Government intervenes to save mortgage market

Non bank lenders will benefit the most from the federal government's plan to buy up to $4 billion of residential mortgage backed securities. The treasurer Wayne Swan said the move to fund about 20,000 mortgages would help the non-bank lenders compete with the big banks in the mortgage market. This package has nothing to do with the US government's rescue package for financial institutions said Mr Swan. Taxpayers will only be taking on triple A rated securities he said. Big banks will be able to participate in the tendering process however and are expected to receive funding from the process. Non bank lenders welcomed the federal government package. The Australian Bankers Association said the initiative would expose taxpayers to the risks of the housing market. The federal opposition said they had suggested the same idea one week ago.

Source: Herald Sun