Dutch RMBS Delinquencies Rise on Unemployment: Moody’s

The 60 plus-day delinquency rate for Dutch residential mortgage-backed securities (RMBS) rose slightly to 0.57% of the current balance in Q209, from 0.52% in the previous quarter. The increase arrived uniformly across vintages and transaction series, and remained in-line with rising Dutch unemployment, according to Moody’s Investors Service. The weighted-average cumulative foreclosures also increased at a moderate rate during the quarter, reaching 0.42% in Q209, compared with 0.39% in Q109 and 0.35% in the year-ago quarter. Moody’s notes this is a relatively low foreclosure volume for the region encompassing Europe, the Middle East and Africa — or EMEA. HousingWire‘s sources say the Dutch market is largely considered the most stable market in the European secondary sector. It has perhaps until now been thought to be the market most cushioned against the credit crisis. But Moody’s says the high degree of debt leverage among Dutch households leaves them “considerably vulnerable” to shock waves felt through the economy. “Weak house prices are likely to continue in the economic recession,” says Nitesh Shah, a Moody’s economist and co-author of the report. “Furthermore, as unemployment increases and personal insolvencies rise, households are likely to come under increasing financial stress.” A July securitization report out of Deutsche Bank also drew an important link between spiking unemployment, rising delinquencies and plunging home prices. Deutsche researchers noted June’s 9.5% unemployment rate is well above the 5.6% level seen a year ago and marks the highest rate since the early 1980s. As the ABS market expanded, the report notes, performance of consumer-related ABS and national employment trends became inextricably linked. Write to Diana Golobay.