European RMBS 2025 Outlook: On a Promising Path Forward

This commentary presents our outlook for the European residential mortgage-backed securities (RMBS) market in 2025.

Key highlights include:
-- RMBS issuance once again represented the largest share of European securitisation issuance in 2024, but we expect slightly lower volumes for 2025.
-- After increasing over 2024, mortgage arrears may experience limited improvement this year supported by central banks entering an easing cycle and overall stable employment levels.
-- House price growth in several European countries was positive in 2024, and falling rates and strong demand should continue to support house prices in 2025 in most European jurisdictions.

"We have concerns surrounding pre-global financial crisis collateral, but transactions backed by such loans are structured to withstand higher arrears and default levels, and thus we maintain a stable outlook for these credit ratings", said Rehanna Sameja, Senior Vice President, European RMBS & Covered Bond Ratings. "Our performance outlook on all other sub asset classes across UK and European jurisdictions expects limited movement and therefore our outlook for credit ratings is stable across the board for European RMBS."