KBRA Europe Releases Research: Ireland’s RMBS Faces Inflation and Rate Headwinds

KBRA Europe (KBRA) releases research that examines factors that could mitigate RMBS performance degradation in Ireland, given the rising cost of living environment as the country experiences higher inflation due to supply chain issues caused by the reopening of the economy following COVID-19 lockdowns, as well as higher energy and food prices primarily driven by the war in Ukraine.

Key Takeaways

• Household savings built up during the pandemic remain at high levels and could help to support borrowers who are facing financial stress.
• There is a supportive political environment in Ireland for borrowers facing financial difficulties, with lenders and servicers working with them to achieve a sustainable solution based on affordability. These efforts have resulted in an increased percentage of borrowers historically returning to performing status and improved cash flows for those who remain in arrears.
• Property equity gains, along with rents that are higher than mortgage instalments in many cases, create an economic incentive for financially stressed borrowers to work with lenders and servicers.
• The strong performance of Ireland’s economy should help moderate potential delinquencies.
• Securitisation structural features can help to mitigate the negative impact from a deterioration in portfolio performance.

Click here to view the report.

Related Publication

• Supportive Environment for Restructured Loans in Ireland

About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.

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