Moody: Prepayment rates steady... Fixed-rate home loan demand up in May... Reverse mortgages may cut pension costs, experts claim...
Mortgage constant rate to remain steady
Constant prepayment rates (CPRs) will remain steady in residential mortgage-backed securities (RMBS) globally for several region-specific reasons, supporting ongoing stable collateral performance in RMBS throughout the world, according to a new Moody's Investors Service in a new report published today.
To facilitate cross-jurisdictional comparisons of RMBS metrics, such as CPRs, Moody is using the Global RMBS Market Comparison Tool, which allows for a comprehensive comparison of 13 RMBS markets and provides metrics on the collateral characteristics.
"In the UK, the number of homeowners taking out new mortgages or refinancing existing mortgages will likely rise in 2016, nudging CPRs gradually upward. In the euro area and the UK, a number of seasoned borrowers hold mortgages with interest rates that are lower than currently available in the market, and these borrowers will be unlikely to refinance," says Annabel Schaafsma, a Moody's Managing Director -- Structured Finance and co-author of the report.
Fixed-rate home loan demand up in May
Fixed-rate home loan demand climbed slightly higher over May, according to new research by Mortgage Choice. The group’s latest national home loan approval data found fixed-rate home loans made up 18.17 per cent of all loans written in May, up from 17.91 per cent in April, according to an article from the Adviser.
Mortgage Choice chief executive John Flavell said demand for fixed-rate products hasn’t been this high since the beginning of the year.
“Since the Reserve Bank of Australia cut the official cash rate to the new historic low of two per cent at its May board meeting, speculation has started to mount that we are now at the bottom of the rate cycle,” he said.
“Following last month’s rate cut, the domestic economy has started to show signs of improvement. Consumer sentiment improved dramatically, while business conditions retraced some of the gains reported in March.”
Reverse mortgages may cut pension costs, experts claim
Experts believe reverse mortgages (the manner in which the bank lender pays Australian borrowers money instead of vice versa) could cut the huge cost of the age pension.
However, there are certain risks as the local reverse mortgage market collapsed seven years ago during the GFC. To date, only a handful of the financial products remain from the major banks, the Sydney Morning Herald reported.
National Seniors Australia chief executive Michael Oneill believes the social benefits of helping older people stay in their own homes longer could be done by reverse mortgages, as long as there will be improvements in the quality and choice available.
"In the GFC a number of reverse mortgages went bad very quickly because they were inappropriately structured and put people into a position of negative equity. Now they carry a reputational risk for the big banks because amid all the financial planning scandals they don't want to be perceived to be ripping off old people," Ralston was quoted as saying.
Constant prepayment rates (CPRs) will remain steady in residential mortgage-backed securities (RMBS) globally for several region-specific reasons, supporting ongoing stable collateral performance in RMBS throughout the world, according to a new Moody's Investors Service in a new report published today.
To facilitate cross-jurisdictional comparisons of RMBS metrics, such as CPRs, Moody is using the Global RMBS Market Comparison Tool, which allows for a comprehensive comparison of 13 RMBS markets and provides metrics on the collateral characteristics.
"In the UK, the number of homeowners taking out new mortgages or refinancing existing mortgages will likely rise in 2016, nudging CPRs gradually upward. In the euro area and the UK, a number of seasoned borrowers hold mortgages with interest rates that are lower than currently available in the market, and these borrowers will be unlikely to refinance," says Annabel Schaafsma, a Moody's Managing Director -- Structured Finance and co-author of the report.
Fixed-rate home loan demand up in May
Fixed-rate home loan demand climbed slightly higher over May, according to new research by Mortgage Choice. The group’s latest national home loan approval data found fixed-rate home loans made up 18.17 per cent of all loans written in May, up from 17.91 per cent in April, according to an article from the Adviser.
Mortgage Choice chief executive John Flavell said demand for fixed-rate products hasn’t been this high since the beginning of the year.
“Since the Reserve Bank of Australia cut the official cash rate to the new historic low of two per cent at its May board meeting, speculation has started to mount that we are now at the bottom of the rate cycle,” he said.
“Following last month’s rate cut, the domestic economy has started to show signs of improvement. Consumer sentiment improved dramatically, while business conditions retraced some of the gains reported in March.”
Reverse mortgages may cut pension costs, experts claim
Experts believe reverse mortgages (the manner in which the bank lender pays Australian borrowers money instead of vice versa) could cut the huge cost of the age pension.
However, there are certain risks as the local reverse mortgage market collapsed seven years ago during the GFC. To date, only a handful of the financial products remain from the major banks, the Sydney Morning Herald reported.
National Seniors Australia chief executive Michael Oneill believes the social benefits of helping older people stay in their own homes longer could be done by reverse mortgages, as long as there will be improvements in the quality and choice available.
"In the GFC a number of reverse mortgages went bad very quickly because they were inappropriately structured and put people into a position of negative equity. Now they carry a reputational risk for the big banks because amid all the financial planning scandals they don't want to be perceived to be ripping off old people," Ralston was quoted as saying.
