Moody's Rating Services just wrapped up its first quarter analysis of the home equity loan market. In a comprehensive report issued today, the ratings agency found delinquencies continued to drop.

"The average rate of serious delinquencies was 7.37% in the first quarter  of 2004 versus 7.68% in the fourth quarter of 2003," said Moody's Vice  President/Senior Analyst Julia Tung, co-author of the report. "The weighted average seasoning of the index also declined to 16.3 months in March 2004 from 16.5 months in December 2003."

The rate of the downward trend in 1Q04 was attributed as a result of the high issuance volume.

High issuance volume in 2Q04 should continue to push the average seasoning of the pools in the index down further, analysts said, referring to Moody's Home Equity Index Composite (HEIC).

The decrease in delinquencies was also attributed to performance-enhancing effects of adding new, unseasoned pools to its Moody's Subprime subindex. The strong performance of 2002 and 2003 vintages were also noted.

However, while the subprime sector did well, the weighted average seasoning of the High LTV and Traditional Home Equity subindexes increased in 1Q04.






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