Fitch Ratings says performance in Greek RMBS transactions is showing signs of stabilizing, with mortgage arrears levels flat and new defaults occurring at a reduced rate in Q113. Fitch has published its Q113 Greek Mortgage Market Index.
The proportion of the loans that are in arrears by more than three months increased only marginally by 20bps to 4.7%, following a period of more rapid increases. The constant default rate (a measure of the number of new loans defaulting) actually fell during Q113 to 1.5% from 1.8% in the previous quarter.
House prices have continued to decline, however. Data from the Bank of Greece suggests that prices of new build properties (under five years of age) have been more resilient than prices of older properties (over five years of age). Fitch believes this is due to the more modern houses generally having better designs and specifications.
Recoveries on defaulted loans continue to be extremely weak as the moratorium on lenders taking possession of certain categories of property remains in effect. The application of a new capital gains tax on properties may also further depress recoveries as well as prepayment rates.[Reuters]