UK RMBS supply is expected to fall as UK mortgage lending materially contracts – over time reducing collateral available for securitisation.

UK mortgage approvals fell from 57,900 in October to 46,100 in November.

This acts as a positive force on prices, in an environment in which RMBS prices are otherwise suffering. Credit is seen as worsened on RMBS – as interest rates rise (increasing repayments for borrowers), as inflation has risen (reducing disposable income for borrowers to repay loans), and as unemployment increases. UK RMBS credit spreads have, as a result, increased materially in 2022.