By Gareth Vaughan
Fresh from launching a home loan business in New Zealand, Australian non-bank lender Resimac is hinting at additional expansion, potentially into vehicle financing and asset lending.
Adrienne Church, Resimac's Auckland-based director of sales for both Australia and New Zealand, told interest.co.nz in a Double Shot interview that Resimac was looking at further growth in New Zealand, which could come through acquisitions.
"As a business we will continually look at new opportunities be that asset class, be that other geographies, we will continue to do that. So we would like to eventually have other products here if that's vehicle finance, asset lending, whatever that looks like, we will look at whatever opportunities are available," Church said.
Resimac touts itself as the pioneer of Australian Residential Mortgage Backed Securities (RMBS) saying since its first issue in 1998 it has issued about A$14 billion worth of RMBS through 22 domestic and international issues. Resimac was originally established, in 1985, to service and securitise residential loans for HomeFund, a New South Wales State government housing programme, under the name of First Australian National Acceptance Corporation, or FANMAC.
FANMAC was established by the New South Wales government in conjunction with US investment bank Sellerman Brothers. In the mid 2000's the New South Wales government sold out of the company and RESIMAC now has 17 shareholders including Westpac, BNZ's parent National Australia Bank, Citibank, Merrill Lynch, Cuscal and QBE. Resimac also says it's supported by key strategic partners such as Perpetual Trustees, Bank of NY Mellon, NAB, Deutsche Bank and Barclays PLC.
In New Zealand, given it's not a registered bank and won't be taking deposits from the public, Resimac will largely escape Reserve Bank oversight.
'Conservative' securitisation
Church says RMBS issues in New Zealand from Resimac are probably "closely on the horizon." Although banks here do borrow via RMBS, it's just one of many funding sources for them whereas it's Resimac's sole source. Church acknowledges "a lot of noise and feedback" on securitised funding throughout the global financial crisis (GFC).
"A lot of businesses did go out of business. (But) we have been in business for 28 years . When I was working in Australia with Resimac, and prior to that with Genworth, we had probably 30 non-bank lenders in Australia. Today there's only three. So Resimac is one of those remaining companies. We've never stopped lending throughout the GFC whereas a lot of non-banks did. We've continued to lend and we've also continued to securitise," says Church.
Asked how Resimac had survived when other non-bank lenders didn't she said: "Conservatism of product, we've never really gone hugely down the risk curve. We do have specialist lending in Australia which has adverse credit and different things as well, but we have some amazing systems and risk policies in order to ensure that they are true and correct and we're doing the right thing by the borrower."
As for its home loans, which Resimac launched publicly last week after a three month pilot, it's targeting self employed borrowers through both standard and "lo doc" loans, and also borrowers who aren't resident in New Zealand. It's selling through mortgage brokers. Resimac's advertised launch rates are competitive with advertised bank rates featuring a 4.95% one-year rate for borrowers with deposits of 20% or more, 5.65% for borrowers with deposits below 20%, and 5.95% on lo-doc loans. Its floating rate, across all three categories, is 5.55%, 5.85%, and 6.55%, respectively.
The lo-doc loans are targeted at borrowers who have difficulty in proving their income, usually because they are self-employed. Resimac will lend up to 70% of a house purchase price for self employed borrowers and up to 95% for standard borrowers. See all advertised mortgage rates here.
Church says she believes Resimac can compete with the banks over the long-term on rate but will also compete on service.
"We have very sharp turnaround times (with) guaranteed 24 hour turn around time. We're working with brokers so we distribute through the broker network. We will pay trail (commission), so that has been another thing that a lot of the New Zealand banks haven't been doing. So we pay an upfront (fee) and a trail to them," said Church.
The New Zealand launch comes after a three month pilot to test out Resimac's systems and processes. It also comes after Resimac bought a majority shareholding in NZF Group’s home loan securitisation operations last year. Prior to that, in 2009-2010 Allied Farmers touted Resimac as a potential white knight for its ultimately doomed finance company, Allied Nationwide Finance although nothing came of this.
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