Adjustable rate mortgages

They really do go for long dated fixed rate mortgages, over in the US.

That’s almost 80%, by allocation, for new mortgage originations.


Puts them in vastly better stead, one would suggest, than those here, who face a material repricing upon rolling off, or only ever faced SVR.

Also worth recalling in the back and forth of “do-they-don’t-they” have a housing bubble, recall that many bulls revert to the % of adjustable rate mortgages (and famous “teaser rates”) then (e.g. in 2004-2005) versus now.

Then gander at the Aussie numbers. That is why we are quite bearish Aussie residential, longer run, and the local equity market in aggregate (given the disproportionately large impact of the financials/banks, we underweight relative to our SAA weight).

Our trade there is for the near term NIM benefits, and not the longer run story.

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