BFCSA Blog

  This is an interesting historical article on perceptions about Australian RMBS. It certainly pays to be informed about risk in the marketplace.   by Hardeep Dhillon     In terms of collateral, the Australian residential mortgage-backed securities market has performed better than its peers for several years, thanks mainly to its blemishless default history. After a post-crisis slump, a revival of domestic issuance is under way; but it could take much longer for cross-border transactions to follow.   The peak came in February 2007 with the A$7 billion ($5.5 billion at time of issue) multi-currency transaction by Commonwealth Bank of Australia, via its Medallion programme. As well as being the largest RMBS by an Aussie borrower, the deal set a new pricing benchmark, with the most senior US dollar-denominated notes offering a pick-up of just 4 basis points over Libor. Around that time, spreads on deals from the three other banks...

From MORTGAGE MIX - Thankyou to Tim Neary for this good article on the Royal Commission and Lo Doc Sub Prime Debate.    17 Aug 2012 Macrobusiness published an interesting article recently suggesting Australia’s claim to having a conservative (and safe) banking sector have ‘taken a bath’ recently, as evidence emerges of our own low doc driven sub-prime lending scandal.A video link from the article suggests in the run up to the GFC, Australian banks and other home-grown lenders abused the system of low doc loans; designed for small businesses but sold “by the thousands” to pensioners, single mums and people on welfare.It might sound shocking, but opinion on the subject is firmly divided.In response to the subprime scandal reference one reader left this pointed comment: “Sub-prime???? Pffffffft you guys are so 2007…”One of the industry’s leading low doc aficionados, Pepper’s Mario Rehayem, is also thumbing his nose at the notion. He has been ever...

NATIONALS senator John Williams has called for a royal commission into the banking sector following evidence of widespread improper lending practices during the last property boom and subsequent regulatory inaction. Senator Williams, appearing yesterday before a Senate committee into banking, attacked the corporate regulator as "gun-shy" amid claims that thousands of vulnerable people were stung by so-called low-doc loans before the global financial crisis."If only 10 per cent of what comes in to my office is true . . . we have a problem and we should have a royal commission," Senator Williams told the inquiry.His comments followed claims by Denise Brailey, of the Banking and Finance Consumer Support Association, that abuse of low-documentation loans was widespread during the the property boom and regulators had done very little to hold those responsible to account. Ms Brailey said her organisation had uncovered documentary evidence that many mortgage brokers or others in the...