Macquarie’s decision to introduce $500 million worth of low-doc loans through its securitisation arm is among the first moves to reintroduce the product into the market following the effects of the financial crisis, a property expert has said.
Macquarie Securitisation sold a $1.2 billion bond last week with residential mortgages as the underlying asset, with at least 46% “low doc” loans. While it is not the first party to introduce low-doc loans since the financial crisis began, the size of the proportion is surprising.
Low-doc loans are loans that have more relaxed lending standards. Their popular distribution in the US property market is often cited by analysts as one of the causes of the financial crisis.
SQM Research founder and research director at Advisor Edge, Louis Christopher, says he expects similar moves over the foreseeable future.
“Macquarie is trying to fill a market that has been void for some time now, and these players who have been in the low-doc movement in the past are seeing demand, and if they are able to fund it then they will introduce them like they used to.”
Christopher says the timing of introducing the loans is particularly interesting, given the season of rising interest rates, but he expects good things to come.
“I think it could be a good thing for the market as the banks may be a little more sensitive in trying to grab a higher margin. There are some dollars to be made through a competitive offering here, with the only key aspect being that you need funding.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
