Prime Residential MBS Expected to Decline Further

Outstanding foreclosures in the United Kingdom may be declining a bit but employment and industry trends suggest the performance of prime residential mortgage-backed securities market will generally continue to deteriorate, according to a Moody's Investors Service report. Moody's senior associate Daron Kularatnam attributes performance woes to a combination of increasing unemployment and lack of financing options. A Moody's index report that the senior associate co-authored shows RMBS delinquencies in the second quarter rose to 1.80%, up 18.3 basis points from the previous quarter, while outstanding repossessions "decreased marginally to 6.6 basis points on average." The report also noted that no new U.K. prime RMBS deals were issued during the second quarter.