House prices look set to remain on a downward trajectory and is likely to keep repayment rates in U.K. RMBS low.
According to analysts at Deutsche Bank, averaging the Halifax and Nationwide indices, prices are currently flat for the year and down 14.1% from the peak, compared to 12.2% in July. Mortgage lending remains weak with negligible net origination and low remortgage activity.
"In line with this, repayment rates continue to be low and, with little sign of a base rate increase on the horizon, this picture looks set to remain," explained Deutsche Bank securitization analysts." While BTL RMBS continues to show low repayment rates, a small revival of lending in the sector is at least being seen. In the U.K. non-conforming sector the fall in repossession sales continue to depress already low repayment rates."