The Australian Office of Financial Management will invest $8 billion in Australian RMBS at the government's direction.
Federal Treasurer Wayne Swan has directed the Australian Office of Financial Management (AOFM) to invest a further $8 billion in Australian residential mortgage-backed securities (RMBS).
"The investment is an important part of the government's commitment to strong and effective competition in Australia's mortgage market," 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."
The direction under section 62A of the Financial Management and Accountability Act 1997 also allows for the remaining $246 million of the original $8 billion to be invested.
The government's investments to date in RMBS have supported five non-major Australian banks, four building societies and credit unions, and four non-ADI lenders, which has allowed them to raise almost $11.4 billion in funding.
Treasury and AOFM have begun consultations with industry on the merits of delivering part of the additional $8 billion support through a liquidity facility.
The institutions that collectively control more than $40 billion of Australian investment dollars are viewing 2010 as a year to tread carefully.... Watch»
