Low default risk in borrowers behind mortgages portfolio, says DBRS

Ratings agency DBRS believes there is a low risk that the borrowers of the €290 million worth of mortgages being sold by lender Finance Ireland will default.

Finance Ireland said this week that it intends offering almost 1,400 home loans on which the borrowers owe €290 million for sale in bonds known as residential-mortgage-backed securities.

DBRS Ratings, which assesses businesses’ ability to pay their debts, has given the Finance Ireland bonds ratings of between BB and AAA, meaning that it believes there is a low risk of the borrowers defaulting.

Triple A-rated

DBRS noted on Friday that Finance Ireland was selling 1,364 loans, about one in three of which had fixed-interest rates. A little more than 11 per cent of the mortgages are buy-to-let, the agency said.

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Billy Kane, Finance Ireland chief executive, said this week that most of the mortgages were triple A-rated, meaning the risk that the home owners would be unable to repay their debts was particularly low.

The Irish lender will use the cash raised to refinance its debts and continue to grow its mortgage business.

Finance Ireland bought €200 million worth of mortgages from Pepper Finance last December, when it also began lending to home buyers through brokers.