Review of mortgage bond collateral standards

5 December 2022 – enhancements to current I-RMBS standards to be pursued instead of RMO product

We have decided not to pursue a new mortgage bond collateral standard in the form of residential mortgage obligations (RMO). Following an internal review, we have decided that the objectives of our review of mortgage bond collateral standards could be achieved by ongoing enhancements to the current internal residential mortgage-backed securities (I-RMBS), rather than the introduction of a new residential mortgage-back security framework.

We acknowledge the significant input from the industry on the RMO project and we appreciate the engagement with stakeholders, including investors and issuers, to date on this process. We recognise the importance of a robust mortgage bond collateral standard in New Zealand and remain committed to contribute to a sustainable securitisation market over the long term.

23 July 2021 – development of new standard deferred

We have deferred the development of a new mortgage bond collateral standard until after the borrowing window for the Funding for Lending Programme (FLP) closes in December 2022.

We are aware that the current internal residential mortgage-backed securities (I-RMBS) are the main source of collateral in exchange for the term funding provided via the Funding for Lending Programme. Therefore, we deemed it prudent to delay developing the RMO framework until after the Funding for Lending Programme ends and also to take into account any relevant decisions from our review of bank liquidity policy.

We acknowledge the significant input from the industry on the RMO project and we appreciate the engagement with stakeholders, including investors and issuers, to date on this process. We recognise the importance of a robust mortgage bond collateral standard in New Zealand and remain committed to contribute to a sustainable securitisation market over the long term.

2019 – final summary of submissions published

On 12 August 2019, we published a summary of the submissions on the exposure draft.

We received six submissions in response to our second consultation on Residential Mortgage Obligations (RMOs): (ACC - submitter requested its submission not to be published)

2019 – consultation extended

In February 2019, after requests from stakeholders, we extended the consultation period to 8 March 2019.

2018 – exposure draft published

After a year in ongoing discussion with issuers and investors, we published an exposure draft for final consultation on 13 November 2018. The draft summarised the changes proposed by industry to the revised mortgage bond standard. The new mortgage bond standard aimed to:

• reduce our contingency risks as a lender of last resort and ensure financial intermediaries supplied sufficient high quality and liquid assets
• provide issuers and investors with an extra funding and investment instrument, supporting the development of deeper capital markets.

2018 – summary of submissions published

We received 14 responses and published a summary of submissions on 22 May 2018.

2017 – consultation starts

We sought feedback on the terms under which we should accept mortgage bonds as collateral and the proposed new standard in Residential Mortgage Obligations (RMOs).

The consultation closed on 9 March 2018. The enhanced mortgage bond standard was aimed at supporting confidence and liquidity in the financial system.