Scope’s 12-month trailing ratings drift for structured finance transactions continued its shift into positive territory in the second quarter of 2025, with a positive ratio of upgrades over downgrades not seen since early 2022.

Collections fell 28% in the first half of 2025 compared to H1 2024, confirming the downward trend that began in 2023. All collection strategies contributed to the decline: judicial proceeds fell 30%, DPOs by 27% and note sales by 20%.

Higher mortgage rates have increased pressure on housing affordability. Longer fixed-rate mortgages periods limit the risk of shocks to the banking system and support the resilience of euro-area mortgage markets.

Collections in May 2025 rose 12% month-on-month to EUR 144m but were 38% lower than the average May volumes of the previous three years.

Collections in April declined by 22% month over month and were 35% lower than the April average for the three previous years, indicating a notable slowdown in recovery performance.

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Italian NPL collections in March rose 45% month on month, consistent with previous years. But while monthly volumes bounced back from a poor February, they were still 43% below the three-year March average.

European households will see housing affordability deteriorate as the supply-demand gap persists and prices continue to rise. Stimulus measures are urgently needed to boost housing supply in European countries where the situation is particularly acute.

The first quarter of 2025 saw the highest quarterly issuance of European CMBS since the global financial crisis but refinancing risk for securitised loans is still high, while US tariffs could affect industrial, logistics and retail assets.

Scope’s 12-month trailing ratings drift for structured finance transactions moved into positive territory in the first quarter of 2025, with a positive ratio of upgrades over downgrades not seen since 2022.