South African Property Market and RMBS Update: August 2021
30 August 2021 – GCR Ratings (“GCR”) has published its Property Market and Residential Mortgage Backed Securities (RMBS) Update on the performance of the RMBS Sector for 2021 and outlook for the remainder of 2021, as well as a Property Market Update and its effect on RMBS transactions.
The property market currently shows the average residential housing price is increasing, this correlates with an increase in total residential mortgage funding since the start of Q3 2020.
Arrears data indicates a continued recovery of Residential Mortgage-Backed Security (“RMBS”) transactions after ‘90+ days arrears’ peaked in Q3 2020 and they have been on a downtrend ever since.
In terms of RMBS credit enhancement, performing Loans as a percentage of notes have been increasing since Q2 2020 but flattened out recently.
Annualised Excess Spread, as a percentage of notes, has increased on average since Q2 2020 but decreased slightly from Q1 to Q2 2021.
Overall, increasing property prices coupled with improved arrears data bodes well for RMBS transactions and we can expect this trend to continue going forward with RMBS health improving over the remainder of 2021.
GCR will periodically provide insights on various asset classes, encompassing performance trends as well as changes in the economic and operating environment.
Structured Finance Analyst
+27 11 784 1771
Related Criteria and Research
Criteria for Rating Residential Mortgage-Backed Securities – Nov ‘18
GCR Rating Scales Symbols and Definitions – May ‘19
South African Reserve Bank Quarterly Economic Review – June ‘21
ABSA Homeowner Sentiment Index – Q1 ‘21
FNB Property Barometer – May ‘21
Lightstone Data provided to GCR – Q2 ‘21
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.
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