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The federal government announced yesterday that it would provide five home lenders with a pipeline of funding to support the issuance of securities until December 2010.
According to a report in The Australian Financial Review, the government has directed the Australian Office of Financial Management (AOFM) to purchase $3.4 billion of mortgage-backed securities.
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Liberty Financial, RESIMAC, Members Equity Bank, FirstMac and AMP will all have access to the funds.
In September 2008, the government injected $8 billion into the securities market in an effort to boost competition among lenders.
Yesterday’s allocation will be drawn from the second $8 billion injection announced by the government on 30 November 2009.
Treasurer Wayne Swan said the government’s decision to buy $3.4 billion in RMBS would provide certainty of funding to the smaller lenders.
“This will place more competition on the big banks, helping to put downward pressure on mortgage rates over time,” Mr Swan told the daily.
