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The government’s recent announcement to expand its mortgage backed securities (MBS) program will help sustain competition in the housing loan market, RBA deputy governor Ric Battellino said at the 6th National Housing Conference in Melbourne this week.
The expansion of the MBS program comes after the success of the Australian Office of Financial Management (AOFM) in buying MBS from lenders at low yields during the GFC.
Mr Battellino said that with market spreads having narrowed in recent months, it is again becoming economic to issue securities into the market.
“Australian [MBS] have not experienced credit problems. I am confident that this fundamental point will eventually see the local securitisation market return to being an important source of funding for housing loans,” he said.
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