This article is from the Australian Property Journal archive
FIRSTMAC, Australia’s largest non-bank lender, has issued $500 million in Residential Mortgage Backed Securities online, in a signal about the future direction of the mortgage lending market.
The capital raising by Firstmac was mainly secured against mortgages written by related company loans.com.au – Australia’s biggest online lender.
Firstmac CFO James Austin said the strong support for the issue from domestic institutions reflected the growing realisation that online borrowers were a lower credit risk than the typical borrower who walks into a bank branch.
“Contrary to what you might think, a typical online borrower isn’t a kid in the basement playing computer games but a mature buyer who is sophisticated and confident enough to handle their own financial affairs.
“With our superior low-cost model, we are taking the best customers away from the majors and that is now recognised by institutional investors and reflected in the price they pay for our securities,” Austin said.
Mortgages issued by Firstmac and loans.com.au have a level of arrears that is only 0.47%, less than half the industry average of 1.11%.
The latest issue was priced at 1.5% above the Bank Bill Swap Rate (BBSW), only a fraction higher than a similar recent major bank issue which was priced at 1.4% over BBSW, and significantly less than the gap Firstmac has paid in the past.
Firstmac has written in excess of 84,000 home loans and manages approximately $8 billion in mortgages and $150 million in cash investments.
Australian Property Journal
