Moody's Positive on 'Young' Mortgage Market

Russian securities backed by residential mortgages have had few delinquencies and losses so far as the economy has weathered the credit crisis, Moody's Investors Service said last week.

Seven out of 11 transactions totaling $1.98 billion rated by Moody's have shown delinquencies below 0.5 percent, and none has reported losses, analysts wrote in a report released Sept. 1.

Prepayment rates have been high, averaging 20 percent in the first half of 2008, as borrowers seek to repay mortgage loans as fast as possible.

"Russia's economy has weathered the global credit crunch relatively well, partly due to the support of oil prices," the ratings agency said. "Russia's relatively 'young' mortgage market has been growing briskly as many Russians aspire to become homeowners," it added.

The country's outstanding mortgage debt reached about $35 billion in the second quarter, or about 2 percent of gross domestic product, Moody's said, citing data from the Central Bank. That compares with an average of 49 percent of GDP in the European Union.

House building has not been able to keep up with demand, and prices have risen rapidly, Moody's said. It cited data for the Moscow region, where prices have risen ninefold since 2000.