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Volume 2014 - Number 46

December 5, 2014

Half of All Currently Performing Mortgages Backing Non-Agency MBS Set to Experience Payment Shock

The relatively strong performance of mortgages in vintage non-agency MBS could be disrupted by interest rate resets and the expiration of interest-only periods, according to analysts at Fitch Ratings. Roughly half of all performing first-lien mortgages in non-agency MBS will be exposed to monthly payment increases during the next five years, Fitch said in a report released this week. The rating service determined that if a borrower’s monthly payment increases by 35 percent, the probability of default for the borrower doubles. “The product that’s going to be most affected is...

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This weekly covers the secondary mortgage market, including mortgage-backed securities and asset-backed securities.

 

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