Numerous, sometimes contradictory, reports on the state of U.K. housing have created a general uncertainty as to the market's future. While frustrating, this has done little to quell the growth and performance of securitization in the sector.
For some time now, the securitization industry has maintained that borrower fundamentals, interest rates and unemployment have remained resilient to the global economic downturn. Even in the event of a worst-case scenario, analysts maintained that RMBS structures benefit from excess spread levels to mitigate losses. Nonetheless, a dramatic fall in interest rates combined with rising unemployment could add some pressure to these structures.