reintermediated because other forms of non - bank financing dried up. 1 one of the areas of the market that suffered the greatest impact from the crisis was asset - backed securities, due to the loss of investor confidence in this asset class globally. this resulted in the stock of outstanding australian asset - backed securities nearly halving, in nominal terms, and declining three - fold relative to gdp since mid 2007. the developments in the australian bank bond market between mid 2007 and 2009 are covered in more details in black s, a brassil and m hack ( 2010 ), “ recent trends in australian banks'bond issuance ”, reserve bank of australia bulletin, march, pp 27 – 33. more recent developments in the banks'bond issuance are covered in berkelmans l and a duong ( 2014 ), “ developments in bank ’ s funding costs and lending rates ”, reserve bank of australia bulletin, march, pp 69 – 75. bis central bankers ’ speeches table 1 australian bonds outstanding * overview of developments since 2013 conditions faced by australian bond issuers have continued to improve since early 2013, reflecting the markedly better conditions in global financial markets as the global economic recovery has become more entrenched and as european sovereign debt concerns have eased. issuance has been generally strong and has been met by robust domestic and offshore demand. the only exception to this was the month of june which saw virtually no issuance of non - government bonds as issuers and investors stood on the sidelines while financial markets were assessing the prospects and implications of the start of the us federal reserve ’ s tapering to its asset purchases program. however, this episode proved short - lived, with australian and global bond market activity resuming quickly and continuing apace when tapering actually started in december. the past year in the australian bond market has been most notable for the signs of the improvement in investor sentiment extending along the risk spectrum towards lower rated corporate bonds and to parts of the fixed income market that have been, unfairly, at least in the case of australia, tarred by the loss of global investor confidence. issuance in the bis central bankers ’ speeches domestic market of lower - rated corporate bonds, which in the case of australia means those rated bbb + to bbb−, was the strongest on record, and, notably, at longer than usual maturities. the securitisations market, particularly for residential mortgage - backed securities ( rmbs ), also recorded a significant increase in activity.

2. real after tax income even for those who have retained salaried jobs, as tax rates increased 2008 – 12, and many suffered pay cuts ( with the pension levy also eating into the pay of public servants ) ; 3. residential property prices – now over 50 per cent off their peak levels of about six years ago, with the result that a very high percentage both of performing and nonperforming mortgage loans – whether owner - occupier or buy - to - let – are in negative equity ; on the positive side, at present ecb policy interest rates are low, which has helped keep the servicing costs of mortgages low, especially tracker mortgages of course, but also standard variable rate ( svr ) mortgages, even though these have become relatively insensitive to the policy rate2 and now embody higher spreads over the banks ’ marginal cost of funds than used to be the case. each of the three negative features is associated with distinct consequences for both borrowers and lenders leading to stress in many cases. of the three, on the face of it, loss of employment could be expected to have the most acute impact on a household ’ s ability to pay. interestingly, though, the preliminary findings of a central bank survey of household income and indebtedness ( details forthcoming ) 3 suggests that income declines unassociated with unemployment, and negative equity, are also strongly associated with arrears in ireland today. the decline in employment rates means that many households have a reduced number of income earners at present. while this will be a temporary situation for some households, for many recovery will not come soon enough. this will result in mortgages being unaffordable. if the household has a good chance of getting back into full employment, the relief can be temporary, but if the prospects are not good, then a more lasting loan modification will be needed, and this should be faced up to sooner rather than later. 4 indeed, the survey suggests that having some unemployment in the household is econometrically linked with arrears, but interestingly it is far from being the only factor or a decisive one. indeed, the survey data suggest that, while unemployment is much more prevalent among those in arrears, almost two thirds of those in arrears are employed. the decline in after tax incomes for most employees has been significant, but aggregate data suggest that in the bulk of cases this decline is not so large as to