Eligibility criteria rate in securitisation is referred to as the eligibility rate. It is the minimum credit rating that a loan must have in order to be securitized. The eligibility rate is set by the issuer of the securitisation and it is based on a number of factors, including the creditworthiness of the borrowers, the type of loan, and the economic conditions.
The eligibility rate is important because it helps to ensure that the securitization is backed by high-quality assets. If the eligibility rate is too low, there is a risk that the securitization will experience losses if borrowers default on their loans.
Here are some of the factors that can affect the eligibility rate:
- The creditworthiness of the borrowers: The higher the creditworthiness of the borrowers, the higher the eligibility rate.
- The type of loan: Some types of loans, like subprime mortgages, are more risky than others. The eligibility rate will be higher for riskier loans.
- The economic conditions: If the economy is weak, the eligibility rate will be higher because there is a greater risk of borrowers defaulting on their loans.