Decision On Mortgage Bond Standards

The Reserve Bank has decided not to introduce new mortgage bond standards through Residential Mortgage Obligations (RMO).

The Reserve Bank is today announcing the decision to not introduce a new mortgage bond standard in the form of Residential Mortgage Obligations (RMO). This decision follows the announcement in 2021 that the Reserve Bank 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.

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. The Reserve Bank will instead continue to seek enhancements to the current generation of (RMBS) to ensure it remains fit-for-purpose and enduring.

The Reserve Bank acknowledges the significant engagement from industry stakeholders, including investors and issuers, during the RMO project. The Reserve Bank 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.

More information:

• Review of mortgage bond collateral standards
• Submissions received on new mortgage bond standard, update on repo-eligibility conditions
• Residential mortgage-backed securities application criteria

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