In its assessment for Q4 2007, the rating agency found that even with a tougher environment for mortgage borrowers and fears over increased arrears and repossessions, prime securitisations remained largely unaffected and continued to perform well.
Even in the non-conforming sector, which has seen a greater squeeze on borrower affordability and the number of lenders operating in the market, the performance of securitisations had not been affected to any great extent.
However, the ratings agency believed that the potential for impact from a rise in repossessions was still a distinct possibility.
Kate Livesey, credit analyst at Standard & Poor’s, commented: “The current potential for payment difficulties comes against the backdrop of a weakening housing market. A pronounced slowdown in UK house price growth – or even a correction – now seems likely.
"This could increase losses realised on any foreclosures and would also increase our assessment of the risks on outstanding loans as their loan-to-value ratios rise
“Any deterioration in borrower payment behaviour over the next few quarters would initially slow upgrades. Widespread downgrades would only follow from a systemic increase in mortgage risk, for example, if UK house prices were to fall significantly.”
Simon Biddle, director of marketing and communications at In-Focus Packaging, said: “There are many doom-mongers who would have expected vehicles to be hit by the current situation so this is good news.
"However, what we have to do is look forward 12 months and see where we are then.
Biddle added: “What we have to remember though, is that things aren’t as bad as they are in the United States as they keep getting mixed up with what is happening over there. Even in comparison to the early 1990s, the economic conditions are very different.”
