RHG chairman John Kinghorn has said the company may make a return into the mortgage market in 2011, when it is permitted to write business once more.
According to a report in The Australian Financial Review, Mr Kinghorn said he was open to relaunching a mortgage business if the securitisation markets recovered.
The securitisation markets were responsible for RHG’s downward spiral in 2007.
At the beginning of the global financial crisis, the securitisation markets froze, forcing Mr Kinghorn to sell RHG’s distribution and brand rights to Westpac and place the brand in run-off mode, which prevented RHG from writing loans before 2011.
However, Mr Kinghorn said following this time, writing home loans again could be a viable option for the company.
“[Home loans] are an option. We wouldn’t consider the corporate loan market; we wouldn’t know how to finance it and don’t have a deposit like a bank. We only finance it through capital markets,” he said.
According to Mr Kinghorn, RHG entered the market when there was little competition, easy access to securitisation markets and bank margins sat at about 4 per cent.
“At the moment those conditions do not prevail but we are moving rapidly towards them again – banks are enjoying lower competition...and if banks are banks, [margins] will get back to 4 per cent,” he said.
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