Fitch: Portuguese Housing Market More Liquid and Transparent

Fitch Ratings says in a new report that recent sales of properties from the possession of lenders are pointing to greater market liquidity and transparency in the Portuguese housing market as the economy continues to recover.

The distressed sale discount to the indexed original valuation, referred to as the quick-sale adjustment (QSA), has been on a declining trend. In 2014, the average QSA reached 31.9%, down from 40.1% in 2010, indicating increased market liquidity. The data also suggests enhanced accuracy of revaluation upon lender possession.

In 2Q15, the proportion of loans in early-stage arrears drifted lower, while late-stage arrears, excluding defaults, are below 1% for the third consecutive quarter. The pace of newly defaulted loans and the stock of outstanding defaulted loans increased only slightly in 2Q15.

New mortgage lending remained depressed in 1Q15, but crept above its three-year low. Fitch expects lending volumes to remain stable throughout 2015.

Fitch's 'Mortgage Market Index - Portugal' is part of the agency's quarterly series of index reports. It includes information on the performance of residential mortgages, predominantly from RMBS transactions, but also those held on bank balance sheets. The report sets the housing market against the macroeconomic background and provides commentary on emerging trends.

The data behind the Mortgage Market Index report is also shown in the RMBS Compare which is an Excel-based tool for displaying the performance of individual transactions against each other and Fitch's benchmark indices. It also includes indicators of the broader mortgage markets, home prices and macroeconomic background.