At a time when the market provides low bond yields, it's no surprise that asset manager will want to provide their customers with alternative investment opportunities that will generate some return. Accordingly, the world's largest asset manager - BlackRock, has built a partnership with a UK lending platform to have access to pools of mortgages which could be sold as bond-like products. These type of structures have been done in the US as well, where just last April an investor purchased a packaged of loans on Funding Circle. Perhaps after the Lending Club fiasco, institutional investors will start thinking of the securitization of mortgages as an alternative asset class.
“They saw there’s an opportunity for those clients who want to take a position in mortgage assets to actually own the risk on the assets directly,” said Bob Young, chief executive of Fleet Mortgages. “BlackRock manage clients directly, then we originate pools of loans for clients based on what those clients are looking for risk and return wise.”