“We’ve been watching the residential mortgage market very closely for some time now, and, in our opinion, it’s been getting increasingly difficult to source enough high quality home loans for our investors,” AXA’s head of wealth management Ralph Stewart says.
As part of the change AXA has sold its 963 existing loans to the Public Trust and has entered a joint venture with an Australian company which will mange the loan side of the business.
Stewart says AXA has traditionally been a very strong player in this sector and its mortgage backed products have always performed well.
“As time has gone on things have changed,” he says. “It’s harder to get people to borrow from us.
“If we didn’t do something returns would go down and investors would walk.”
Stewart says the new MBB investment is also designed to provide some stiffer competition to the raft of secured debenture offerings from finance companies.
Mortgage Backed Bonds aim to offer a competitive rate of return, exceeding the 90-day bank bill rate by up to 0.50%, with interest rates being declared monthly in advance.
The September 2004 launch rate for Mortgage Backed Bonds is 6.95% per annum.
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