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The Australian Securitisation Forum (ASF) yesterday reignited calls for the government to address liquidity and competition pressures within the mortgage market.
Greg Medcraft, ASF chief executive, said securitisation was essential to deliver cheaper home loans to Australian borrowers.
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“As non-bank lenders leave the market, the competitive pressures that have kept mortgage rates low may also disappear,” he said.
While he applauded the government’s efforts to drive competition by making transfers easier, Mr Medcraft said such initiatives would be meaningless if there were only limited mortgage providers.
Measures proposed by the Forum included the introduction of an agency RMBS model as well as shorter-term liquidity injections similar to those in the UK and United States.
“Whether or not the illiquidity in the primary RMBS market is temporary or permanent is beside the point: there is clear need for government infrastructure that provides liquidity support... when the market irregularly closes due to external shocks,” Mr Medcraft said.
“Government infrastructure is in place to protect deposit-taking institutions, it’s time to broaden this infrastructure to accommodate other financial innovations.”
Published: 31-07-08
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