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LONDON-Securitisation of mortgages on homes is set to reach record levels in 2003 despite a slowdown in the housing market.

New research by Standard & Poor shows that £32 billion ($51.6 billion) of bonds backed by residential mortgages have been issued so far this year, double that of the last year.

Brian Kane, a director at S&P said: “The residential mortgage-backed securities (RMBS) market has so far proved resilient to a weakening economic climate.” He added: “Unprecedented issuance looks set to be achieved in 2003 despite indications that house prices may have topped out in parts of Europe and economies are slowing.”

A major driver of the shift to securitisation had been the war in Iraq which had prompted investors to view property as a safe haven. The trend will continue in the short term but the credit rating agency warns that over the longer term continued economic weakness, upward pressure on interest rates, and rising unemployment could negatively affect the market for securitisated mortgages.

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