To Be Announced (TBA) Explained: 2025 Guide for Australian Investors

To Be Announced (TBA) might sound like a placeholder, but in the world of finance, it’s a powerful term with major implications for investors, lenders, and even Aussie homebuyers. In 2025, as Australia’s mortgage-backed securities (MBS) market matures and global financial flows shift, understanding TBA is more relevant than ever.

What Is TBA in Finance?

In finance, ‘To Be Announced’ (TBA) refers to a forward contract for mortgage-backed securities (MBS), where the specific securities aren’t finalised at the trade’s inception. Instead, critical details—such as the issuer, maturity, coupon, and settlement date—are locked in, but the precise pool of loans is only disclosed a few days before settlement. This process is most common in the US, where it underpins trillions in MBS trading and is essential for market liquidity.

In Australia, while the MBS market isn’t as vast as in the US, the TBA concept is gaining traction among institutional investors and could play a growing role as our mortgage market continues to innovate.

• Key Features: TBAs allow for bulk trading and efficient hedging of mortgage risk.
• Settlement Flexibility: Actual securities are ‘announced’ just before delivery, giving buyers and sellers agility in managing their positions.
• Market Liquidity: TBAs promote liquidity in the secondary market, enabling lenders to offer more competitive loans.

Why TBAs Matter for Australian Investors in 2025

Australia’s financial markets are increasingly interconnected with global capital flows. The TBA system, long a fixture in US finance, is now drawing attention from Australian super funds, banks, and institutional investors seeking to diversify and manage risk in mortgage portfolios.

Key reasons TBAs are significant in the 2025 context:

• Rising Securitisation: The Australian Prudential Regulation Authority (APRA) and Reserve Bank of Australia (RBA) have both encouraged deeper securitisation markets to support credit growth and housing affordability. TBAs can facilitate higher trading volumes and price transparency.
• Hedging and Portfolio Management: With interest rate volatility expected to continue in 2025, TBAs offer a way for institutions to lock in prices and manage duration risk before final settlement.
• Potential for Broader Participation: As the Australian Securities Exchange (ASX) explores new products and clearing mechanisms, TBAs could eventually open up to more market participants, including advanced retail investors.

Example: Imagine a major Australian lender wants to issue a pool of new mortgages. By selling them on a TBA basis, they can lock in funding rates today, even though the exact composition of loans will only be finalised closer to settlement. This flexibility can help banks compete and keep mortgage rates sharper for consumers.

2025 Policy Developments and the Future of TBAs in Australia

There have been notable policy and regulatory shifts in 2025 that impact the TBA landscape:

• APRA’s Securitisation Updates: New 2025 guidelines require clearer disclosure and risk management in MBS transactions, paving the way for more standardised TBA contracts.
• RBA’s Repo Eligibility Expansion: The RBA has expanded eligibility for certain MBS (including those traded via TBA) in its repurchase operations, making them more attractive to banks and investors as high-quality collateral.
• Global ESG Trends: Investors are increasingly seeking ‘green’ or ‘social’ MBS. TBAs can help aggregate pools of qualifying loans, supporting Australia’s sustainable finance ambitions.

While TBAs are not yet a household term among everyday Australians, their growing influence in mortgage finance could ultimately shape the options and rates available to borrowers, as well as the risk and return profiles for super funds and other large investors.

What Should Investors and Borrowers Watch?

• Market Adoption: Track announcements from major banks and the ASX on TBA product launches or trading platforms.
• Regulatory Changes: Stay updated on APRA and RBA statements related to MBS and securitisation rules.
• Product Innovation: Watch for TBA-linked products in superannuation, ETFs, or managed funds, as institutional appetite grows.

For sophisticated investors, understanding TBAs is becoming as important as tracking interest rates or inflation. For everyday Aussies, the impact is less direct—but as TBAs support a more robust mortgage market, everyone stands to benefit from sharper competition and more diverse lending products.