I think I am missing a small link in the chain here…
I am just reading Spann’s $10m in 10 years, and can’t really pin-point what a “securitised lender” is exactly. Can someone give me an example of one that is well-known? Or perhaps just a good one??
Cheers,
SpankAge doesn’t negate effort – you can never be too young or too old.
A “securitised lender” is a bank or non bank lendee who sources their funds via the whoolesale bond market. Every lender in Australia (bank and non bank) does this…some more than others. Lenders like Rams, Liberty etc are very realint on this style of funding, the bigger banks are less realiant. This year there was $50bill of securitised deals done in Australian market….which is almost exactly half of the total loans written in Australia for the year. many people think that some lenders tap very cheap funds from the US and Asia…this not true…whilst many lenders do source money offshore the saving is 1/10 of 1% (sometimes less).
In all honesty as a borrower you will see no differnce between a loan that has been securitised and one that hasn’t…in fact you won’t even know which you have.
Securised funds also require mortgage insurance. Many lenders will cover the cost of this up to 80% of the property value and charge mortgage insurance in excess of this. Low doc loans often see mortgage insurance costs kick in below 80%.
Securitisation also often restricts the security property types that can be funded by that parcel of money. It can be very restrictive for lenders to use this form of financing but it beefits them by not requiring compliance with capital adequacy requirements requiring them to keep a heap of their cash in reserve.
Securitisation is often called off-balance-sheet funding. Lenders using this have a responsibility to the investors funding them.
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auComments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
One major factor with securitised lenders is virtually all are mortgage insured – no matter what the LVR is.
This is important to note when you have a few properties, as the two mortgage insurers have limits on the amount of loans they will insure for any one person.
Terryw
Discover Home Loans
Mortgage Broker
Click below to email meTerryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
regarding Morgate Insurane: The point you need to be careful with is that many banks write sub 80% LVR loans on balance sheet without LMI and then some time later move them across to a Securitisation structure and buy wholsale LMI on a pool of loans.
Net result : even though you are borowing from a lender on what appears to be a non securitised basis there is no guarantee your loan may not end up in a securitsation deal at a later date. Plus the bank does not have to inform you.
Nat R
thats quite interesting, as are all your posts, i’d presume the ‘pool’ on sell wouldn’t impact on the borrower in any way with regard to future mi’d borrowings?
cheers
brahms
Mortgage Broker
[email protected]Brahms, when loans are packaged and on-sold as outlined by Nat, there is no detrimental effect whatsoever to the borrower. It does not change the loan type at all. It merely takes that parcel of loans ‘off-balance-sheet’ meaning the lender can lend more money.
Robert Bou-Hamdan
Mortgage AdviserM: 0414 347 771
E: [email protected]
W: http://www.mortgagepackaging.com.auComments made are of a general nature and should not be construed as individual advice.
© 2004 Mortgage Packaging Pty Ltd
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