Investors in residential mortgage backed securities (RMBS) are acting irrationally, and demanding excessive premiums, says the Council of Mortgage Lenders (CML).
The CML also demanded the Treasury publish the findings of Sir James Crosby’s review of the RMBS market after the Bank of England said the financial system continues to face serious risks. Prime mortgage backed securities are severely undervalued in the present market, the CML claims, despite figures showing a massive increase in arrears and repossessions. Citing the central bank’s Financial Stability Report published today, the CML says: “Investors are demanding a significant premium for uncertainty, far exceeding any premium that might be demanded on any rational prognosis of performanc...
To continue reading this article...
Join Professional Adviser for free
Signup and gain exclusive members-only insights
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes
