Fitch Ratings says lender intervention has improved Greek RMBS performance as a significant portion of defaulted loans have reverted back to less critical delinquency status or even to performing. This is reflected in the pipeline of non-performing loans, which remains stable below 11%, while the constant default rate dropped to 0.4% p.a. as of 4Q2014, down from its 2Q2012 peak of 2.8%. According to Fitch, originator intervention is likely to persist in 2015 as borrower affordability slowly improves.
In December 2014 period recoveries increased slightly to 3.7% from 3.2% the previous quarter. Recovery income remains low at only 29% of the cumulative gross defaults. This is not a surprise as the partial moratorium on property foreclosure continues and is likely to be extended into 2015. In Fitch's opinion, the ability to enforce some distressed loans would provide lenders with an improved negotiating position with borrowers and potentially increase the number of out-of-court settlements.
In the three-quarters to end-September 2014, Greek home prices declined 2.4%, bringing the total decline from the January 2009 peak to 39.3%. Fitch expects home prices to fall between 4% and 6% further in 2015. Given the high unemployment and limited personal savings, any economic recovery is unlikely to immediately support home prices.
Fitch's 'Mortgage Market Index - Greece' is part of the agency's quarterly series of index reports. It includes information on the performance of residential mortgages, predominantly from RMBS transactions, but also those held on bank balance sheets. The report sets the housing market against the macroeconomic background and provides commentary on the emerging trends. The report is available at www.fitchratings.com or by clicking on the link above.
The report, 'Mortgage Market Index - Greece 1Q15', is available on www.fitchratings.com or by clicking the link above.
Additional information is available on www.fitchratings.com