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Investors still believe in securitisation

A whopping 75% of investors believe securitisation still has a role to play in funding consumer lending, a survey published last week reveals.

Investment giant JP Morgan polled more than 170 global investors about whether they are likely to return to the market, and also asked about their views on European residential mortgage-backed securities.

The survey provides an insight into the attitudes of individuals who have invested in RMBS products from specialist lenders such as GMAC-RFC and Platform.

In a presentation delivered at Mortgage Strategy’s Buy-to-let Summit at the Four Seasons Hotel in Fleet, Hampshire last week, Steven Khan, an independent consultant and former head of residential trading at Morgan Stanley, said JP Morgan’s survey demonstrates that investors still have confidence in RMBS deals.

He says: “Most investors still think securitisation works. For the next two or three months, they plan to study the market but in the longer run they are likely to return.”

Khan expects investors to start coming back towards the end of this year.

He says: “It will only take one in-vestor to break the mould.”

Khan says investors were driven away from the market because of plunging confidence in the ratings of mortgage-backed bonds.

His presentation revealed a sharp decline in securitisation business this year. While this reached £524bn in 2007, volumes of only £20bn have been ach-ieved so far this year.


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