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I have no knowledge of Australia or the uk mortgage markets but in America mortgages get packaged up in securities and sold to investors in the market or big ag
by Red_Leaves_Flyy 3y ago
I have no knowledge of Australia or the uk mortgage markets but in America mortgages get packaged up in securities and sold to investors in the market or big agencies/government programs. Most banks don’t hold mortgages on their books for long before selling them off. Some banks retain servicing but don’t hold the debt on their books. It’s all very complicated and feels like a shell game but mortgage markets have only blown up once in memory whereas I’ve stopped counting recessions.
https://en.m.wikipedia.org/wiki/Mortgage-backed_security https://en.m.wikipedia.org/wiki/Mortgage-backed_security
https://www.axios.com/2023/04/08/banks-retreating-mortgage-market https://www.axios.com/2023/04/08/banks-retreating-mortgage-m...
- Gibbon1 3y agoAnd a lot of conforming mortgages are held by government-sponsored enterprises like Fanny Mae. Key point those asset holding companies don't have to deal with profit and losses like ordinary investment businesses. https://en.wikipedia.org/wiki/Fannie_Mae https://en.wikipedia.org/wiki/Fannie_Mae
- Nursie 3y agoThis begins to effectively sound like government subsidised mortgages, two steps removed and by the back door… huh.
- a5seo 3y agoThis 2008 article in Wired does a good job of explaining how aggregation, in theory, enables bundled mortgages to create a 1+1=3 situation: https://www.wired.com/2009/02/wp-quant/ https://www.wired.com/2009/02/wp-quant/ Except the model was flawed and carried much higher tail risks. Risks that the ratings agencies failed to catch when they gave them AAA ratings in the debt market.