Mortgage and Property Report December 2020

Welcome to the latest edition of Kensington’s Special COVID-19 Update Series. In this newsletter, we look at how the COVID-19 crisis has impacted mortgage prepayment rates, which have slowed down noticeably during and following the Spring lockdown. We examine how this has impacted different types of collateral and discuss which drivers are likely to have a temporary effect and which may be more long term.

Key Highlights

• The expected voluntary prepayment speed of a mortgage pool varies by collateral type, and is an important driver in the valuation of the portfolio
• A mix of COVID-related factors have led to a slow down in CPR in recent months across legacy and new originations

• This has been followed by a correction caused by the stamp duty holiday and pent up demand, but an expected rise in unemployment and decrease in house prices could reverse this again in early 2021

Download the report here.