Russia's home mortgage delinquencies low -Moody's

LONDON, Sept 1 (Reuters) - Russian securities backed by residential mortgages have had few delinquencies and losses so far as the country's economy has weathered the credit crisis, Moody's Investors Service said.

Seven out of 11 transactions totalling $1.98 billion rated by Moody's have shown delinquencies below 0.5 percent, and none has reported losses, analysts Maria Divid and Nitesh Shah wrote in a report released on Monday.

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 of Russia. 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, including a 29 percent rise year on year in the second quarter of 2008.

This year, however, the unemployment rate has increased to 6.2 percent from a low of 4.4 percent last year, the report said. "This could lead to the pace of house price growth abating."

Also inflation is escalating, reaching 15 percent currently, as strong domestic demand combines with global food and commodity price shocks, although wage growth has been keeping up so far.

As for securities backed by auto loans, delinquencies have been stable. Moody's has rated five transactions totalling $1 billion, and only one transaction so far has reported a small loss of 0.01 percent of its original loan pool balance.

Prepayment rates have been 38 percent and higher because of increasing competition between lenders and little or no penalties for early repayment, the ratings agency said.

Moody's said data on default levels varied greatly between transactions because of a lack of clear definitions and uniform reporting on delinquencies and defaults. (Reporting by Jane Baird, editing by Jon Loades-Carter)