Markit European ABS

Australia has also been increasingly affected by the credit crisis. In response to the current situation, the Reserve Bank of Australia cut its cash rate target by 25 basis points to 7%.

 

The cut was preventive since Australian housing is still showing positive year-on-year growth (around 8%). Some negative news such as a 17% decline in  mortgages sold in August and a year-on-year growth close to 0 in both Sydney and Perth have increased pressure.

Still, QBE Insurance Group is looking to acquire PMI Mortgage Insurance, a mortgage insurer that provides credit enhancement to AAA RMBS. PMI is involved in major Australian deals such as Crusade Global Trust, Puma Global Trust and Swan Trust and it has been impacted by negative outlooks from the rating agencies this summer.

Uncertainty surrounding the Australian market has driven the Australian RMBS market to new wides: