The Bank of England unveiled a surprise 25 basis point rate rise last week that could leave consumers scrambling to make ends meet. However, on the securitization end, the market can draw comfort from the high level of fixed-rate mortgage debt originated over the past 18 months, Morgan Stanley analysts said.

"Between autumn 2004 and spring 2006, the average U.K. mortgage rate fell for existing debt," Morgan Stanley analysts reported. "In addition, we have seen a significant drop in the relative price of new fixed-rate mortgage deals versus variable-rate deals. As a result, the mix of mortgages sold has changed. The proportion of fixed-rate mortgages originated rose from 39% to 71%." They added that the high levels of recently originated RMBS fixed-rate mortgages pools should help maintain borrower affordability in these deals for the short-to-medium term.

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