Lenders take slow road back to RMBS

BOB HUNT, CHIEF EXECUTIVE, PARADIGM MORTGAGE SERVICES
BOB HUNT, CHIEF EXECUTIVE, PARADIGM MORTGAGE SERVICES

The recent half-year results issued by banks and the subsequent questions about the low level of lending to the business sector has revealed the strength of political pressure on lenders.

With big banks still owned in large part by the state it was obvious that the timing of state handouts, quantitative easing and profitable results would be met with shakes of the head about why lending is so low.

So the banks had to respond and they have done so quickly, with the formation of a task force looking at how credit to businesses can be boosted. It’s interesting that this task force is first going to look at policy measures to restart the securitisation market.

This is the Holy Grail. Only a small number of securitisations have taken place since the crisis struck and it is widely accepted that only with the return of this market will we see lending levels increase.

We should be pleased that this is on the agenda but not expect any big improvement in the short term.

Confidence in mortgage-backed securities has still not recovered.

Measures to improve the securitisation market are overdue and anything that boosts liquidity is to be welcomed.

But the fact that investors have been burnt before by the toxic nature of securitisations means they will remain cautious.

Quite rightly, loan quality will be everything and a slow return to health for the securitisation market should be the initial aim for the task force.