The ratings agency attributed the stronger performance to lower interest rates, stronger fiscal expansion and a smaller rise in unemployment afforded by greater wage flexibility.
Greater household wealth, greater forbearance from lenders and more availability and flexibility in financial products also contributed to the stronger performance of UK mortgages.
Moody’s said the ‘delinquencies’ would increase marginally as household budgets came under pressure from fiscal tightening and unemployment rises.
The Office for National Statistics recently reported unemployment hit a 2-year high of 2.685m.
Moody’s ratings agency said the current economic downturn in the UK is the worst since the 1930s with GDP levels still far below their pre-crisis levels some 45 months after the start of the downturn in 2008.
The agency said the UK would be unlikely to get to the pre-crisis levels of economic output until 2013 which would break all existing records.
The 1990-93 downturn was much shorter-lived, less than 40 months, and not as deep as the current downturn. In the 1979-83 downturn, the longest downturn on modern record in the UK, GDP returned to its pre-crisis level within 49 months.
Moody’s said: “Borrower performance has held up well. Mortgage arrears have not risen as high as they did during 1990-93.
“A lower interest rate environment has helped UK borrowers in the current downturn. Interest rates were considerably lower during 2008-11 than 1990-93.
“We believe that UK lenders will continue to provide assistance to borrowers through forbearance, due in part to moral pressure from the government, which has provided banks with financial support through the crisis and in part helped banks avoid crystallising their losses prematurely.”
