...Fitch Ratings estimates that for its rated universe of UK RMBS master trusts, of the 2.7m loans totalling GBP263bn, around 15% of loans (by value) totalling more than GBP39bn are in negative equity as of April 2009. In terms of number of borrowers, around 270,000 (approximately 10% of total borrowers) are already in negative equity. Fitch expects this to increase sharply to 34% by value (or 23% by number of borrowers), if house prices decline further in line with its expectation of a 30% peak to trough decline. Such an increase is unlikely to be sole driver of rating actions since a 30% peak to trough house price decline is already factored into current Fitch RMBS ratings. Amongst the master trust programmes, there is a wide variation of exposure to negative equity. Up to the end of April 2009, using the Nationwide Building Society (NBS) House Price Index, Fitch estimates that Granite, with 32% of loans (by value) in negative equity, has the highest proportion and the Gracechurch pool,...
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