Asset-Backed Securities Market Report 2025

The asset-backed securities market size has grown strongly in recent years. It will grow from $2.42 trillion in 2024 to $2.59 trillion in 2025 at a compound annual growth rate (CAGR) of 6.9%. The growth in the historic period can be attributed to rise of securitization as a financial practice, economic stability and low-interest rate environment, mortgage market growth and housing demand, development of credit rating agencies, expansion of consumer credit markets.

The asset-backed securities market size is expected to see strong growth in the next few years. It will grow to $3.36 trillion in 2029 at a compound annual growth rate (CAGR) of 6.6%. The growth in the forecast period can be attributed to regulatory frameworks supporting securitization, demand for diversified investment portfolios, impact of digital assets and tokenization on abs, increased focus on esg (environmental, social, governance) factors, shifting demographics and consumer behavior. Major trends in the forecast period include financial innovation in structuring asset-backed securities, technological advancements in financial modeling, integration of blockchain for transparency and efficiency, adoption of machine learning and ai in abs analytics, innovation in risk-sharing structures in abs, integration of real-time data in abs valuation.

The anticipated growth in the asset-backed securities market is expected to be propelled by the increasing level of real estate activities. Real estate, encompassing land, buildings, and natural resources, spans various property types, including residential, commercial, and industrial buildings. Asset-backed securities play a crucial role in the real estate sector by facilitating capital raising, risk management, and improved liquidity. For instance, as of 2023, Trading Economics reports a rise in the homeownership rate in the US, increasing from 65.90% in the fourth quarter of 2022 to 66% in the first quarter of 2023. Additionally, Realtor notes a 54.7% increase in homes for sale in December 2022 compared to the previous year. Consequently, the surge in real estate activities is a driving force behind the growth of the asset-backed securities market.

The growth of disposable income is anticipated to contribute to the expansion of the asset-backed securities market. Disposable income denotes the funds available to an individual or household for spending and saving after tax deductions from their total income. Increased disposable income generally results in borrowers having more resources to service their debts, reducing the likelihood of defaults in the ABS pool. This, in turn, leads to improved performance and higher returns for investors in the security. For example, a June 2022 report from the Bureau of Economic Analysis indicates a monthly climb of $113.4 billion, or 0.5%, in personal income in May 2022. Disposable personal income (DPI) also rose by $96.5 billion (0.5%). Thus, the growing disposable income is a significant factor driving the growth of the asset-backed securities market.

The emergence of asset-backed securities funds is a noteworthy trend gaining traction in the asset-backed securities market. Major players in the market are actively developing innovative services centered around asset-backed securities funds to reinforce their market standing. For instance, in March 2023, Morgan Stanley, a US-based investment banking company, unveiled a floating-rate global asset-backed securities fund. This fund provides investors exposure to a diversified portfolio of high-quality floating-rate asset-backed securities, including mortgage-backed securities (MBS), asset-backed commercial paper (ABCP), and other such securities. Emphasizing high-quality assets with robust credit ratings, the fund invests across various maturities, from short-term to long-term. Furthermore, it outlines investment objectives, strategies, and associated risks, encompassing credit, market, and liquidity risks. This fund serves as an attractive option for investors seeking diversified exposure to high-quality floating-rate asset-backed securities.

Major companies in the asset-backed securities market are focusing on technological advancements, such as investment strategies, to enhance risk assessment and improve liquidity management. Investment strategies refer to a set of rules, behaviors, or processes that guide investors in allocating their capital across various assets to achieve specific financial goals. These strategies can vary widely, including approaches like value investing, growth investing, index investing, or technical analysis. For example, in September 2024, Legal and General Investment Management Limited, a UK-based corporation, launched the L and G US Securitized Fund and the L and G US Securitized Plus Fund. These funds aim to provide a diverse range of investment opportunities in US investment-grade securitized credit and offer significant benefits for UK Defined Benefit (DB) pension schemes, including enhanced liquidity that allows schemes to access cash when needed. Additionally, they provide diversification across various asset-backed securities, helping to mitigate risks associated with traditional corporate credit investments. The funds also target returns that exceed those typically offered by conventional fixed-income assets, aiming to generate income for investors.

In August 2022, Barclays Plc., a UK-based universal bank, completed the acquisition of Kensington Mortgages Limited for $2.8 billion. This strategic move aims to bolster Barclays' mortgage lending business and extend access to mortgages for a broader customer base. Kensington Mortgages Limited, the acquired entity, is a UK-based financial services company specializing in asset-backed securities services for residential purposes.

Major companies operating in the asset-backed securities market include Bank of America Corporation, Citigroup Inc., Wells Fargo And Company, BNP Paribas, Morgan Stanley, HSBC Group, Goldman Sachs Group Inc., ING Group, Capital One Financial Corporation, UBS Group AG, Barclays Plc., Deutsche Bank AG, Societe Generale S.A., Mizuho Financial Group Inc., BlackRock Inc., Fidelity Investments, Credit Suisse Group AG, Manulife Financial Corporation, State Street Corporation, The Vanguard Group Inc., Franklin Templeton Investments, Janus Henderson, Aegon Asset Management, WisdomTree Inc., Conning Holdings Limited, Fitch Ratings Inc., Eaton Vance Corp.

North America was the largest region in the asset-backed securities market in 2024. Asia-Pacific is expected to be the fastest-growing region in the forecast period. The regions covered in the asset-backed securities market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the asset-backed securities market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Italy, Spain, Canada.

Asset-Backed Securities (ABS) are financial instruments backed by a pool of assets, such as loans, leases, or receivables. They are used to provide liquidity to lenders and diversify investment portfolios, enabling investors to gain exposure to the underlying assets.

The primary categories of asset-backed securities include existing assets and future cash flow. Existing assets are those currently owned or held by individuals, companies, or organizations. These assets find applications in various sectors such as real estate, travel, finance, healthcare, and education, and are utilized by diverse downstream industries, including small and medium enterprises (SMEs) and large enterprises.

The asset-backed securities market research report is one of a series of new reports that provides asset-backed securities market statistics, including asset-backed securities industry global market size, regional shares, competitors with an asset-backed securities market share, detailed asset-backed securities market segments, market trends, and opportunities, and any further data you may need to thrive in the asset-backed securities industry. This asset-backed securities market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenarios of the industry.

The asset-backed securities market includes revenues earned by entities by providing services such as mortgage-backed securities, funding services, collateralized debt obligations, collateralized loan obligations, and cash flow generation services. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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