A new ratings agency report suggests that no near-term recovery is expected in the non-agency securitization market.
The report, Why A Revival In The U.S. Private-Label RMBS Market Is Still Years Away, was announced Wednesday by Standard & Poor’s Ratings Services.
According to the New York-based company, “U.S. private-label residential mortgage-backed securities have faded into the shadows.”
S&P noted that it was the housing market that was a primary contributor to the exit of investors in private-label RMBS, and a market revival can’t be expected while housing is still weak.
“A revival in private-label RMBS is still several years away,” the report said.
However, S&P Senior Director Erkan Erturk said some short-term gains in the private RMBS market might be made as a result of a potential drop in conforming loan limits and passage of covered bond legislation.
But any long-term gains won’t be made until the housing market strengthens and housing finance reform is in place.