Sector developments and company hires

UK mortgage refinanceability eyed
DBRS Morningstar has analysed the loan-level information of almost 400,000 loans within 36 portfolios of securitised UK mortgages to assess how rising interest rates affects affordability ratios, which borrowers are the most vulnerable and how many mortgages are expected to revise their rates in the short term. The findings suggest that within the owner-occupied segment, about 77% of mortgages will see their interest rates resetting over the next two years. For borrowers in the three lowest income bands, this number is 85%.

DBRS Morningstar notes that even a moderate increase in interest rates (+1%/2%) can materially challenge affordability for the lowest income earners, leading to a relative increase in their mortgage payments by +15%/30%. The ability of borrowers to refinance will depend on how high interest rates rise: a sharp increase in rates could leave many borrowers unable to refinance, given their resulting high debt-to-income ratios.

Meanwhile, the study shows that about 90% of buy-to-let mortgages are interest-only and pay an interest rate of 2.5% on average. While these mortgages might see their payments double or triple if interest rates increase significantly, most of these loans are in a fixed-rate period and have a longer time to reset than owner-occupied loans.

In other news…

Acquisition enhances SPO offering
S&P has acquired the Shades of Green business from the Center for International Climate Research (CICERO), Norway's institute for interdisciplinary climate research. The business will be integrated into S&P Global Ratings and further expand its ESG second-party opinions (SPOs) offering.

Shades of Green provides independent, research-based SPOs of green, sustainability and sustainability-linked financing frameworks and climate risk assessments and impact reporting reviews grounded in climate science. S&P will retain an office in Oslo, where Shades of Green is based. CICERO will continue to lend its climate expertise to Shades of Green and provide insights to S&P's other leading sustainability businesses. 

North America
SFA has announced the incoming class of its board of directors: Michael Canter of AllianceBernstein; David Ellis of Ares Management; Mia Koo of Brighthouse; Marlo Young of Dentons; Alberta Knowles of EY; Bryan Tsu of PIMCO; Song Kim of Upstart; Kyra Fecteau of Wellington; and Jennifer Doyle of Wells Fargo. A significant portion of the SFA’s 40 board members is rotated annually to provide fresh perspectives and expertise.