Arran Residential Mortgage Funding No.3 PLC

The third issue from RBS's Arran residential mortgage vehicle, which follos on strucurally
from the previous two. For this transaction, the collateral comprises of 71,863 mortgage loans
made to individuals and secured on residential properties located in England, Wales and
Scotland.

The actual loans can be broken down as follows; fixed 39.92%, discount 34.49%, variable
20.86%, base rate tracker 4.44%, and capped 0.29%. Average seasoning is 70mnths, with a
current WA LTV of 63.35% (arran No.2, seasoning >4yrs, LTV 62%). Geographically, the pool
is heavily concentrated on the South East & Greater London (42.79), with the next three
concentrations being: the North West (12.24%), Scotland (9.18%), and the South West (8.66%).

All tranches printed either in line or through guidance of 4-5/3a/4a/6-7/5-6/6-7/10-11/9a/10a
/14a/lo teens/13a/mid 20s/lo 20s/mid 20s. The +9bps print on the 4.9yrs AAA tranche is the
second deal so far this year to break through the +10bps barrier for long dated AAA notes
with Permanent 2007-1 (Feb-2007) being the only other UK RMBS where the long dated AAAs
priced in single digit territory. Recently,the sterling/euro AAA notes for Holmes 2007-2 also
priced at +9bps, albeit for a shorter average life (4.09yrs). Typically for UK prime issuers, the
US$ tranches prints around 1 to 2bps inside the corresponding euro piece, although this didn't
seem to be the case here with the 4.9yrs US$ dollar tranche also pricing at +9bps. Further
down the capital structure, the euro and sterling AA/A notes priced in line with Holmes 2007-2.


Compare/contrast: Arran Res No.2, Holmes 2007-2, Permanent 2007-1,