Non-conforming loans safe
Australia's low doc home loan industry could be spared the financial instability emerging in the US due to key structural and product differences. US New Century Financial, a sub prime lender financing customers with poor or incomplete credit histories, is suffering severe problems due to slump in housing and is unable to repay its own lenders. However, Moody's Investor Services is not concerned about the health of the non-conforming loans sector in Australia. In Australia the non-conforming segment makes up less than 5 per cent of the nation's home lending book, compared with 15 per cent in the US. Last week low doc provider Bluestone completed its biggest securitisation of loans worth $800 million.