Adam Grotzinger explains two of the reasons Neuberger Berman believes there‘s an opportunity for investors to reduce 'home bias' in portfolios and to generate income from the US home loan market. Firstly, new regulations post the GFC has become highly constrictive with tight standards around documentation and the ratio of debt relative to income. He says the new framework is a positive in terms of ensuring that people applying for loans are subject to appropriate background checking. Secondly, from a supply and demand perspective there are now fewer lenders servicing the market. The limited supply of loans means that those people who pass the credit worth tests need to pay a premium due to a relative scarcity of available credit. Watch the video for more detail:
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