Securitisation is a financial concept that’s quietly powering much of Australia’s credit and lending markets. While it may sound like something only bankers and finance geeks discuss, securitisation plays a crucial role in how mortgages, car loans, and small business finance are funded—and in 2025, it’s more relevant than ever for both borrowers and investors.
What Is Securitisation and Why Does It Matter?
At its core, securitisation is the process of bundling together pools of loans—like home loans, personal loans, or even solar finance—then selling those bundles as tradeable securities to investors. This process frees up capital for lenders, making it easier for them to issue new loans and, in theory, helping to keep borrowing costs competitive for Australians.
Here’s how it typically works:
- Banks or non-bank lenders originate loans (e.g., home loans).
- These loans are grouped into pools and transferred to a separate entity (a trust or Special Purpose Vehicle, or SPV).
- The SPV issues securities—known as Asset-Backed Securities (ABS) or Residential Mortgage-Backed Securities (RMBS)—to investors.
- Investors receive returns from the repayments made by the underlying borrowers.
This structure lets lenders recycle capital and manage risk, while investors gain access to stable, income-generating assets. The Australian securitisation market is one of the most developed in the Asia-Pacific region, with RMBS accounting for over 70% of issuance volume in 2024-2025, according to the Australian Securitisation Forum.
2025 Policy Changes and Market Trends
The securitisation landscape is constantly evolving, shaped by global market forces and local regulatory shifts. In 2025, several developments are changing the game in Australia:
- APRA’s Updated Capital Rules: The Australian Prudential Regulation Authority (APRA) rolled out fresh capital requirements for banks’ securitisation exposures in late 2024. These changes aim to align with Basel III’s global standards, making securitisation more resilient but also slightly more costly for some issuers. Non-bank lenders, however, are leveraging these updates to gain market share, especially in the RMBS space.
- Green Securitisation on the Rise: Driven by ESG (environmental, social, and governance) mandates and government incentives, 2025 has seen a surge in green-labelled securitisations—especially for residential solar loans and electric vehicle finance. The Clean Energy Finance Corporation (CEFC) continues to back these deals, broadening investor appetite and supporting Australia’s net-zero ambitions.
- Digital Innovation: Securitisation platforms are embracing blockchain and AI-driven analytics, improving transparency and speed in structuring and trading deals. This tech shift is attracting new institutional investors and making it easier for smaller lenders to tap wholesale funding markets.
The upshot? Securitisation is not just a tool for the big banks—it’s becoming an engine of competition, innovation, and sustainable finance across Australia.
How Securitisation Impacts Borrowers and Investors
For most Australians, securitisation operates behind the scenes, but its effects are felt in everyday finance. Here’s what it means in practice:
- More Lending Options: By enabling non-bank lenders to access wholesale funding, securitisation supports a diverse, competitive lending market—especially important as borrowers seek alternatives to the major banks.
- Potentially Lower Costs: When securitisation markets are strong, lenders can offer sharper rates to borrowers. However, as seen in early 2025, global volatility can temporarily raise funding costs, sometimes nudging up mortgage or personal loan rates.
- Investment Opportunities: For super funds and institutional investors, RMBS and ABS offer steady income streams with relatively low default rates—making them a popular asset class in 2025’s low-yield environment. Some retail investors can also access these securities via listed investment trusts (LITs) or managed funds.
- Risk Management: Regulators continue to monitor securitisation to prevent the excesses seen in the 2008 GFC. In 2025, transparency rules and reporting standards are tighter than ever, aiming to protect both investors and the broader financial system.
The Future of Securitisation in Australia
Looking ahead, securitisation is set to remain a cornerstone of Australia’s financial system. As lending shifts further towards digital and green finance, expect more innovation in the structuring of deals and the types of assets being securitised—from SME loans to renewable energy projects.
For borrowers, this means more choice and, potentially, better rates. For investors, it offers a way to diversify portfolios with assets that are both income-generating and increasingly aligned with sustainability goals.
