Mortgage holidays to ‘negatively affect’ covered bonds
Features in UK covered bond programmes offer limited protection and could lead to a delay in the classification of defaulted loans, Moody’s said this week. Meanwhile in Europe, regulators have muddied the waters on payment moratoria legislation.
According to Moody’s, around 15% of UK mortgages are on payment holidays, which is affecting a similar percentage of mortgages in UK cover pools.
Delayed payments leads to a reduction of cash flow into cover pools cash flow and will “negatively affect covered bonds”, said the ratings agency....