Research looking at the performance of residential mortgage-backed securities (RMBS) said the market had improved in the three months period leading to May 2012.
Repossessions remained stable at 0.1%, although cumulative losses grew from the 0.5% recorded in February to 0.6% this quarter. The agency also reported that is 90+ day delinquency trend decreased 0.2% to 1.3% over the last three months.
Moody’s said that it expected performance in this sector to remain steady, predicting that interest rates, unemployment and house prices would remained relatively flat during the rest of the year.
“Performance in this sector has been stable for the past year mainly because of a low interest rate environment, which has helped borrower affordability, and relatively low job losses, which have helped tenants continue to pay their rent.
“Interest rates will remain low in 2012 and unemployment will rise only slightly to 8.7% in 2012 from an average of 8.0% in 2011. Also, house prices will remain within a plus-or-minus 3% band, which will help contain losses on foreclosed properties.”
This is in contrast to a recent report by BDRC Continental which said private landlords were increasingly struggling with rent arrears. The report said that 16% of properties now losing money and that 9% of these landlords had experienced voids that lasted just over two months during the quarter.
Chris Norris, head of policy at the National Landlords Association (NLA), told Mortgage Solutions that market conditions are a worry for most landlords, but that they agreed with Moody’s assessment that the market as a whole is performing well.
“According to our latest Landlords Panel, almost half (49%) of landlords experienced rental arrears in the last 12 months and over a third (37%) are worried about instances of arrears in the coming months.
“This is undoubtedly a sign of the difficult economic conditions and landlords should work with their tenants to minimise the impact of financial stress. This kind of professional and collaborative working will help ensure the private-rental market remains a promising investment opportunity.
“However, the UK buy-to-let market has shown signs of recovery recently and seems to be performing well, despite the recent rises in arrears.”
