Abstract
Overview
Introduction
As defaults on US sub-prime mortgages rose and the global mortgage-backed
securities (MBS) market froze, Northern Rock was unable to secure funding,
triggering debate on UK lenders' funding models that rely upon wholesale
funding and securitization in particular.
Scope
- Discusses the trends in mortgage funding over the last decade and their
benefit to lenders and consumers alike.
- Provides insight into which lenders are now particularly exposed to
liquidity shortages.
- Provides Datamonitor' s view on the future of mortgage funding in the UK.
- Incorporates primary interviews from industry experts and secondary data
from a wide range of sources.
Report Highlights
In order to ensure that they can lend at any time, mortgage lenders require
constant access to funds. Traditionally-and still accounting for around two
thirds of funding-mortgage lenders have relied upon retail deposits. However,
providers that do not have this luxury are forced to look elsewhere, usually
to the wholesale markets instead.
The highly competitive nature and diversity of the UK mortgage market is a
direct result of the development and heavier dependence on non-retail funding,
and in particular, securitization. This financial development allowed new and
innovative lenders into the marketplace during the 1990s and early 2000s.
Not all lenders are being impacted to the same degree by the liquidity
shortage and securitization freeze-indeed, it will be lenders in the
specialist sectors (sub-prime, self-certification, and buy-to-let) who will be
impacted more as these tend to rely on wholesale markets and securitization to
a greater extent.
Reasons to Purchase
- Plan your strategy with confidence using Datamonitor' s view of mortgage
funding trends in the UK.
- Evaluate the risks of certain funding strategies and understand what steps
your business can take to reduce its risk.
- Identify current best practice in the industry, and what other steps
lenders are likely to take.
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