Treasury
Residential mortgage‑backed securities — extension
| 2008‑09 | 2009‑10 | 2010‑11 | 2011‑12 | 2012‑13 | |
|---|---|---|---|---|---|
| Australian Office of Financial Management | - | - | - | - | - |
| Related revenue ($m) | |||||
| Australian Office of Financial Management | - | * | * | * | * |
The Government will invest up to a further $8.0 billion in Australian residential mortgage‑backed securities, depending on market conditions. This will be financed from Commonwealth Government Securities issued by the Australian Office of Financial Management. This is a temporary extension to the Government's original $8 billion investment announced in 2008, which will further support competition in Australia's mortgage lending market.
Eligibility for the program will also be extended to AAA‑rated residential mortgage‑backed securities backed by a greater proportion of prime residential mortgages used by small business owners to fund their business. This will assist small business owners who access finance for their business using loans secured against residential property.
Residential mortgage‑backed securities purchased under this initiative are treated as financial assets and therefore do not impact on the fiscal balance. Interest earned on the securities is offset by interest paid on the Commonwealth Government Securities issued to finance the securities' purchase. The net interest revenue from the transaction will result in a variation in the fiscal balance which is accounted for in the budget estimates.
The Government has also announced that it will consult with industry on the merits of delivering part of this additional support through a fee‑based liquidity facility rather than direct investment in securities.
Further information can be found in the press release of 11 October 2009 issued by the Treasurer.
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