European mortgage lenders seeking diversified capital market funding will increasingly turn to whole loan sales as an alternative to securitization, which, like in the U.S., is likely to lead to even higher levels of residential mortgage loan securitizations in Europe, said a Standard & Poor's report.

"From a buyer's perspective, whole-loan products can help banks maintain asset/liability management flexibility because these products do not have to be marked-to-market," said the S&P report. "The new IAS 39 rule could spark a similar boost to the whole loan sales market in Europe, as originators will be required to recognize securitized assets on their balance sheets in certain circumstances, although it should be noted that the new rule is by no means considered to seriously curtail securitization in Europe."

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.