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The retirement lending specialist has printed a $270 million RMBS public term issuance to meet borrower demand.
Specialist lender Household Capital has printed a $270 million residential mortgage-backed securities (RMBS) public term issuance, amid growing demand for the retirement funding provider’s products.
The lender said the transaction would allow the trust to meet the current and future needs of retirees by funding “ongoing customer drawdowns on their home equity under existing approved contracts as well as through potential future increases to their credit contract.”
The securitisation attracted a mix of onshore and global investors, according to the lender, with Citigroup Global Markets Australia and Macquarie Debt Markets team acting as joint lead managers.
Household Capital indicated the securitisation was more than four times oversubscribed, with Standard & Poor’s (S&P) and Moody’s assigning the senior tranche ratings of AAA and Aa2, respectively.
One of the key drawcards for global investors was that the mortgage securities met international risk retention standards.
Joshua Funder, Household Capital CEO, described the deal as a “great outcome” for retirees and a step forward in the evolution of the sector.
“Our scalable securitisation program is essential to sustainably scale retirement housing and funding and help Australians meet the challenge of an ageing population,” Funder said.
“We were delighted to attract strong, global, diverse investor demand for our securitisation. The way Australian retirees access the wealth in their homes using a Household Loan is different from similar approaches here and elsewhere.
“The rating on our portfolio reflects a series of key differentiators of Household Capital equity release mortgages: higher voluntary discharge, shorter duration, lower negative equity risk and higher cashflows.
“We have achieved a very strong dual rating and continued to innovate so these securities deliver for our customers, our investors and Household Capital.”
Nick Sherry, Household Capital chair, added: “Household Capital continues to lead the way in providing access to home wealth for older Australians.
“The securitisation of our mortgage portfolio is a major milestone in providing billions of dollars each year in additional funding for an ageing population.”
This transaction marks the second-rated mortgage securitisation completed by the lender, following the successful printing of a $263 million RMBS in 2024.
Growing demand
The specialist lender for borrowers aged 60 and over began mortgage origination in 2019.
Since then, Household Capital’s contracted mortgage portfolio has grown to over $730 million, with approximately 70 per cent of its business currently coming through the broker channel.
This latest announcement comes after Household Capital launched a refinancing loan for retired borrowers, available exclusively via brokers on several panels, including Finsure, LMG, SFG, and YBR.
Speaking to The Adviser, Funder said the specialist lender had been delighted with the response from brokers to its proposition.
“As the over 60s segment grows, clients are approaching brokers to find options that help improve their retirement plans (for example, our new Retirement Refi loan helps the over 60s refinance a mortgage and free up their cash flow because it does not require regular repayments),” Funder said.
“We’ve been fortunate to be well supported by many of the large aggregator groups, as well as the key specialist reverse mortgage brokers over the last few years. We are excited to expand further into the broker channel in the coming months.”
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