Investors in Australian mortgage bonds are demanding higher premiums to buy the ...
SYDNEY - Investors in Australian mortgage bonds are demanding higher premiums to buy the riskiest tranches of new debt, as a slowing economy stokes concerns a property downturn could get worse and increase home loan defaults.
That marks an important shift from a near decade-long run of relatively stable spreads for the lower-rated residential mortgage backed securities , as the previously red-hot property prices have turned sharply lower, particularly in the major Sydney and Melbourne markets. Indeed, the still-strong appetite for the safer - and much bigger - portions of mortgage debt suggests a major economic shock is unlikely.
An ME Bank deal this month included A$5.25 million of unrated securities paying a 6% margin over benchmark rates which is 25 basis points more than what ME Bank paid buyers of similar non-rated bonds in October, the bank said.
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