Application criteria for acceptance of Residential Mortgage Backed Securities in Reserve Bank Domestic operations

 Updated 21 October 2019

Thank you for your interest in the Reserve Bank of New Zealand accepting your issuance as security in its liquidity operations.


To obtain or maintain repo-eligibility in the Reserve Bank’s domestic market facilities, the following actions require Reserve Bank approval:

  • New issuance of Internal RMBS;
  • Upsize of existing Internal RMBS;
  • Sales and or purchases of loans to or from the loan pool larger than 2.5% per month in relation to the outstanding pool amount as per the last monthly report date;
  • Changes to the capital structure or the Notes on issue;

Failure to obtain approval for ii,iii,iv will result in repo-eligibility being revoked.

Please provide the information noted below and attest to the following statements:


Background on the issuer (including all ratings);

Details of the issue, as per an Issue Notice, Prospectus and/or Information Memorandum. This should include:

  • Full legal name of Issuer;
  • Physical and postal address;
  • Description;
  • Issue size;
  • Pricing convention (full details)
  • Currency;
  • Trustee;
  • Arranger;
  • Dealers;
  • Registrar;
  • Paying agent;
  • Term;
  • Clearing system;
  • Governing law;
  • Redemption;
  • Payments and record date; and
  • Listing (Stock exchange if any).


Confirm that the issue meets the following criteria:

  • Issues must have a long term AAA rating from at least one acceptable rating agency – this must be a public rating.
  • New Zealand originated first mortgages on New Zealand residential properties.
  • The securitised mortgages must be owned by a bankruptcy remote special purpose vehicle (SPV).
  • The securitised mortgages may have a maximum indexed loan to value ratio of 80%, or, where a loan to value ratio is or has become greater than 80%, the mortgage must be insured or it has to be repurchased by the originator. The insurance provider providing lender's mortgage insurance must be an unrelated party with an insurer financial strength rating of at least A (Standard & Poor's or FitchRatings) or A2 (Moody's Investors Services) and the insurance must cover all losses realised in a default on the mortgage up to amount of no less than 40% of the loan value.
  • Loans may be included in the pool only if the originator has, prior to loan approval and as part of the loan origination and approval process, documented, assessed and verified the ability of the borrower to meet their repayment obligations.
  • Only loans that are performing may enter the pool (Non-performing loans are those that are 90 days or more past due).
  • RMBS must be lodged and settled in NZClear.

Issuers are required to submit a monthly report to the Reserve Bank, which provides updated details on the pool (use the reporting templates below). Please note this template has been changed to obtain additional information and is effective from 01/11/2019. The previous template is still operational until 01/11/2019.

There is a 5% limit on the total of assets, other than mortgages, that can be held in the pool. Pool's found to contain more than 5% of ‘other assets' will lose their eligibility status with the Reserve Bank. Additionally, if the total of ‘other assets' is held constantly around the 5% level then the Reserve Bank, at its discretion, may increase the haircut applied to this security by a margin of up to 5%. The Reserve Bank will also be particularly concerned if any cash held within the pool is deposited in the originator bank. Where cash holdings accumulating in the current reporting period exceed the 5% limit, these cash holdings have to be reinvested in full into new mortgage loans as of the next sale date, conditional on the next sale date being no later than 30 days following the last report date.

The Reserve Bank expects that steps will be taken to maintain the quality of the pool by replacing non-performing loans or loans that exceed an indexed loan to value ratio of 80%. The Reserve Bank would not expect the combined amount of non-performing loans or loans exceeding an indexed loan to value ratio of 80% to exceed 1% of the outstanding pool amount and reserves the right to adjust the haircut applied, or review repo eligibility status, should this occur.

The Bank will value RMBS at par and will apply the fixed haircut (as specified on the Eligible securities and haircuts page) to the par value of the securities delivered to the Bank as collateral. The Bank assumes that the coupon on RMBS will be in line with the average yield on the underlying mortgage pool and reserves the right to adjust the haircut for securities that don't meet this criterion.

As is usual for securities in NZClear, only NZClear members who have a valid resident withholding tax certificate are allowed to hold these securities in the NZClear depository.

The Reserve Bank reserves the right to refuse an application for any reason and is not required to disclose such reasons. In particular, it should be noted that if the credit rating of the issuer/issue falls below the Reserve Bank's threshold, then the issue will cease to be eligible in the Reserve Banks' operations.

The above information must be signed by authorised signatories of the Issuer. The Reserve Bank will require a list of authorised signatories for the Issuer and evidence satisfactory in form and substance to the Reserve Bank of the authority of the authorised signatories of the Issuer to execute this Agreement, any other notice or communication issued in respect of this Agreement on behalf of the Issuer.

Please email applications and monthly reports to and