Polaris 2026-2 PLC secures final Fitch ratings for UK mortgage securitisation

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Dan Blystone

6 hours ago

Polaris 2026-2 PLC secures final Fitch ratings for UK mortgage securitisation — Polaris closes Fitch deal

The latest Polaris transaction brings together UK owner-occupied and buy-to-let mortgages, including loans first originated in 2021 and newer lending from 2026. The deal marks the 13th issue in the Polaris series and reflects Pepper Money's specialist lending focus in a market with higher borrower complexity.

Highlights

Polaris 2026-2 PLC received final Fitch ratings on eight tranches, with class A at AAAsf and class B at AA-sf.
The securitisation pool contains 26.1% buy-to-let loans, 18.2% of borrowers with county court judgments, and weaker arrears than high street prime lenders.
Fitch's sensitivity analysis indicates that a 15% rise in foreclosure frequency and 15% drop in recovery rate could cause model-implied downgrades of up to three notches for class B and C notes.

Final ratings for notes and asset mix

As reported by Fitch Ratings, Polaris 2026-2 PLC has received final ratings across eight classes of notes after earlier expected ratings were assigned. Class A is rated AAAsf, class B AA-sf, class C A-sf, class D BBBsf, class E BB+sf, class F B+sf, class X1 BBsf and class X2 B+sf.

The securitisation is backed by owner-occupied and buy-to-let mortgages originated by UK Mortgage Lending Ltd, which is wholly owned by Pepper Money Limited. The loans are secured on properties in the UK, and the pool includes mortgages previously securitised in Polaris 2022-1 PLC alongside more recent loans originated in 2026.

Credit profile and market implications

The mortgage pool contains 26.1% buy-to-let loans, mainly from 2021, while Pepper has only recently resumed buy-to-let lending. Fitch says arrears performance data is weaker than at high street prime lenders, which it views as consistent with the originator's more complex target market.

Fitch also highlights that 18.2% of the loans involve a borrower with a county court judgement, with about 10.9% of those cases showing a balance above GBP1,000. Its sensitivity analysis shows that a 15% increase in the weighted average foreclosure frequency and a 15% fall in the weighted average recovery rate would lead to model-implied downgrades of up to three notches for the class B and class C notes.

Our earlier article on the UK’s retreat from tighter audit oversight explained that the government has dropped long-planned reforms to strengthen the Financial Reporting Council, easing pressure on the accounting sector after years of stricter supervision. We noted that this shift reinforces the Big Four’s dominance and pricing power, with audit fees rising sharply while regulatory focus increasingly shifts toward firms outside the top tier.

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