New mortgage rules won’t slow price growth - Fitch

Ratings agency points to first improvement in arrears in mortgage backed securities since 2005

Fitch said that the European Central Bank’s quantitative easing programme is likely to support home price recovery, “partially offsetting the impact of the new mortgage lending regulation”. (Photograph: Brenda Fitzsimons / The Irish Times)

Fitch said that the European Central Bank’s quantitative easing programme is likely to support home price recovery, “partially offsetting the impact of the new mortgage lending regulation”. (Photograph: Brenda Fitzsimons / The Irish Times)

 

The Central Bank’s new mortgage lending rules will likely lower credit growth, but will only have a “limited impact” on home price recovery, ratings agency Fitch said on Monday.

In its Mortgage Market Index report for Ireland, the ratings agency says that mortgage loans in arrears pooled in residential mortgage backed securities (RMBS) reported a “sustained decline” for the first time since 2005.

Loans in arrears by more than three months fell to 17.7 per cent in the second quarter of 2015, down from their peak of 19.3 per cent in 3Q14 and 18 per cent in the previous quarter.

“This recent change in trend is a result of ongoing servicing activities aimed at resolving long-term arrears cases and an improvement in the domestic macroeconomic environment,” Fitch said, although it added that recent data from the Central Bank shows that the portion of loans in arrears by more than 720 days is still rising, “implying that more loan renegotiations are yet to take place”.

Fitch said that the European Central Bank’s quantitative easing programme is likely to support home price recovery, “partially offsetting the impact of the new mortgage lending regulation”.