RMBS running at record levels… RBA deputy governor: Rates driving strong growth… Australian property rental yield at record lows...
Residential mortgage-back securities at all-time high
Funding markets used by non-bank lenders have posted their strongest start to a year since the global financial crisis, further lifting competition in the $1.3 trillion mortgage market, according to an article from the Australian Financial Review.
After several recent big deals involving non-banks and the major banks themselves, the amount of money being raised through residential mortgage-backed securities (RMBS) – bundles of home loans that are sold to institutional investors – is running at levels not seen since the 2008 global financial crisis, according to recent analysis.
"Last year, we had about $28 billion of public RMBS; this year, we're looking at about $14 billion already," Commonwealth Bank analyst Tally Dewan said. "On a year-on-year basis, issuance is at record post-GFC levels."
While issuance is strong, this type of funding is not as cheap as it was a year ago. Recent deals involving the major banks have been priced at about 80 basis points above the benchmark rate, compared with a spread of about 70 basis points this time last year.
RBA deputy governor: Rates driving strong growth
Low interest rates are working to support economic activity in Australia and there is little concrete evidence that policy is less effective than in the past, a top central banker said on Monday.
According to an article in the South China Morning Post, Reserve Bank of Australia (RBA) assistant governor Christopher Kent also reiterated that a further drop in the local dollar was both "likely and necessary" to support demand and help offset lower commodity prices.
Speaking at the Australian National University, Kent addressed concerns that low rates were having less of a stimulative impact than in the past.
"Monetary policy is clearly working to support demand, although it is working against some strong headwinds," said Kent.
The RBA cut rates to an historic low of two per cent last month in an effort to help revive a sluggish economy, and has left the door open to further easing if needed.
Australian property rental yield at record lows
CoreLogic recently released their monthly report on rental rates. It wasn’t good news — at least, not for property investors. Over the past year, rental rates increased at the slowest rate on record. Average rent went up just 1.5 per cent, according to an article in Money Morning Australia.
Rent rose the most in Hobart, with landlords getting 3.2 per cent more compared to this time last year. Sydney was close behind, with 3.1 per cent year on year growth. Melbourne and Brisbane trailed with 2.3 per cent and 2.0 per cent respectively.
“…Higher house prices don’t affect people who’ve bought their investment properties a while ago. But it’s important to remember that the higher house prices go, the more attractive and reliable houses look as investments. The more investors and investment properties there are, the more competition there is to attract tenants. Which means rents are lower. It’s a bit of a cycle,” the article reads.
With more investors are buying properties than ever before, around 500,000 dwellings change owners each year according to the RBA, the latest housing finance stats from the ABS show that loans to investors make up over 40 per cent of the value of all mortgages. And that number is growing all the time as the ABS stats say investor loans grew 0.1 per cent faster than owner occupied housing over the last period.
Funding markets used by non-bank lenders have posted their strongest start to a year since the global financial crisis, further lifting competition in the $1.3 trillion mortgage market, according to an article from the Australian Financial Review.
After several recent big deals involving non-banks and the major banks themselves, the amount of money being raised through residential mortgage-backed securities (RMBS) – bundles of home loans that are sold to institutional investors – is running at levels not seen since the 2008 global financial crisis, according to recent analysis.
"Last year, we had about $28 billion of public RMBS; this year, we're looking at about $14 billion already," Commonwealth Bank analyst Tally Dewan said. "On a year-on-year basis, issuance is at record post-GFC levels."
While issuance is strong, this type of funding is not as cheap as it was a year ago. Recent deals involving the major banks have been priced at about 80 basis points above the benchmark rate, compared with a spread of about 70 basis points this time last year.
RBA deputy governor: Rates driving strong growth
Low interest rates are working to support economic activity in Australia and there is little concrete evidence that policy is less effective than in the past, a top central banker said on Monday.
According to an article in the South China Morning Post, Reserve Bank of Australia (RBA) assistant governor Christopher Kent also reiterated that a further drop in the local dollar was both "likely and necessary" to support demand and help offset lower commodity prices.
Speaking at the Australian National University, Kent addressed concerns that low rates were having less of a stimulative impact than in the past.
"Monetary policy is clearly working to support demand, although it is working against some strong headwinds," said Kent.
The RBA cut rates to an historic low of two per cent last month in an effort to help revive a sluggish economy, and has left the door open to further easing if needed.
Australian property rental yield at record lows
CoreLogic recently released their monthly report on rental rates. It wasn’t good news — at least, not for property investors. Over the past year, rental rates increased at the slowest rate on record. Average rent went up just 1.5 per cent, according to an article in Money Morning Australia.
Rent rose the most in Hobart, with landlords getting 3.2 per cent more compared to this time last year. Sydney was close behind, with 3.1 per cent year on year growth. Melbourne and Brisbane trailed with 2.3 per cent and 2.0 per cent respectively.
“…Higher house prices don’t affect people who’ve bought their investment properties a while ago. But it’s important to remember that the higher house prices go, the more attractive and reliable houses look as investments. The more investors and investment properties there are, the more competition there is to attract tenants. Which means rents are lower. It’s a bit of a cycle,” the article reads.
With more investors are buying properties than ever before, around 500,000 dwellings change owners each year according to the RBA, the latest housing finance stats from the ABS show that loans to investors make up over 40 per cent of the value of all mortgages. And that number is growing all the time as the ABS stats say investor loans grew 0.1 per cent faster than owner occupied housing over the last period.
