NZ Mkt For Non-Conforming Mortgage Bonds Comes Of Age

Non-conforming mortgages are those that don't have the high level of documentation and income history which make prime mortgages so attractive for investors.

The market for non-conforming mortgage-backed bonds has tightened in the past eight months with a contraction in the spread at which the AAA tranche of floating-rate non-conforming mortgage-backed securities trades over the three-month bank bill rate.

Last week, Sapphire Securities, which securitizes non-conforming mortgages originated by Bluestone New Zealand, became the first issuer of bonds backed by non-conforming mortgages originated in New Zealand.

Read More - Opens in a new window