News Column

Fitch: Home Prices Cushioning Recent U.S. RMBS from Future Stress

July 7, 2014



NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: U.S. Prime Jumbo RMBS Trends

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=751744

Though slowing of late, strong U.S. home price growth since 2012 is helping recent vintage U.S. prime RMBS borrowers by providing a cushion against any unexpected economic stress, according to Fitch Ratings in its latest monthly prime jumbo trends report.

'Home price increases are slowing and some regions may still be vulnerable to a correction, but most recent vintage RMBS borrowers will still be left with more equity than they had at origination even if home prices fall 10%,' said Managing Director Grant Bailey.

Weighted average combined loan-to-values have improved for deals originated between 2011-2013, as shown below:

--2011: to 50% from 64%;

--2012: to 55% from 68%;

--2013: to 59% from 68%.

This comes as home price growth continues to slow. When weighted by the geographic concentration in prime RMBS pools, home prices increased at an annualized rate close to 5% in first quarter-2014, down from double-digit increases last year.

The improvement in equity positions to date combined with the strong initial credit profile of the prime borrowers is reflected in the low delinquency rates. As of the most recent month's data, only 13 basis points of outstanding prime RMBS borrowers were delinquent.

'U.S. Prime Jumbo RMBS Trends' is available at www.fitchratings.com or by clicking on the above link.

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.



Fitch Ratings

Grant Bailey, +1 212-908-0544

Managing Director

Fitch Ratings, 33 Whitehall Street, New York, NY 10004

or

Ryan O'Loughlin, +1 212-908-0387

Analyst

or

Media Relations:

Sandro Scenga, +1 212-908-0278

sandro.scenga@fitchratings.com

Source: Fitch Ratings


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