Australia May Consider a Fannie Mae-Style Mortgage Agency
By Gemma Daley
June 18 (Bloomberg) -- Australia may consider a government- backed mortgage agency similar to the Fannie Mae in the U.S., after recommendations from a housing affordability committee.
The committee says a state-backed lending agency, AussieMac, would be ``beneficial in the Australian market,'' according to a report tabled in parliament in Canberra today. It also wants tax concessions and more construction workers to alleviate a ``high level of housing stress.''
Australian housing affordability is at a three-decade low because of interest rates at a 12-year high and higher house prices. Some 1.1 million Australians are suffering from housing stress, paying more than 30 percent of their income in rent or home-loan costs.
The mortgage agency would leverage the government's tripe-A rating to buy mortgage-backed securities and repackage them as low-cost mortgage bonds to be sold to investors. It would boost liquidity and enable smaller operators to fund their mortgage borrowings.
Treasurer Wayne Swan was not available for comment.
Reserve Bank of Australia Governor Glenn Stevens and his board left the benchmark cash rate target unchanged at 7.25 percent this month, amid signs four increases since August are cooling the $1 trillion economy, which expanded at the weakest pace in almost two years in the first quarter.
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