Delin­quen­cies in home loans to stay sta­ble in 2018: Moody’s

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The delin­quency rate in com­mer­cial ve­hi­cle loans and home loans are likely to re­main sta­ble in 2018 aided by healthy eco­nomic growth, says a re­port. The coun­try’s auto as­set- backed se­cu­ri­ties (ABS) backed by com­mer­cial ve­hi­cle loans is­sued in 2018 will have pos­i­tive credit char­ac­ter­is­tics that, along with healthy eco­nomic growth, will sup­port the per­for­mance of these deals,” Moody’s said in a re­port. Auto ABS backed by com­mer­cial ve­hi­cle loans ac­count for around 45 per cent of the to­tal vol­ume of out­stand­ing ABS in the coun­try, and the agency ex­pects such deals will con­tinue to ac­count for a sig­nif­i­cant pro­por­tion of is­suance in 2018. In the res­i­den­tial mort­gage-backed se­cu­ri­ties (RMBS) sec­tor, it ex­pects delin­quen­cies to re­main around low lev­els of one per cent in 2018, with sta­ble in­ter­est rates and home prices sup­port­ing per­for­mance. The ma­jor­ity of mort­gage bor­row­ers in the coun­try are salaried em­ploy­ees with steady earn­ings and mainly use these loans to buy prop­er­ties for self­oc­cu­pa­tion, which sig­ni­fies that such bor­row­ers have a good credit pro­file, it said. The re­port, how­ever, said delin­quency rates in ABS deals backed by loans against prop­erty (LAP) to SMES will in­crease in 2018 be­cause of the tougher op­er­at­ing en­vi­ron­ment for SMES. The more strin­gent un­der­writ­ing stan­dards for LAP re­flect a more cau­tious ap­proach by lenders in view of ris­ing delin­quen­cies and the sub­dued op­er­at­ing en­vi­ron­ment for SMES, the agency said.

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