'No consent, no sale' law will hit Irish lenders on bonds: S&P
A proposed law to force banks to seek permission from borrowers before selling their mortgage would limit lenders' ability to tap the bond markets, rating agency S&P Global has warned.
The Sinn Féin-sponsored 'No Consent, No Sale' Bill, if fully implemented will likely constrain issuance of Irish residential mortgage backed securitisation, particularly non-performing and re-performing transactions, S&P said.
RMBS typically sees lenders bundle mortgages into packages that can be borrowed against on the bond markets - either in order to raise new cash from further lending or to shift risk off the bank's own balance sheet. If those option were closed the supply of credit would likely fall.
In a wide-ranging report on the mortgage market, S&P said the generation of home-owners trapped after the crash in often unsuitable starter housing has begun to move in significant numbers.
S&P said that since 2016 it has seen evidence of increased prepayments - mortgages paid off early, typically by movers - across the pools of Irish residential mortgages that it rates.
The decline of negative equity and increased supply of new homes are the main drivers.
House prices are up 83pc since the financial crash, and the share of borrowers in negative equity has dropped from 40pc in 2012 to 10pc in the pools rated by S&P, the agency said. Even so, the general under-supply of housing "should support property prices within RMBS transactions over the medium term", S&P said.
On the flip side a "long tail" mortgage arrears will remain persistently high here, despite the economic bounce back and improvements since the worst period of the crisis.