A new report suggests that the credit quality of residential mortgage-backed securities will continue to improve in 2015.
The report from Moody’s concludes that tighter restrictions on mortgage lending will keep market health improving.
“New regulations setting strict standards for origination of qualified mortgages along with ability-to-repay rules will drive the strong credit quality of new issuance,” said Navneet Agarwal, a Moody’s managing director, in a release.
“The credit quality of non-qualified mortgages will also be strong because they need to comply with ability-to-repay rules as well.”
Moody’s also predicts that banks will securitize more of their high-credit quality assets in 2015, driven by interest rate rises.