PARADISE ISLAND, Bahamas - In addition to the recent passage of the Alternative Mortgage Transaction Parity Act (see ASR 9/30 p. 10), the net-interest margin (NIM) sector faces the challenge of a potential rising interest rate environment, when the economy does in fact rebound, noted market sources at the Information Management Network ABS East conference last week. Thus far this year, the asset class has fared extremely well, benefiting from declining rates that have led to faster-than-expected paydowns, giving investors the higher yields inherent within the sector much sooner than anticipated.

A trend born out of these quick paydowns is the re-NIMing of residuals, which is expected to pick up in the new year, as 2000 vintage deals reach maturity. Instead of the initial 27-month principal repay NIMs have been structured for, they have been paying down in approximately 15 months.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.