The loan originators, bankers, and investors who create and finance the market in securitized mortgage debt are showing concern that the weakness in sub-prime will impact the broader US mo

The loan originators, bankers, and investors who create and finance the market in securitized mortgage debt are showing concern that the weakness in sub-prime will impact the broader US mortgage market.

In an online survey of attendees of the upcoming Spring ABS Show, which will be held in Miami Beach from April 29 - May 2, 85% of respondents expected that sub-prime will have at least 'partial impact' on the performance of higher rated mortgages. 

Also, more than 75% of respondents believed that home prices will fall for the remainder of 2007, and that home prices are by far the most important factor in determining loan performance. In recent years, investor appetite for mortgage-backed securities has been a large factor in ensuring credit availability to home buyers.

Other important sentiments revealed by the survey include:

• More than 50% of respondents expect that the ABX Index, the benchmark for sub-prime performance will trend lower in April, while less than 25% believe it will head upward.
• More than three quarters of ABS investors do not see the current sell off in sub prime securities as a 'buying opportunity.'
• 40% of respondents viewed changes in home prices as the single greatest determinant of loan performance, more than twice the number who pointed to either employment or GDP growth.
• Respondents were evenly split as to whether new national regulatory proposals will have a positive of negative impact on the health of the home mortgage market.

'Although survey participants named home prices as the most important driver of sub-prime mortgage performance, we expect that interest rates or the labour market could be just as significant, and on that front, there is much uncertainty' said Mark Adelson, head of structured finance research at Nomura Securities and a presenter at Spring ABS.