Prime suspect
Knowing the exact quality of the loans in a securitisation pool is key if investor appetite for mortgage securities is to return. Chris Ames, an asset-backed portfolio manager at Schroders, discusses what's prime, what's not, and what has to happen for the markets to return to the way they were
What is your outlook for the mortgage markets?
With the permanent exit of so many highly levered investors from the asset-backed securitisation (ABS) market, spreads are unlikely to go back to the tight levels of the past few years. This means that unless securitisation is entirely replaced as a financing mechanism for banks' mortgage lending operations, lending margins on mortgages are going to have to move out to reach equilibrium with today's spreads. It looks like the UK is already moving
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