OREANDA-NEWS. Fitch Ratings has affirmed Langton Securities plc (Langton) and Lannraig Master Issuer plc (Lannraig), two UK prime master trust programmes. A full list of rating actions is available at www.fitchratings.com or by clicking the link above.

Langton master trust programme consists of prime residential owner-occupied mortgage loans historically originated in the UK by Alliance & Leicester Plc, Abbey National plc and Santander UK plc (Santander; A/Stable/F1). Santander is a wholly-owned subsidiary of Banco Santander SA (A-/Stable/F2).

Lannraig master trust programme comprises prime residential buy-to-let mortgage loans originated in the UK by Clydesdale Bank plc (A/Stable/F1) and Yorkshire Bank Home Loans Limited, which are subsidiaries of National Australia Bank Limited (AA-/Stable/F1+).

KEY RATING DRIVERS
High Credit Enhancement
The Langton programme has a capitalist structure, whereby each issuer has its own credit structure and amortisation schedule. As of October 2014 the credit enhancement for the 2011-1 series had increased to 24% from 20.5% after amortisation in March 2014. As none of the notes in 2010-1, 2010-2 and 2011-2 series amortised during 2014, the enhancement remained static at 20.2% and 27.1%, respectively.

Lannraig's structure shares subordination and reserve funds across issuances. As of October 2014 credit enhancement for the class A notes was 16.1%, up from 15.8% 12 months ago. The increase follows the controlled amortisation of the 2011-1 series, which is scheduled to continue until the notes final scheduled redemption in November 2017.

Stable Arrears
The portion of borrowers in arrears by more than three months in the Langton programme has increased marginally to 2.4% over the past 12 months, up from 2.3%. However, the absolute level of arrears has been decreasing for the past year. Loans in arrears by more than three months fell to GBP190.8m from GBP231.7m.

As of October 2014, three months plus arrears in Lannraig were stable at 0.4%, which is well below Fitch's prime index of 1.3%.

Given the seasoning of these transactions, the quality of the collateral and the current economic conditions, Fitch expects that arrears will remain stable at their current levels for the foreseeable future.

Consistent Underlying Asset Characteristics
In its analysis of the transactions, Fitch did not employ its surveillance model. Instead the agency focused on the key portfolio characteristics, including original loan-to-value ratio and concentrations by regions, repayment and occupancy type. The agency found the pool characteristics to be comparable to those at the time of last review and also within the eligibility criteria defined in the transaction documentation.

Fitch also performed a sensitivity analysis to assess the effects of sustainable house prices on loans originated between 2005 and 2007 on the weighted average frequency of foreclosure (WAFF) and the weighted average recovery rate (WARR). In its analysis, Fitch increased the WAFF by up to 50% and at the same time reduced the WARR by the same amount for this portion of the portfolio. The high levels of credit enhancement provide cushion above these additional stresses, leading to the affirmation of the notes.

RATING SENSITIVITIES
Fitch considers the ratings fairly insensitive to increasing stress factors, given the high levels of credit enhancement and the strong arrears performance to date.