Securitisation adapts to the ‘new normal’

UK & European Securitisation Market Review H1 2026

The securitisation market was always likely to face a challenging few months following February’s news that MFS (Market Financial Solutions) was going into administration. And across H1 2026, it felt like a market that was re-finding its feet and adjusting to a ‘new normal’.

Understandably, there has been a noticeable shift in investor behaviour across both the UK and the wider European securitisation market. Credit selection has become more disciplined, structures are facing greater scrutiny and service providers are being asked tougher questions than they were a few years ago.

Fraud continues to be a major talking point – and increased due diligence requirements from investors are highlighting the importance of transparency, data quality and asset verification. The market remains highly functional and active, but there’s a general acceptance that spread levels, investor expectations and execution processes have changed from the years that immediately followed the pandemic crisis.

Encouraging signs: market resilience despite MFS collapse

Yet despite these challenges, the performance of the European market in H1 2026 has been encouraging. AFME's latest public data shows European securitisation issuance remained robust, with €59.6bn of transactions completed in Q1 2026 and publicly placed issuance increasing to €43.3bn, representing almost 73% of the total figure.

Supporting that positive commentary, Morningstar DBRS reported that total European securitisation volumes reached €123.5bn in H1 2026, with investor-placed issuance hitting its highest point since the Global Financial Crisis. While overall volumes softened slightly due to lower retained issuance, investor demand remained resilient. Structured credit continued to dominate issuance volumes, while ABS activity (asset-backed securities) benefited from strong auto and consumer finance issuance. DBRS maintained a largely stable outlook for collateral performance and ratings stability across European structured finance markets, which is also reassuring.

STS (Simple, Transparent and Standardised) securitisation also continued to gain traction, with nearly €25bn of issuance notified under the STS framework during Q1. This remains a key indicator of market maturity and investor confidence, and I expect it to become an increasingly important requirement.

Despite the impact of MFS on the UK market, it has perhaps surprisingly kept pace with the wider European securitisation market. While uncertainty surrounding motor finance commission continues to weigh on sentiment, transactions are still being successfully executed. Encouragingly, the lenders we support continue to access the capital markets, with new issuers such as Abound and Lendable completing transactions, alongside Oodle's Dowson facility.

Investors continue to show a strong appetite for established asset classes such as RMBS (residential mortgage-backed securities), auto ABS and consumer ABS, while interest in newer forms of asset-backed finance continues to grow.

But perhaps the strongest signal of market sentiment came from Fitch Ratings' survey of market participants at the 2026 Global ABS conference. The majority of respondents expected public European structured finance issuance in 2026 to match or exceed 2025 levels. Nearly two-thirds expected issuance growth, while only 4% anticipated any decline.

The poll suggests that, despite uncertainty and performance deterioration in certain asset classes, investor confidence remains strong and demand for structured credit continues to support issuance activity across Europe, which is encouraging. 

There are also signs that European securitisation may be entering a more sustainable phase of growth. Rather than relying solely on traditional RMBS and auto issuance, the market is increasingly welcoming new issuers, a wider range of asset classes and broader use of securitisation as a capital and funding tool. That's good news for the UK as a more diverse market is ultimately a more resilient one. I don't expect RMBS to lose its dominant position any time soon, but we're certainly seeing a growing number of non-RMBS transactions.

Key takeaways

H1 2026 was a story of resilience and the potential for renewed optimism.
At the same time, fraud concerns and tighter investor scrutiny have fundamentally changed expectations – and these are changes that the market is still adapting to.
However, capital remains available, investor demand remains healthy and the European market continues to demonstrate impressive depth and maturity.

Author: Owain Chambers, Director of Capital Markets

With over 20 years' experience in the banking industry — the last 10 focused on capital markets — Owain has been the key driver behind the growth of Lenvi's Standby Servicing product, helping it become the largest supplier of this service across Europe. He has been directly involved in more than 400 Capital Markets contracts.