Kohler Article: The good, bad and ugly of RMBS resurgence

[pierso]

Thought this was interesting...

The good, bad and ugly of RMBS resurgence...

...The mortgage-backed securities market is booming and bodes well for bank competition. But it's driving house prices higher and making it even harder for first homebuyers, writes Alan Kohler.

After five years of near death, the residential mortgage-backed securities (RMBS) market in Australia is roaring back to life, which is both good and scary.

Good because the banks might finally get some competition from non-bank lenders again; scary because the resurgent supply of prime and subprime mortgage money from yield-hungry investors is not being matched by the supply of new land to lend against, so it's just driving house prices higher.

We are seeing two quite different markets being mixed together: one for credit that is active and plentiful (call this one nitro) and one for land that is short (call it glycerin).

In 2013, $26 billion worth of RMBS were issued in Australia, which was the most anywhere in the world.......

http://www.abc.net.au/news/2014-04-17/kohler-the-good-bad-and-ugly-of-rmbs-resurgence/5396428

 

[Aaron Sice]

selling CDOs against property is part of what caused the whole GFC shebang in the first place.

selling them against AUS real estate is not learning from prevous mistakes.

admittedly, we have higher lending criteria and a very low default rate, but geezus - four or five consecutive IR rises and it's all over, red rover.

this kind of crap does indeed drive house prices higher - but then, with 80% of folk requiring 20% deposit, it's just generating more on-book equity for banks to leverage off.

this is evil.