In his latest economic note, federal treasurer Wayne Swan says AMP's decision to cut rates by 10bps demonstrates that the AOFM's RMBS investment scheme is working.
Swan said AMP managing director and chief executive Craig Dunn had written to him to inform him of the rate reduction and to say that "this reduction in interest rates has only been possible because of the improvement to the securitisation markets flowing on from the Government's support."
"It was also encouraging to read Mr Dunn's statement that 'we are also hopeful that we will be further able to reduce our rates in the coming months, as we gear up our operations in light of ongoing improvements in the securitisation market'," Swan added.
The treasurer said the government direction to the Australian Office of Financial Management (AOFM) to invest up to $16bn in Australian RMBS had supported competition in Australia's mortgage market, "enabling smaller lenders to lend at competitive interest rates and maintain a higher level of lending than would otherwise have been possible during the global financial crisis".
"As Australia recovers from the global recession and official interest rates move from their emergency 1967 levels, the Government will continue to do whatever we can to boost competition in the banking system," he said.
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