From Banking Day:
Bluestone is getting back into non-conforming lending five years after suspending new loans from its cornerstone product range.
…Peter Wood, general manager of asset management for Bluestone, said the firm researched the market for more than a year to work out its options for resuming lending.”We found some niche pockets that were not being fulfilled. The niche is the pure non-conforming or specialist market…those people who deal with major banks or other lenders… [who have] had credit issues in the past.
Well gee, that must have taken some serious research. Let see now, ‘we’re a shadow bank with limited market power, what shall we do? I know, let’s lower credit standards!’
Anyway, sarcasm aside, the real driving force here is, I suspect, Macquarie Bank, which bought a big stake in Bluestone in late 2010.
This move will help fill the gap in credit that I have myself noted – being a ‘low doc’ borrower – that higher bank standards have created. Whether that’s wise is another question. Obviously not being the answer.
However, at this stage I have my doubts that the economic cycle will even enable Bluestone to sell its non-conforming RMBS. Although we’ve seen a steady reopening of the RMBS market over the past year, the recent backup in global yields and especially Australian yields on rising Chinese credit and growth risk, is going to make Australian non-conforming RMBS look a touch frontier.
