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