Broker market share fuels record RMBS for non bank

by Mike Wood03 May 2021

Firstmac have announced the largest ever issue of Residential Mortgage-Backed Securities (RMBS) completed by an Australian non bank lender. The Queensland-based bank have broken their own record, set in 2017, by chalking up a $2.0 billion issue, surpassing the previous bat set at $1.7 billion.

They paid just 73 points above the bank bill rate for the funds, the least since before the Global Financial Crisis. It is a huge drop on their previous issue, from September 2020, which was 135 points. ANZ arranged the deal, with Joint Lead Managers including NAB, Standard Chartered and SMBC Nikko Capital Markets.

“It’s significant,” said James Austin, CFO at Firstmac. “We’re riding some good volumes now: in the month of April, we settled $500m for the first time, which is a pretty sizeable flow. That’s about two thirds from brokers, and this deal is about the same ratio. That’s been well received in the marketplace. It allows us to be there in a competitive way and grow our market share.”

“One of the big talking points around this deal has been around why we’re attracting volume, and the answer is that the banks’ processing times for broker deals has been playing second fiddle to their retail, whereas we’re able to process quite quickly. We’ve got a very automated, efficient system that can get through that process. That’s one of the big reasons that we’re winning share.”

“Before the brokers have tried us, they had been putting a lot of volume through the banks and, as the banks have been writing massive volumes, it’s ground them to a halt. After having tried us, when they’ve seen the good process and seen our competitive products, then we hope they choose to stay with Firstmac longer term.”

“The banks have been very competitive in fixed rate loans, but they haven’t in variables. When you compare the variable rates that we have on offer, they stack up pretty well against any other in the market.”