(ASX: AFG) Australian Finance Group Ltd Chair, Greg Medcraft, has welcomed the recommendation for a government-backed Residential Mortgage-Backed Securities (RMBS) scheme made by the House of Representatives Standing Committee on Economics inquiry into promoting economic dynamism, competition and business formation.
AFG Chair Greg Medcraft thanked the Committee for the opportunity to present to the inquiry and welcomed the Committee’s bi-partisan support for the scheme. “I was very pleased to see the Committee recommend a public RMBS scheme which would reshape competition in the Australian residential lending market.
“The model recommended by the Committee has an internationally proven track record of success. It will help drive competition in the lending market, foster innovation and provide further choice for consumers,” he said.
The model works to lower the systemic risk for lenders, government and taxpayers through matched funding of government-supported mortgage bonds with zero-risk rating.
“In times such as now, it will help lead to lower and more stable mortgage interest rates for consumers by enabling more competitive fixed interest rate offerings to provide certainty and reduce the stress from rising variable interest rates.
A public RMBS scheme would also provide the country’s superannuation funds with liquid government guaranteed bonds, which is needed for their own liquidity, and will also support housing for Australians.
“I commend the Committee on their thorough and constructive approach to the important task at hand of examining how best to foster a fair and effective economy,” he concluded.
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