Call for action on mortgages
The Federal Government has been urged to enhance Australia’s mortgage-backed securitisation (MBS) market to reduce mortgage rates and improve market liquidity.
The call has come from new peak industry body, the Australian Securitisation Forum, with chief executive Greg Medcraft claiming that Australian homebuyers were paying unnecessarily high mortgage rates and that a better system existed.
He said the blow-out in mortgage provider cost of funds and its resulting impact on mortgage rates highlighted fundamental weaknesses in the Australian mortgage market and the need for reform.
Medcraft said that Australian financial institutions were currently experiencing high cost of funds compared to other funding models around the world and that the Federal Government could learn from the success of the Canadian MBS model, which continued to enjoy strong demand and liquidity despite credit market turmoil.
“We believe Australia would benefit from enhancing its MBS model for prime residential mortgages by creating a new structure that would issue higher quality, Government guaranteed mortgage-backed bonds,” he said.
Medcraft said enhancing the MBS market had the potential to deliver wide-reaching benefits not just to homeowners but also to Australia’s fast-growing superannuation and investment sector.
AUTHOR
Mike Taylor
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