Smaller lenders could lose RMBS support

by Adam Smith12 Jun 2012

Government support to help small lenders access funding may be winding down.

A report by the Australian Financial Review has claimed the Federal Government may wind down the $20bn program supporting small lenders through RMBS buying. The Australian Office of Financial Management has supported smaller lenders in purchasing RMBS issues since the onset of the GFC in 2008.

But the program may be winding to a close, according to the AFR. The AOFM has thus far injected $15.2bn into the RMBS market for lenders such as FirstMac, Resimac, ING Direct, Bendigo and Adelaide and ME Bank. But a Treasury document obtained by the AFR said the $20bn allocated to the program was likely to be exhausted by late this year to early next year.

"Before this time, the government should formulate policy objectives to help finalise the trasition towards an RMBS market that is independent of government support," the document said.

Treasury has claimed it has yet to make any decisions regarding future support of the market.