The bank draws its decision on a 2019 consultation and a more recent internal review
The Reserve Bank has decided to not introduce a new mortgage bond standard in the form of residential mortgage obligations (RMO) and will instead continue to enhance the current generation of residential mortgage-backed securities to ensure it remains fit for purpose and enduring.
The decision came after RBNZ announced in 2021 that it would defer development of the standards, due to the Funding for Lending Programme (FLP) window running through to December 2022.
“The decision not to pursue an RMO draws on the Reserve Bank’s 2019 consultation on the review of mortgage bond collateral standards, as well as a more recent internal review of existing collateral frameworks,” RBNZ said. “Since the external consultation, the Reserve Bank has made enhancements to the existing mortgage bond collateral standards via changes to our repo-eligibility criteria. This included a new approval process and requirement for a more detailed Residential Mortgage-Backed Securities (RMBS) reporting template.”
RBNZ said it recognises the importance of robust mortgage bond collateral standards in New Zealand and remains committed to contributing to a sustainable securitisation market over the long term.
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