RMBS and House Prices

What drives the performance of RMBS? Do house prices matter?

Fact: even during the market volatility experienced in 2018 and the falling house prices - the values of GCI investments were rock solid.

The portfolio has performed exactly as forecast, never falling below its $2 issue price and delivering low volatility and sustainable monthly income.

This raises the question - what drives RMBS?

2 things:

  1. Affordability (mortgage rates)
  2. Borrowers Capacity to pay (unemployment) - Click here to view our charts on 'Do House Prices Matter?'

IMF stress test (Feb 2019) of the Australian Major Banks concluded unemployment is the most important driver of performance of home loans.

Click here to view the Gryphon Stress Test >

House prices are important for the 'wealth' effect and government coffers BUT they have a second order impact on borrowers capacity to pay their mortgage.

See below links for more information on: