Speakers: RMBS Issuance to Abate

The rapid growth in the issuance of residential mortgage-backed securities cannot be sustained much longer, according to speakers at S&P's annual structured finance seminar in Orlando.The issuance of nonconforming mortgage products surged in the first quarter, reaching a level 42% higher than that of a year earlier, S&P reported. It was the fifth consecutive quarter of rising issuance. "It is unusual to have such a significant drop in interest rates and appreciation of real estate prices simultaneously," said Rod Dubitsky, a director in Mortgage ABS Research at Credit Suisse First Boston. Mr. Dubitsky expressed doubt that the conditions will continue for long. "Volume will still be strong, but not as strong as we have seen," he said. Thomas Zimmerman, executive director of UBS Warburg, told the seminar that low interest rates and the refinancing boom are not the only factors involved in the RMBS volume growth. "It is difficult to sort out exactly whether the explosion in volume over the past few years is because of the decline in rates or from a broadening of the product in the subprime market," Mr. Zimmerman said. "It may also be ... the general credit decline by consumers in the U.S. that has pushed them back into the subprime area."