The CFO of a non-bank lender, which has priced the largest RMBS issue from a lender of its type, has said it is currently doing everything it can to expand its third-party channel, as brokers are “immensely important”.
Speaking to The Adviser, Firstmac chief financial officer James Austin reiterated that the broker channel is an “immensely important” and “integral” part of the business, and had been for over 15 years.
He explained: “It's very important for us to provide diversification across the whole community. We are a national lender so it’s important that we have a good geographic spread and brokers are well-placed to provide that.”
Mr Austin elaborated that Firstmac is in the process of expanding its broker numbers, as it is hiring more BDMs and working on competitive offerings.
“We're doing everything we can to increase our broker channel,” he remarked.
Firstmac announced last week that it had completed a $1.7 billion RMBS transaction with an overseas bank.
The new funding source is expected to provide Firstmac with ongoing support for RMBS issues, and according to founder Kim Cannon has “solved the funding challenge” for the lender.
“Firstmac can now fund as many loans as we can write, subject to our lending criteria, so our focus is on growing as fast as possible by offering the best deals and services to our broker network,” Mr Cannon said.
“This reinforces our position as the obvious choice for brokers who are serious about diversifying their business so they have relationships with established non-bank lenders and aren’t solely reliant on the banks.”
The lender currently offers a two-week settlement guarantee, which has been extended to 31 March, as well as an online accreditation system that allows brokers to request accreditation, complete necessary training, and access the lender’s broker site.
Firstmac to ‘be aggressive’ on home lending with $1.7bn deal
CFO Mr Austin added that the RMBS transaction is a strategic one that Firstmac has been working on for six months.
“It's over and above our normal RMBS funding programs, so it frees up all of our warehouse capacity and allows us to really get out there and be very aggressive for new home loan lending,” he said.
“Over the past 12 months, we have been less competitive due to the lack of funding capacity. We’d certainly been operating in the markets but during 2014 and 2015, we were settling 1 per cent of all home loans in Australia.
“We had quite a backlog of settlements that we needed to clear through the RMBS markets, and while we continued to lend through 2016, we couldn't lend with the same aggressiveness that we had back in 2014 and 2015.”
Further, he explained that the transaction is a direct outcome of the corporate process to sell Firstmac last year.
“The corporate process was largely around solving the funding issue,” Mr Austin explained. “The existing RMBS program, which was largely domestic investors, was probably catering for perhaps about half of our funding needs.
“The reason we went into that corporate process was to look for a bigger borrower, a big balance sheet that could give us that incremental funding, or other funding solutions.
“So, this $1.7 billion is the outcome of that corporate process,” he said.
Looking to the future, Mr Austin told The Adviser that Firstmac is looking to ramp up its mortgage lending throughout the rest of the year.
“We currently have a balance sheet of $8 billion. We’re aiming to increase that balance sheet to $10 billion by Christmas, and that really entails us achieving that goal of growing beyond 1 per cent of market share in Australia.”
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