KBRA Releases Research – Equity Release Mortgages: Supportive Environment for UK Expansion … and Beyond?

LONDON--(BUSINESS WIRE)--KBRA UK (KBRA) releases a research report examining the equity release mortgage (ERM) market in the UK and supportive demographic trends that signal potential expansion across the rest of Europe.

Ageing populations have resulted in an increasing number of retirees with meaningful value within their homes turning to ERMs for a variety of purposes, including leveraging the product to age in place. KBRA has received an increasing number of inquiries about ratings for securitisation transactions containing ERM collateral from both originators and investors. KBRA expects issuance of ERM-backed RMBS to continue rising in the UK and potentially expand in Europe. In the report, we highlight the key features and notable trends in this burgeoning corner of RMBS.

Key Takeaways

• Demographic trends within the UK and across Europe provide a supportive background for the development of ERMs as a product for later life lending.
• House price appreciation in the UK has provided a large store of wealth available as collateral for ERM lending.
• Securitisation of ERMs has developed from the initial programmes, as the product has become more mature and an industry association has established standard practices.
• The performance of recent UK transactions has generally been within expectations. Cumulative losses in recent transactions have tended to be very low to nonexistent, while credit enhancement has remained relatively stable or grown over time.

Click here to view the report.

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About KBRA

KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.