Prime mortgage borrowers are struggling to keep up their payments – the proportion of top-quality loans held in asset-backed securities that are at least one month in arrears has risen 50%.
A report today by Standard & Poor’s notes that, at 3.24%, the percentage of delinquent loans to prime borrowers at the end of September compared with a year earlier is at its highest since the ratings agency developed its index in 2000.
'Delinquencies are an indication of future defaults and the current increases in combination with falling house prices will start to put pressure on ratings for the first time,' S&P said.
So far, UK residential mortgage-backed securities backed by prime mortgages have not been downgraded as a result of losses on underlying collateral.
Financial Times
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