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By: Staff Reporter
Arrears on residential mortgage-backed securities (RMBS) loans surged in February as more borrowers felt the effect of the rising rate environment.
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According to a recent report by Standard & Poor’s, the number of residential mortgage loans greater than 30 day arrears climbed to 1.48 per cent in February from 1.39 per cent in January.
"The increase in arrears is concentrated in the early stage arrears, where we expect to see a higher cure rate compared to other arrears categories," Standard & Poor’s credit analyst Vera Chaplin said.
“However, borrowers in more severe arrears may find it more challenging to restore their position in a rising interest rate environment. As interest rates increase further, we expect overall arrears to remain at this higher range until borrowers adjust to the higher mortgage payments and as the impact of Christmas spending diminishes.”
Sub-prime RMBS arrears declined slightly, by 33 basis points to 11.74 per cent in February 2010, from 12.08 per cent in January.
