 50% non owner occupied mortgages, and therefore is not included in the index.
Starting July 2010 Moody’s Irish Prime RMBS indices will be published mid-month on a quarterly basis. The indices can be found on moodys.com in the Structured Finance sub-directory under the Research & Ratings tab, under the Structured Indices sub-category of Industry/Sector Research.
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In addition, Moody’s publishes a weekly summary of structured finance credit, ratings and methodologies, available to all registered users of our website, at moodys.com/SFQuickCheck.