By: Staff Reporter
Credit agency Moody’s Investor Service says Australia’s residential mortgage backed security sector has a stable outlook.
According to Moody’s latest Annual Sector Review, the sector is currently underpinned by “steadiness in the domestic employment rate, housing process and interest rates”.
The company’s vice president and senior analyst Arthur Karabatsos said the report also found that, on the issue of liquidity, the non-banks are holding less liquidity than banks.
“Specifically, non-banks have sufficient liquidity to withstand 2.3 months (on a weighted average basis) of cash flow disruptions from their underlying mortgages -- for example, due to servicer disruption events -- while banks could withstand 3.7 months,” Mr Karabatsos said.
Deals sponsored by non-banks are currently holding somewhat smaller liquidity facilities because non-banks decrease the amount in the facilities -- in accordance with portfolio pay-downs -- more frequently than banks.
The Australian mortgage and RMBS markets are dominated by prime deals originated by and serviced by high-rated banks.