Securitization in the U.S. and Australia and its Effects on Mortgage Finance: A Comparative Analysis and Some Implications for China

This paper provides a comparative analysis of the development of securitization markets, and its impacts on mortgage finance and the market structure in the U.S. and Australia. It particularly considers the advantages associated with mortgage securitization and those essential factors that lead to its successful developments. This paper also explores the possibility of securitization for China. Mortgage securitization model in the U.S. centers on the three government-sponsored agencies whereas Australian one is virtually private sector activities. Particularly over 50% of mortgage-backed securities in Australia are issued to global capital markets. This paper finds that the deepened securitization market enables the credit market to integrate into the more efficient national capital market, to improve mortgage marketability and liquidity, and so lower costs to consumers, as well as the economy as a whole. This paper provides some comments on securitization and its potentials for China's banking system.