According to European credit risk managers in the second European Credit Risk Survey conducted by FICO and Efma, the delinquency picture is mixed. Overall, respondents’ outlook for the next six months is mixed, but the results were slightly better than the last survey (February 2011) for most credit products.
Where isn’t this true? Mortgages. The share of respondents who expect mortgage delinquencies to remain the same or rise jumped from 69 percent in February’s survey to 84 percent. Only 16 percent of respondents expect mortgage delinquencies to decrease somewhat. In the UK, 100 percent of respondents expect delinquencies to either worsen (47 percent) or remain at their current high levels (53 percent), while in Spain the number was nearly as high at over 90 percent.
As Mike Gordon, FICO’s managing director for EMEA, notes, “Based on our survey’s results, it’s too early to call the bottom on mortgage performance.” Given the linkage between mortgage performance and overall economic recovery, the pessimism of Europe’s lenders is sobering.
