Via Moody’s:
» Macroeconomic update: We forecast that Australia’s real GDP will grow by around 2.5% for full-year 2017 and 2.7% for 2018. Australia’s GDP is growing at below the 10-year average, but we believe the level of growth is supportive of RMBS performance. However, Australia’s high household debt in combination with record low wage growth has made households more vulnerable to negative shocks. Mortgage loans originated in the past 12 months at the peak of the recent house price cycle and at worsening affordability levels will suffer the greatest losses in the event of a negative economic shock or interest rate increases.
» Regulatory update: The Australian Prudential Regulation Authority (APRA) has introduced new measures to curb growth in interest-only mortgages. These measures are credit positive for RMBS, because they will restrict growth in riskier mortgage loans.
