The Financial Times on "one small corner of the market ... likely to show the first signs of any strains" on Brexit, Bank of England rate hike deliberations and doubts over the UK's economic outlook
- Bonds backed by "non conforming" mortgages
- Still contain a large portion of home loans made before the financial crisis
- A decade on, spreads on bonds backed by the home loans are at their lowest level since the crisis (JPMorgan)
- However, some investors and analysts say the market will be worth watching as a proverbial canary in the coalmine
- "In general, UK non-conforming RMBS will be sensitive to Brexit . . . that is because of the nature of the borrower," says Altynay Davletova, an analyst at Bank of America Merrill Lynch. "This is not a typical borrower - the average mortgage size in these deals is close to £100,000, [and] we tend to think of them as lower-income borrowers with previous negative credit"
