Review of mortgage bond collateral standards
Status: Further consultation
Consultation period: 2017-2019
13 November 2018
The Reserve Bank is proposing a new mortgage bond standard aimed at supporting confidence and liquidity in the New Zealand markets.
This follows an initial consultation in November 2017 and ongoing discussion with issuers and investors over the past year.
The new mortgage bond standard aims to:
- reduce contingency risks for the Reserve Bank as a lender of last resort and ensure financial intermediaries supply sufficient high quality and liquid assets; and
- provide issuers and investors with an additional funding and investment instrument, supporting the development of deeper capital markets.
The consultation paper summarises the changes proposed in response to the key issues raised by industry and sets out the revised mortgage bond standard in an exposure draft for final consultation.
The Bank expects to issue final decisions in March 2019, and commence implementation from June 2019. A five-year transition to full implementation is proposed.
The consultation closes at 5.00 pm on Friday 22 February 2019.
- Residential Mortgage Obligations (RMO): Introducing a high grade residential mortgage backed securities framework for New Zealand – Exposure Draft (November 2018) (PDF 656KB)
- Residential Mortgage Obligations: Questions and answers (PDF 144KB)
- Residential Mortgage Obligations (RMO): (‘RMO Framework’) – Key terms and conditions (November 2018) (PDF 476KB)
22 May 2018
The Reserve Bank sought feedback on the terms under which it should accept mortgage bonds as collateral and the proposed new standard in Residential Mortgage Obligations. The formal written consultation closed on 9 March 2018.
The Reserve Bank has published a summary of the feedback received.
The Reserve Bank plans to follow up with stakeholders on the key issues raised. The bank also expects to consult on a revised proposal with the aim of finalising the mortgage bond collateral policy review by the end of the year.
Submissions for publication
The Reserve Bank received 14 responses as part of the consultation. On 22 May the submissions were published except where organisations asked that they not be publicly released.
- ANZ Bank New Zealand Limited response (PDF 5.4MB)
- ANZ Bank New Zealand Limited, ASB Bank Limited, Bank of New Zealand and Kiwibank joint response (PDF 5.4MB)
- Australian Securitisation Forum response (PDF 320KB)
- Cooperative Bank Limited response (PDF 425KB)
- Kiwibank response (PDF 6.4MB)
- Westpac Bank response (PDF 485KB)
- ACC, AMP Capital and ANZ Investments Ltd joint submission
- Bank of New Zealand
- Fitch Ratings Australia
- Guardian Trust
- Harbour Asset Management
- Resimac Home Loans Limited
- Southland Building Society - SBS Bank
- TSB Bank Limited
17 November 2017
The Reserve Bank is proposing an enhanced mortgage bond standard aimed at supporting confidence and liquidity in the financial system.
This follows a review of domestic and international mortgage bond collateral standards.
The Bank believes the proposed new collateral standard would:
- improve the risk position of the Reserve Bank by promoting the use of higher quality and potentially more liquid, mortgage bonds as collateral in the Bank’s lending operations;
- support New Zealand market lenders by creating an additional funding instrument for residential mortgages; and
- promote a deeper capital market through the availability of simple, comparable and transparent mortgage bond instruments.
The Bank is seeking feedback on the terms under which it accepts mortgage bonds as collateral and the proposed new Residential Mortgage Obligations (RMO) standard.
The consultation closed on Friday 9 March 2018.