...New Arrears Trend Down: The volume of loans entering arrears fell to 1.0% in 4Q14 from 1.1% in 3Q14. The stock of late-stage arrears (excluding defaults) has now been stable for two years at 1.6%. New Defaults Constant: The volume of borrowers entering default has not been reflective of the economic environment. The constant default rate (CDR) has been stable at around 1.3% for the past three years. Elusive Recovery Proceeds: Enforcement income has been persistently low during the downturn. Cumulative recoveries are back to 20% of gross defaults, up from the lows of sub- 10% in 2009. Outstanding net defaults have reached a new high of 4.8%. Declining Home Prices: The uncertain economic outlook and constrained lending drove home prices down by 1.2% in the first three-quarters of 2014. Fitch expects prices to reach a trough in 2016, around 20% below their peak level. Payment Holidays in Runoff: Payment holiday schemes have had limited effect and the volume of such loans is now falling....
