'First let me share with you the word on the street...'
Be careful with what you hear on the street and in the press....and always put it in context...
For example the AOFM in the Australian RMBS market is not overly significant for the mortgage market itself.
Do the maths: as of April last year, the AOFM had invested in $12.7b of RMBS. At that point, the mortgage market, according to RBA statistics, was around $1,021b, so the AOFM investments represented a little over 1%.
True - AOFM has been fairly important for the RMBS market, but the majors don’t really use RMBS for funding, but more for liquidity. Also, they don’t need much of a market as they can pledge them as collateral with the RBA if they need.
