The subprime shake-down

The subprime mortgage market - the root of all the summer's troubles - may well be in turmoil but nobody is suggesting it is about to disappear as a source of financing for securitisations. The question is, what part will it play when the dust finally settles? Laurence Neville reports

Despite a rash of gloomy headlines, the US subprime market is far from extinguished. It presents too big an opportunity to simply shrivel up and die. In 2006, subprime represented around a fifth of all mortgage origination in the US. Together, subprime and Alt-A made up a third of all lending. The growth potential that lenders have been chasing over the past four to five years remains. But US mortgage finance post-crisis will look very different from how it looked before.

Needless to say, the