Precise Mortgages has launched its first securitisation with a £164m issue backed by both near-prime and buy-to-let loans.
The pool of loans, originated this year, have an average loan-to-value ratio of 72 per cent.
Experts says the lender’s first foray into the securitisation market suggests the wholesale markets are opening up and could lead to the emergence of a raft of new non-bank lenders.
Money Marketing understands this issuance will be the first in a series of securitisations from Precise and the lender will reinvest the returns in new lending.
Since the financial crisis, very few lenders other than the major banks have been able to get transactions away in the market and drum up investor interest.
Figures from ratings agency Standard & Poor’s show there were 57 residential mortgage-backed securitisation transactions in 2007, including 29 non-prime.
By 2009 the number fell to 11, of which three were non-prime.
However, the securitisation market has recovered somewhat since then, with 26 transactions taking place last year, with four non-prime. So far this year there have been only 11 transactions, with five non-prime.
But experts say the low figure this year has been primarily caused by the Funding for Lending Scheme and that Precise’s entry into the securitisation market shows signs the funding markets are improving.
Home Funding chief executive Tony Ward, a securitisation expert, says: “This can’t be anything but positive. The debt markets are recovering, and securitisations in particular. This should encourage non-bank lenders, both existing and new ones, to come back to the market.”
John Charcol senior technical manager Ray Boulger says: “The fact the market is there means it would certainly not be surprising to see more non-deposit taking lenders enter the fray.”