Released on: May 28, 2008, 11:20 pm

Press Release Author: Tom Darwin

Industry:

Press Release Summary: According to the claims of a market expert, in order to give
shape to another major securitization deal, the Halifax Bank of Scotland will have
to hike its mortgage rates.

Press Release Body: According to the claims of a market expert, in order to give
shape to another major securitization deal, the Halifax Bank of Scotland will have
to hike its mortgage rates.

The deal made by the HBOS last week which closed at £500m was such an expensive one
for the bank that to cover the losses that have been incurred, it will surely
increase the rates, says Steven Khan, proprietor of Mortgage Trading Consultancy. It
will only after the losses of the HBOS are covered through this hike that it will be
possible for the bank to make another nig securitization deal.

The securitization deal was closed by the Halifax Bank of Scotland at a rate which
was 0.85 % higher than the three-month LIBOR. One can imagine the loss as the
figures available before the beginning of the credit crunch were far more
competitive than this figure.

The securitization deal was principally constituted of AAA-rated main mortgages with
an average LTV of 61%.

However, many people do not agree with the rightness of the deal. "The levels at
which it sold were complete rubbish. If they want to do it again, they will have to
hike their rates so as to recover their losses." says Khan, the former head of
residential trading at Morgan Stanley.

He also added that this was not a trend that other lenders will follow in the future
because it would not be possible for them to securitize at such high levels. It only
means that there are investors in the market who are ready to buy bonds. But
certainly they would not do that at a price which they paid 18 months earlier.

A non-retail director at Nationwide, Mathhew Wyles says, "This step is certainly a
good one for the market. However one should not expect other lenders to follow suit
as it is not possible for them to make such a deal. I believe that HBOS is a market
leader in these kinds of deals. But the amount it will make on securitization
completely depends on it making 0.85% margins on the new lending.

The Managing director of Paragon Mortgages John Heron says, "The transaction made by
the HBOS was certainly expensive but there is something beyond that too. It seems
this was done by the HBOS to show that was possible and they can do it. Although
this kind of deals would not have been thought of eight weeks ago, it still does not
mean that the credit crunch has come to an end."

A spokesman for HBOS says, "This is the first public residential mortgage-backed
securitization which has been offered to the UK investors since July 2007. Some
enquiries from small investors sparked the deal and have been offered to a small
group. 50% to banks and 50% to the insurance companies in the UK and outside have
been involved."

http://www.firstchoiceloan.co.uk/



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