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Home Price Gains Leave RMBS Cushioned Against Economic Stress

first_imgHome Price Gains Leave RMBS Cushioned Against Economic Stress in Daily Dose, Headlines, News, Secondary Market July 7, 2014 451 Views Even as home price growth starts to level off, recent prime mortgage borrowers remain well-cushioned against any unexpected economic stress, according to one ratings agency.In its newest monthly prime jumbo trends report, Fitch Ratings finds weighted average combined loan-to-value ratios for residential mortgage-backed securities (RMBS) deals made in the last few have fallen substantially, fueled by ongoing gains in house prices.According to the ratings agency, the weighted average combined LTV for deals made in 2011 has improved to 50 percent from 64 percent previously; the LTV for 2012 vintages has dropped to 55 percent from 68 percent; and the LTV for 2013 deals has come down to 59 percent from 68 percent.”Home price increases are slowing and some regions may still be vulnerable to a correction, but most recent vintage RMBS borrowers will still be left with more equity than they had at origination even if home prices fall 10 percent,” said Grant Bailey, managing director at Fitch.Together, the improvement in equity positions combined with stronger borrower credit profiles has helped keep delinquency down, Fitch reports. As of the most recent data, the agency reports only 13 basis points of outstanding prime RMBS borrowers were delinquent.center_img Fitch Ratings Home Prices Mortgage-Backed Securities RMBS 2014-07-07 Tory Barringer Sharelast_img read more