Issuers of ABS Hang-on to Mortgage Business: Q1 2006
Posted By John Schroy On 30th June 2006 @ 09:54 In Agencies, Mortgages, Corporate Bonds, Bankers, Brokers | No Comments
After having the market for mortgage securitization virtually to themselves, while Fannie Mae was in the regulatory doghouse, issuers of asset-backed securities again faced fierce competition as government-sponsored enterprises returned with a vengeance to the market.
(See: [1] Agency Bond Issuance Recovers: Q1 2006)
The graph, based on Federal Reserve [2] flow of funds table F126, shows how, after 2003, issuers moved aggressively into the mortgage securitization market, taking over the market space occupied by Fannie Mae:
 Loans made by Issuers of Asset-Backed Securities
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In Q1 2006, with the return of Fannie Mae, there was a noticeable drop in the volume of loans by issuers of asset-backed securities.
Competition Increases
Having had two years to build a position in this market segment, perfecting loan origination methods and distribution channels, issuers of asset-back securities are not likely to surrender these gains without a fight.
Basically, we now have two clashing sectors in the mortgage securitization market: the government-sponsored agencies (with the political backing of the Democratic Party), and the issuers of asset-backed securities, mainly supported by the private commercial banking sector.
Although it is too soon to say with certainty, this increased competition may result in a greater supply of securitized mortgage paper, which, in turn, would help to depress bond prices, while driving interest rates higher, all other things being equal (which they never are).
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URL to article: http://capital-flow-analysis.com/capital-flow-watch/issuers-of-abs-hang-on-to-mortgage-business-q1-2006.html
URLs in this post:
[1] Agency Bond Issuance Recovers: Q1 2006: http://capital-flow-analysis.com/capital-flow-watch/agency-bond-issuance-recovers-q1-2006.html
[2] flow of funds table F126: http://capital-flow-analysis.info/flow-of-funds/F126.htm
[3] agencies: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=agencies
[4] Agencies, Mortgages: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=agencies%2C-mortgages
[5] asset backed securities: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=asset-backed-securities
[6] bankers: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=bankers
[7] Bankers, Brokers: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=bankers%2C-brokers
[8] brokers: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=brokers
[9] corporate bonds: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=corporate-bonds
[10] fannie mae: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=fannie-mae
[11] mortgages: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=mortgages
[12] residential real estate: http://capital-flow-analysis.com/capital-flow-watch/index.php?tag=residential-real-estate
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