Kroll Bond Rating Agency Releases Macro-Market Research Report on Low Rates, Low Growth & Falling Market Liquidity

NEW YORK--()--Kroll Bond Rating Agency (KBRA) has released a new report entitled “Low Rates, Low Growth & Falling Market Liquidity.” The report makes the following key points:

  • KBRA notes that there is a growing lack of liquidity in some of the most important U.S. markets for residential mortgages and related securities, a lack of business volumes driven by low or even negative interest rates and excessive regulation. We believe that the combination of restrictive regulations on credit creation, unnecessary increases in capital and liquidity requirements for banks, and the deflationary effect of low interest rates are potentially producing the circumstances for a serious liquidity crisis.
  • KBRA believes that without relief in terms of higher interest rates and meaningful regulatory reform, smaller non-bank seller/servicers operating in the U.S. mortgage market could fail. If that occurs, advocates of increased regulation may be surprised to discover that the creditors of these entities may simply abandon unprofitable mortgage servicing portfolios.
  • KBRA believes that regulators and policy makers need to take notice of the dwindling liquidity in and capital available to support the markets for mortgage servicing rights, mortgage-backed securities, and even government securities, and consider what it says about the economic model for lending, loan servicing and securities dealing in the current regulatory environment.

To read the report, please click here.

About Kroll Bond Rating Agency

KBRA is registered with the U.S. Securities and Exchange Commission as a Nationally Recognized Statistical Rating Organization (NRSRO). In addition, KBRA is recognized by the National Association of Insurance Commissioners (NAIC) as a Credit Rating Provider (CRP).

Contacts

Analytical Contact:
Kroll Bond Rating Agency
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com
or
Follow us on Twitter!
@KrollBondRating

Contacts

Analytical Contact:
Kroll Bond Rating Agency
Christopher Whalen, 646-731-2366
Senior Managing Director
cwhalen@kbra.com
or
Follow us on Twitter!
@KrollBondRating