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Industry welcomes RMBS cash injection

by Staff Reporter8 minute read
The Adviser

Jessica Darnbrough

A key industry figurehead has applauded Treasurer Wayne Swan’s decision to pump an additional $4 billion into the Residential Mortgage Backed securities (RMBS) market.

Late last week, the treasurer announced the government would increase its total investment in the RMBS market from $16 billion to $20 billion in a bid to stimulate competition between lenders.

While some believe the cash injection is not enough, FirstMac’s chief executive Kim Cannon said the amount is not concerning.

“I think anything the government does to support the non-bank sector is good,” he told The Adviser.

“Any support further enhances competition between lenders, which is a good thing for us and the industry as a whole.”

Mr Cannon said as the financial markets start to improve, non-bank lenders will not be forced to rely on support from the government or the Australian Office of Financial Management.

“When this happens, the amount the government injects into the RMBS market will no longer be an issue. For the major part, the government and the AOFM have done their part over the past few years of supporting the smaller lenders and this will improve things going forward,” he said.

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