Reserve Bank publishes summary of submissions on new mortgage bond standard

by Roxanne Libatique15 Aug 2019

The Reserve Bank of New Zealand (RBNZ) has published a summary of submissions on its new mortgage bond standard, which is meant to support confidence and liquidity in New Zealand’s financial markets.

The new mortgage bond standard aims to reduce contingency risks for the Reserve Bank as a lender of last resort, and to provide additional funding and investment instrument to issuers and investors.

According to RBNZ, most of the participants supported the introduction of a high-grade residential mortgage backed securities framework for New Zealand – known as Residential Mortgage Obligations (RMO).

Issuers, investors, and other market participants also provided constructive feedback that will help the bank with its final policy decision, which is expected to be published by the end of 2019.

Read more: Reserve Bank releases new DTI data informing mortgage risks

Christian Hawkesby, assistant governor and general manager of economics, financial markets, and banking at RBNZ, said they were pleased with the feedback that they received during the consultation process.

“The consultation process has been successful in delivering improvements to the initial concept for a new mortgage bond standard to support financial intermediation, liquidity management and funding in New Zealand’s markets,” said Hawkesby.

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