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RBA Says Smaller Lenders Slowly Increasing Share Of Mortgage Lending
Guy Debelle, an Assistant governor of the Australian central bank the RBA, says that smaller regional lenders are increasingly returning to the mortgage lending market, prompted by a recovery in the domestic securitisation market.
Mr. Debelle told a conference in Sydney on Tuesday that the market share held by smaller lenders had risen over the last few months, though it was unlikely that their market share would return to the levels seen prior to the onset of the global financial crisis any time soon, hampered by the fact that the majors had managed to significantly increased their market share at the expense of regional lenders during the crisis.
Mr Debelle said smaller lenders have become more competitive because securitisation was becoming “a more viable source for lenders”.
Spreads on the most recently issued RMBS have narrowed to between 130 to 135 basis points over the swap rate, down from nearly 400 basis points quoted in the secondary market during the height of the global financial crisis.
Yield spreads on newly issued residential mortgage-backed securities have narrowed to around 130 to 135 basis points over swap, from over 400 basis points in the secondary market at the height of the global financial crisis.
Since October 2008, the Federal Government has provided support to the RMBS market, injecting nearly $16 billion. The Australian Office of Financial Management which was responsible for the operation is not interested however in the riskiest tranches, and neither would it seem are investors just yet.
As further evidence of recovery in the financial sector, Mr. Debelle pointed to the proportion of on balance sheet home loans that were either overdue or impaired as being stable in the last few months.
In December 2009, that level was 0.6 per cent of all loans, up from the low levels of 2002 to 2003, but low in absolute terms, said Mr Debelle.
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