Bluestone has finally ceased originating non-conforming loans as funding costs proved simply too high to continue.
Peter McGuinness, chief executive of Bluestone, told Mortgage Business the decision was regrettable, but pointed out that the lender had been winding down originations for some time.
“We have been reducing our loan originations for well over nine months,” Mr McGuinness said.
“In the end we were doing less than $20 million a month.”
Mr McGuinness said the decision to completely cease writing loans was made after the realisation that funding conditions were not improving.
“We received new funding terms from Westpac last week which indicated that the cost of funds had clearly not improved,” he said.
“It was marginal before, now it would be uneconomic,” he said.
Mr McGuinness said the decision would have very little material impact on the business as they had recognised the need to reshape their business model last year.
Since then Bluestone has focused on providing servicing and special servicing services to third-party loan books in Australia and New Zealand.
“Originations are no longer fundamental to our business,” Mr McGuinness said, “We are 98 per cent focused on this area [servicing] now.”
Mr McGuinness said Bluestone would continue to watch the market and would have the infrastructure ready to return to the market when and if funding conditions improved.
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