Loan arrears increase
Loans underlying New Zealand residential mortgage-backed securities (RMBS) recorded a slight rise in arrears greater than 30 days over the March quarter.
Tuesday, June 19th 2007, 9:05AM
It says this is small because most of the lending is done by backs, which have not yet used securitisation. S&P says that arrears increased over the quarter from 2.24% to 2.35%.
"This was up from 2.24% at the end of December 2006,” Standard & Poor's credit analyst Alastair Ingram says.
The analyst says the performance index (known as SPIN) “spiked at 2.86% and 2.98% in January and February respectively. However this was likely due to the seasonal jump that occurs every year over the Christmas/New Year holiday period."
Arrears on prime low documentation loans decreased to 3.96% in March. It was down from 4.22% as of December 31. However, arrears on prime full documentation loans rose over the March quarter to 1.94%. It was 1.72% at the end of December 2006.
"In the past, the New Zealand securitisation market has been dominated by asset-backed commercial paper (ABCP) programs," Ingram says. "This is because the market tends to be driven by a large number of small finance companies who seek flexibility to fund small and fluctuating volumes of assets.
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