From Granite to Mound… UK mortgage trust nomenclatura (and performance) | FT Alphaville

From Granite to Mound… UK mortgage trust nomenclatura (and performance)

From Standard & Poor’s this morning:

Delinquencies in prime U.K. mortgages continued to increase in Q2 2008, according to Standard & Poor’s Ratings Services’ latest index report for U.K. prime RMBS. Total delinquencies rose to 2.94%, up from 2.33% the previous quarter, and 90+-day delinquencies hit 1.00%, up from 0.92%.

Not exactly – take note UK Jeremiahs – disastrous. Still, cause for concern for some. HM Treasury, perhaps.

Repossessions also increased across most transactions, and most noticeably in Northern Rock’s Granite Trust.

Granite – so it seems – is suffering especially. In raw terms, the average number of respossessions in Granite jumped from 134 per month in Q1 to 353 in Q2. The Council of Mortgage lenders estimates there were around 18,900 repossessions in H1. Back of the envelope then, Granite accounts for one in every 13 repossessions in the UK.

That jars somewhat with a piece in today’s Telegraph:

In the wider context of the mortgage-lending arena, were Northern Rock’s business practices so really out of step? Did the reality match a widely-held perception that Northern Rock possibly got what it deserved?

The thrust of the piece is that Rock wasn’t really so different from its peers. To wit, Northern Rock’s downfall was brought about not by its dodgy lending, but by its dodgy borrowing.

How, then, are other UK mortgage trusts performing?

Dig a little deeper into the S&P report, and while Granite may well have the highest number of respossessions in H1, it’s not necessarily the worst performer. Take a look not at repossessions but at 90+ day delinquency rates (a repossession leading indicator):

S&P - rmbs perfomance

Mound is the offspring of HBOS – and as can be seen, its portfolio performance is cause for more concern than Granite’s.

For those interested:

Gracechurch – Barclays
Permanent – HBOS
Arkle – Cheltenham & Gloucester
Holmes – Abbey
Lothian – Standard Life
Fosse – Alliance & Leicester