Firstmac has priced a massive residential mortgage-backed securities (RMBS), underscoring continued investor confidence in Australia’s mortgage market despite ongoing domestic and global headwinds.
The Brisbane-headquartered non-bank lender's recent $2 billion issuance ranks among one of the largest in the industry in the recent quarter, achieved even as geopolitical tensions in the Middle East and uncertainty around potential tax changes have weighed on investor sentiment.
"The scale of the demand shows investors are still prepared to back Australian residential mortgages when the underlying loan quality is strong," James Austin, Firstmac's chief financial officer, told Australian Broker.
The RMBS, a four-year structure, was upsized from its initial target of $750 million, thanks to strong institutional investor demand, the CFO said.
"In a cautious global market, the ability to grow this issue from its original size to $2 billion is a clear sign that investors remain comfortable with the fundamentals of Australian housing credit," Austin said. “The Iran War has clearly unsettled markets, with some investors sitting on their hands while they reassess relative value and the broader economic outlook. This outcome suggests investors are distinguishing between short-term market disruption and the long-term performance of well-underwritten Australian home loans.
"For brokers, this result reinforces that Firstmac has continued access to large-scale funding and remains well placed to support borrowers through the broker channel," the CFO said. “A successful $2 billion transaction shows that Firstmac can keep competing strongly in the home loan market.”
He added that investor demand came from a mix of new and existing investors, both domestically and offshore, including the UK, Italy, Southeast Asia and Japan. The transaction was arranged by National Australia Bank (NAB), with ANZ, Commonwealth Bank of Australia (CBA), DBS Bank, Natixis and United Overseas Bank (UOB) acting as joint lead managers.
Firstmac's latest RMBS comes after the firm priced a $2.5 billion RMBS last November. It also comes after a string of large securitisations from non-bank competitors earlier this year, with ColCap Financial, Liberty Financial and MA Money pricing deals of $2.7 billion, $2 billion and $1.2 billion respectively, underscoring sustained investor appetite for both Australia’s lending and non-bank sectors.
"This result demonstrates the important role non-bank lenders continue to play in Australia’s mortgage market," Austin said.
Still, the earlier transactions preceded the escalation of conflict in the Middle East at the end of February, which has since prompted greater investor caution.
Then in May, the Labor Party unveiled its controversial 2026 to 2027 financial year budget, proposing changes to capital gains tax (CGT) and negative gearing that could potentially further dampen investor sentiment toward property investment.
"The budget announcements were certainly part of the investor discussion, particularly with offshore accounts that wanted to understand the possible flow-on effects for property investors and lenders," Austin explained. "But the final level of demand shows those concerns did not stop them from participating in the transaction. Investors were ultimately more focused on the strength of the loan book, credit performance and the depth of the Australian RMBS market.”
Other market players say current market dynamics are not necessarily deterring investors, but reshaping where they deploy capital. Westpac recently estimated that the proposed tax changes could lead to new investor activity plunging by as much as 34% in the near-term, with remaining demand shifting.
"Sophisticated investors will always be investing," Suvidh Arora, co-founder and co-chief executive officer of Melbourne-based 42 Property, told Australian Broker.
But he added that, at present, "there's a bit more detail around what kind of strategy [people] want to employ. Whether they want to get into commercial real estate, or deploy different structures in order to get the best tax outcome for themselves. We're also seeing a slight shift towards people starting to think about their self-managed super funds as an investment vehicle."
