Mortgage swaps seen as speculation tool

By Daniel O'Leary
12 May 2014

Clearable mortgage swaps would primarily be used to speculate on the mortgage securitisation market, with hedging of positions being a secondary use of the instruments, according to traders.

Mortgage and credit traders told GlobalCapital the high quality of collateral backing new mortgage securitisations, together with the lack of new issuance, meant large holders of residential and commercial mortgage securitisations will likely not have a need to hedge risk immediately.  “A lot of these investors were traditional ...

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