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 aview on the future of mortgage funding in the UK. Incorporates primary interviews from industry experts and secondary data from a wide range of sources.

Highlights

In order to ensure that they can lend at any time, mortgage lenders require constant access to funds. Traditionallyand still accounting for around two thirds of fundingmortgage 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 freezeindeed, 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 aview 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.