The ratings agency’s analysis of non-conforming UK securitisations found the percentage of three-month arrears cases within those tranches rose from 10.44 per cent in Q2 2007 to 10.72 per cent, while possessions also rose slightly by 2.1 per cent from 1.65 per cent to 1.69 per cent in the same period.
The rating agencies also warned that the figures could rise further in Q4 as rising interest rates and the inability to refinance due to the credit crunch began to show through in the figures.
However, Fitch also noted that the level of arrears in 2006 securitisations was noticeably lower than in the 2005.
Its report, ‘UK Non-Conforming RMBS – Performance Review Q307’, said: ‘To date, the Fitch UK non-conforming arrears index indicates that 2006 vintage transactions are performing better than their 2005 counterparts, although this remains subject to change as the remaining 2006 transactions are added to the index over the next quarter and arrears levels rise for the 2006 vintage as shown above.”
Alex Hammond, PR manager at Kensington Mortgages, commented: “The next quarter will see arrears increase because of rates but also because it’s Christmas. However, the decrease in arrears is encouraging for both lenders and intermediaries as it is in no one’s interest to lend people money that they cannot afford to pay back.”
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