Bendigo and Adelaide Bank Ltd has announced a new issue of residential mortgage backed securities.

The offer will be made under the bank’s Torrens securitisation program. The securities will be issued in Australian currency, with an expected equivalent value of $650 million.

The final tranche sizes will be determined by market conditions, Bendigo said on Wednesday.
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Bank of Queensland Ltd (BOQ) has issued $1 billion of government guaranteed bonds before the window to sell guaranteed debt closes.

The bank will sell $450 million of fixed notes and a further $550 million of floating rate notes, both due on March 10, 2015, BOQ said in a statement on Monday.

The federal government announced last month it would end its wholesale funding guarantee for local institutions on March 24.

BOQ’s fixed notes will pay an annual interest rate of 5.75 per cent in semi-annual payments.
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Australia is in a class of its own relative to all other nations in the global economy whose capital markets are in for a “rocky road” in 2010, according to IGMarkets’ global chief executive Tim Howkins.

The head of the global contracts-for-difference (CFD) provider questions the idea that Australia’s fortune is tied to emerging markets and says Australia’s economic growth rate and interest rate hikes make it an isolated case.

“You’re on a different cycle to the western world and equally I’m not sure how correlated you are to the emerging markets,” he said in an interview during a three-day visit to Australia.

“I think you’re kind of out on your own.”

Volatility will be a hallmark of financial markets in 2010 and the European Union will almost certainly have to bail out Greece, he added.
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Bank of Queensland Ltd (BOQ) raised $850 million from an increased residential mortgage-backed securities (RMBS) offering to domestic investors, signalling the local RMBS market is returning to normal.

BOQ increased the size of the deal from $500 million after an initial over-subscription by investors for three tranches of notes from the bank’s 2010-1 REDS Trust series.

Twenty investors, including the Australian Office of Financial Management (AOFM), participated, with the AOFM taking $250 million worth of Class A Notes.

The Class A Notes were priced at 130 basis points over swap, while the Class AB Notes were priced at 175 basis points over swap, and the Class B Notes were privately placed, BOQ said in a statement on Tuesday.
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The federal government has allocated up to $3.4 billion to invest in the residential mortgage-backed securities (RMBS) of five smaller lenders to help support competition in the home loan market.

The allocation is part of the $8 billion set aside by the Australian Office of Financial Management in November to invest in RMBS, a statement from Treasurer Wayne Swan’s office on Thursday said.

The AOFM advised the lenders, including three non-bank lenders, that it would invest in RMBS issuances by them until December 15, 2010.
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The Australian bond market closed firmer on Tuesday as investors began considering the outside possibility of interest rate pause by the central bank at its upcoming February board meeting.

At 1630 AEDT, the yield on the Commonwealth Government April 2020 bond was at 5.548 per cent, down from Monday’s close of 5.574, while the yield on the May 2013 bond was at 5.046 per cent, down from 5.053 per cent.

On the Sydney Futures Exchange, the March 10-year bond futures contract was at 94.440, up from Monday’s close of 94.400, while the March three-year bond futures contract was at 94.900, up from 94.870.

FIIG Securities head of strategy and market development Stephen Nash said bonds had rallied as investors reassessed whether the Reserve Bank of Australia (RBA) would continue with its monetary tightening policy when its board next met on February 2.
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Fitch Ratings has applauded proposed prudential liquidity changes for Australian banks and warned of further deterioration in their asset quality as highly geared households come under pressure from rising unemployment.

The global credit ratings agency expects the erosion in the banks’ corporate and commercial loan portfolios to continue during the first half of fiscal 2010, and for the deterioration to spread to consumer loan books.

“Asset quality in consumer loan portfolios will likely weaken as unemployment rises and interest rates increase,” Fitch said in a report released from London on Wednesday.

Fitch expects Australia’s unemployment rate to rise from 5.7 per cent in November to around 6.1 per cent during 2010, noting that the current level does not capture underemployment caused by reduced working hours instead of redundancies.
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By Jill Fraser for Lending Central

The annual Deloitte Australian Mortgage Report: 2010, subtitled Positioning for Opportunity, is a declaration of “renewed hope” carefully expressed in a tone of cautious optimism.

The stars of 2010, according to the report, will be the “other lenders”, as the Big Four relinquish their stranglehold on the industry.

Other lenders (including regionals and non-banks) have been at the mercy of securitisation markets and have had to fight a tough retail deposit war.

But this is about to change if, as forecast in the Deloitte report, the issuance of residential mortgage-backed securities (RMBS) continues to rise in 2010.

James Hickey, a banking partner with Deloitte Actuaries and Consultants, told Lending Central that optimism is based on “encouraging signs in the securitisation the market”.
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Westpac Banking Corporation has launched its first residential mortgage backed securities (RMBS) issue in two years, giving the securitisation market one of it biggest deals since the onset of the global financial crisis.

Westpac on Monday launched $1 billion of series 2009-1 WST Trust RMBS in three tranches.

It is selling $920 million of Class A notes, $55 million of Class B notes and $25 million of Class C Notes backed by prime residential mortgages originated by Westpac’s branch network, the bank’s home finance managers and accredited brokers.

“This will be the first RMBS market issue by Westpac since 2007 and the first RMBS market issue by a major Australian bank since the commencement of the global financial crisis and reflects growing investor demand,” the bank said in a statement.
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Federal Treasurer Wayne Swan has given the government’s bond manager the nod to invest $8 billion in the Australian residential mortgage-backed securities market (RMBS).

Mr Swan on Monday said he had directed the Australian Office of Financial Management (AOFM) to implement this investment, announced last month. It will help put downward pressure on borrowing costs.

It will also allow for the remaining $246 million from a previous $8 billion initiative to be invested.

“This investment is an important part of the government’s commitment to strong and effective competition in Australia’s mortgage market,” Mr Swan said in a statement.

“By supporting smaller lenders and promoting competition in the Australian mortgage market, this investment is helping to put downward pressure on borrowing costs over time.”
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Following approval of its own Australian Financial Services License (AFSL), Wealth Today launched it’s complete franchise model last week.

With this feather in it’s already well feathered cap, Wealth Today, a financial services company built specifically for brokers, by brokers, is now set to embark upon its greatest development in less than thirteen months since its formation in 2008.

On November 17th 2009, the company launched its complete franchise model, further revolutionising the broking industry as we know it in Australia.

The Wealth Today franchise is a financial services business model that bolts alongside a broker’s current aggregation set up. The model already has advocates of its success in brokers across Australia who have completed the Wealth Today Academy and taken advantage of the company’s second-to-none para planning services and business mentoring.
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Originators of residential mortgage-backed securities (RMBS) need to continue to focus on transparency and the quality of information provided to investors when selling such assets, the Reserve Bank of Australia (RBA) says.

RBA assistant governor for financial markets Guy Debelle said on Wednesday key was good information on asset pool performance, the creditworthiness of the borrowers of the loans underlying RMBS and holding “skin” on the assets that are securitised.

“There has been much discussion about requiring originators/sponsors to retain a long term exposure to assets they securitise - so-called skin in the game requirements,” he said during a speech at the Australian Securitisation Conference in Sydney.

“Even before the financial crisis there was a tendency for many Australian securitisers, or related parties, to hold skin in the game.
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A key Senate committee has given support to calls by regional banks and non-bank lenders for a government guarantee over residential mortgage backed securities (RMBS) and a review of the fees they pay for the wholesale funding guarantee.

The Senate economics reference committee said the securitised funding, used by these lenders to fund their balance sheets until late 2008, should be supported through its current difficulties via “some form” of a government guarantee.

It also said a careful design of a RMBS guarantee scheme was needed to avoid unintended consequences,

The committee tabled its report in the Senate on Thursday.
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The average new mortgage lodged in Australia rose to $354,000 in July - the highest figure on record, according to AFG, Australia’s largest mortgage broker. AFG’s Mortgage Index shows that average mortgage sizes have been on the rise since May this year, after falling to a low of $339,000 in January.

As other institutions report rises in house prices, the AFG data shows that borrowers in New South Wales, Queensland and Victoria are especially willing to take on more debt.

Queensland’s average mortgage size hit a new record of just over $339,000. The average mortgage sizes for New South Wales ($407,000) and Victoria ($321,000), though lower than some of the peaks recorded in late 2008, are the highest for 2009, well up on figures for earlier this year.
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