Barratt pondering sale of some shared equity loans

8th Aug 2011 08:19

The concept of slicing and dicing up mortgage books and selling them as "mortgage backed securities" could be about to return to favour, with house builder Barratt Developments confirming it is in the early stages of looking at options to monetise part of its interest in shared equity loans.The repackaging of mortgages of mixed quality and selling them to investors who did not understand what they were buying has been cited by many observers as a major cause of the global financial crisis in the previous decade and the ensuing credit crunch.According to the Financial Times (FT), most of the UK's listed house builders are contemplating similar moves, and have only been waiting until the reputation of mortgage-backed securities becomes less toxic. The FT claims there is demand for such loans, but investors are demanding a heavy discount on the face value of the loans.Barratt depends on shared equity for around 25% of its sales. --jh