PMF 2026-1 PLC class A notes win Fitch AAAsf final rating

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PMF 2026-1 Fitch AAAsf rating

Highlights

Fitch assigned AAAsf final rating to PMF 2026-1 PLC class A notes, backed by prime buy-to-let mortgages from Charter Court Financial Services Limited.
The loan pool features a weighted average seasoning of 39 months and an indexed current loan-to-value ratio of 68.9% at cut-off.
Fitch models portfolio yield compression on the assumption that up to 30% of product switches occur before May 2031 at a minimum post-swap margin of 1.75% over SONIA.

Transaction structure and rating rationale

As reported by Fitch Ratings, the securitisation is backed by prime buy-to-let mortgages originated by Charter Court Financial Services Limited, which is rated BBB with a Stable Outlook and F3. The loan pool includes properties in England, Wales and Scotland and has a weighted average seasoning of about 39 months at the cut-off date.

Fitch says the portfolio benefits from positive selection, with borrowers showing no adverse credit history, rental income verification, full property valuations and lending controls that support its use of the prime foreclosure frequency matrix. Most of the loans come from CCFS's tier 1 and tier 2 originations, and the agency highlights a weighted average original loan-to-value ratio of 72.8%, a sustainable loan-to-value ratio of 78.4% and an indexed current loan-to-value ratio of 68.9%.

The agency also points to a hedge put in place at closing to manage interest-rate risk from fixed-rate mortgages in the pool. Fitch notes that permitted product switches can reach up to 30% of the closing balance until the step-up date in May 2031, and it models portfolio yield compression by assuming all eligible switches occur before that date at the minimum post-swap margin of 1.75% over SONIA.

Prepayment assumptions and downside risks

Fitch says prepayment behaviour is likely to be shaped by the timing of loans moving from fixed rates to follow-on floating rates, while the mortgages are also subject to early repayment charges. To reflect that profile, the agency applies an alternative high prepayment stress that follows the pool's fixed-rate reversion schedule, with the assumed rate capped at 40% a year and floored at the level generated by its ResiGlobal model.

The rating agency says weaker economic performance could hurt the transaction by driving higher delinquencies and defaults, which would reduce credit enhancement available to the notes. It also warns that an unexpected fall in recoveries could lower net proceeds and leave the notes exposed to negative rating action if the decline is severe enough.

Fitch adds that the class A notes already sit at the highest achievable level on its rating scale, meaning there is no scope for an upgrade from the current rating.

Our earlier article on the Netherlands’ residential mortgage market outlook for 2026 noted that improving housing activity and resilient mortgage lending were supporting stable performance in Dutch RMBS. We also highlighted that demand-driven price growth, increased transaction supply from investor sales, and strong borrower fundamentals were helping underpin structured finance exposure linked to housing credit, despite local variations.

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