Gillard Urged to Follow Bernanke With Australia Loans: Mortgages

Australia’s Prime Minister Julia Gillard may be forced to follow U.S. Federal Reserve Chairman Ben S. Bernanke by increasing mortgage purchases as house prices slump and the nation’s biggest banks extend their grip on the home-loan market.

Non-bank lenders including Greater Building Society and CUA say more government purchases of residential mortgage-backed securities will be needed as Europe’s debt crisis saps investors’ appetite for risky assets. The Australian Office of Financial Management has spent 73 percent of the A$20 billion ($21.4 billion) allocated to keep smaller lenders competitive after the credit freeze following Lehman Brothers Holdings Inc.’s collapse in 2008.