Fitch: Strong Lending Activity Amid Wave of Refinancing in Italian Mortgage Market
Fitch understands that over 2Q15 borrowers have opted to refinance mainly to fixed-rate mortgage products. This evidence is supported by CRIF data, which reports that up to 70% of the refinancing loan applications targeted fixed-rate products. The agency believes that this trend reflects the low reference rates associated with fixed-rate loans. In Fitch's view, refinancing activity is likely to remain sustained in the coming months.
Fitch notes that in 2Q15, the ratio of loans in late stage arrears was almost unchanged - at just under 1.6%, compared to 1.5% reported in March 2015. In contrast, the constant default rate (CDR) contracted by 10bp and the average now stands at 1.2%. In addition, the proportion of loans on payment holiday declined by 20bp to 1.9%. In Fitch's view the combination of these factors suggests consistent performance improvement observed since the beginning of 2015.
In 2Q15, Italian home prices contracted by 0.3% qoq, to stand at 16.6% below their 2008 peak. The agency notes that in Lombardia, one of the largest and wealthiest regions, home prices have remained flat. Meanwhile, in Southern Italy residential prices continue to contract at a faster pace, currently down by 28.4% from their peak.
Fitch's 'Mortgage Market Index - Italy' is part of Fitch's quarterly series of index reports. It includes information on the performance of residential mortgages, predominantly from RMBS transactions, but also those held on bank balance sheets. The report sets the housing market against the macroeconomic background and provides commentary on the emerging trends. The report, 'Mortgage Market Index - Italy 3Q15', is available on www.fitchratings.com or by clicking the link above.
The data behind the Mortgage Market Index report is also shown in the RMBS Compare, which is an Excel-based tool for displaying the performance of individual transactions against each other and Fitch's benchmark indices. It also includes indicators of the broader mortgage markets, home prices and macro-economic background.
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