Abstract: The downward trend in U.K. house prices now seems well established, and Standard&Poor's Ratings Services' expects prices to continue falling in the near term. Our economists forecast a further drop of around 17% before prices flatten off in 2009 (see "Related Articles"). In this scenario, a significant number of U.K. mortgage borrowers would fall into negative equity. We have researched the risk of negative equity using loan-by-loan data for a sample of over two million outstanding U.K. mortgages, and estimate that: The average U.K. mortgage has a loan-to-value (LTV) ratio of only about 54%. Nevertheless, around 70,000 (0.6%) of U.K. borrowers are currently in negative equity. A further house price decline of 17% would raise this number to

Brief Excerpt: RESEARCH Ratings Definitions Risk Of Negative Equity For U.K. Mortgage Borrowers Returns Publication date: 30-Jul-2008 Surveillance Credit Analysts: Andrew South, London (44) 20-7176-3712; andrew_south@standardandpoors.com Pierre...

Report Type: Commentary
Sector: Asset-Backed Commercial Paper, Asset-Backed Securities, Collateralized Debt Obligations, Commercial MBS, Financial Institutions, Global Issuers, Real Estate Companies, Residential MBS, Servicer Evaluations, Structured Finance
Free Sample: Click Here to Download

Enter the keyword(s) which you would like to search for within this document and click "Search"

 

 S&P Credit Research
S&P Credit Research provides analysis on issuers and debt obligations of corporations, states and municipalities, financial institutions, insurance companies and sovereign governments. S&P also offers insight into the credit risk of structured finance deals, providing an independent view of credit risk associated with a growing array of debt-securitized instruments.