Standard & Poor's, a credit rating agency, said Tuesday that it is increasing its loss rate assumptions for subprime mortgages which originated in 2006 and packaged in bonds sold to investors.

S&P will now assume a 19 percent loss rate on 2006-vintage subprime loans, compared to previous loss rate assumption of 14 percent. This is due particularly to the cumulative losses from 2006-vintage subprime bonds which increase more than a hundred percent since July 2007.

The adjustment was arrived at as S&P modifies its overall ratings assumptions for reviewing mortgage-backed securities and collateralized debt obligations supported by mortgage-backed securities.

Upon finalizing the adjustments its ratings assumptions, S&P will review all outstanding mortgage-backed debt. Bonds and debt originated in 2005, 2006 and 2007 are likely to be affected the most as they are more sensitive to the current weakening in the market, S&P said in a statement.

Mortgage defaults, particularly in subprime mortgages and home equity products given to customers with poor credit history have risen in the past months. With what is happening S&P is making changes to the assumptions as well.

S&P is also revising its assumptions for excess spread, which is excess capital placed in a deal to cover a portion of losses.