Page 39 - Future Demands Jan 2021
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FUTURE DEMANDS
ALEX MADDOX
CAPITAL MARKETS & DIGITAL DIRECTOR – KENSINGTON MORTGAGES
RESILIENCE IN THE
FACE OF THE STORM
Why capital markets should feel optimistic about 2021
Capital Markets, like most other aspects of life, came to a grinding halt in March when the COVID-19 crisis first caused the UK to lockdown.
Securitisation spreads shot through the roof, and any planned deals were put on hold as investors shied away in light of significant volatility in wider financial markets.
New lending also slowed down considerably as the sudden-onset restrictions on property access made originating new loans difficult, and lenders’ risk appetite decreased in the face of economic uncertainty, all of which resulted in an abrupt reduction of available mortgage products.
The government was quick to step in, launching various support schemes, including the Term Funding Scheme with additional benefits for SMEs (TFSME) which, like the original TFS scheme which followed the 2016 Brexit vote, provided quick and cheap funding to lenders that are part of the Sterling Monetary Framework.
When infection rates started declining and the economy reopened in the summer, the securitisation market slowly kicked off again.
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