Mutual lender announces $300m partnership with neo-lender

Newcastle Permanent Building Society (Newcastle Permanent) has signed a strategic partnership with Athena Home Loans (Athena), which will see the mutual lender provide the fintech with an initial $300 million in mortgage funding.

Under the partnership, Newcastle Permanent will provide funding to Athena for their loan book and purchase the loans from Athena. 

Newcastle Permanent’s CEO, Bernadette Inglis, explained: “Essentially, we are providing funding, but the customers remain with Athena. We just assume the loans onto our balance sheet.”

The mutual organisation, which has more than $11 billion in assets, said the partnership formed part of its strategy to “actively pursue” partnership opportunities in emerging sectors of the finance industry that align to the organisation’s core business of helping customers with their banking needs.

Speaking to Mortgage Business, Ms Inglis said: “This is very exciting for us, and it’s very much a new direction for Newcastle Permanent. 

“When I started 15 months ago, we reset our strategy, and part of that strategy was to develop partnerships. 

“The Newcastle Permanent brand is 117 years young, and we are interested in making sure that we continue to provide the services that are critical to our customers. And that means that we will look for partnerships where we really believe that there are complimentary opportunities, without the need to do everything ourselves.”

She continued: “We have a very strong capital position – north of 20 per cent – we have over a billion dollars in liquidity. And so it’s incumbent on us to utilise those to the very best of our ability to make sure that we are delivering value to customers.”

Newcastle Permanent looking to build all channel partnerships

Ms Inglis added that the organisation was focused on building its diversity and offering across all channels.

The lender CEO told Mortgage Business: “We are very strong in the Hunter region through our own proprietary network and we intend to continue that really strong presence and brand in the community. 

“We’re also very committed to the broker network and recently extended our broker partnerships up into south-east Queensland. So, our share of broker loans is increasing all the time, and we’re very happy with that. 

“Likewise, this relationship with Athena gives us further diversity. 

“But all three channels (direct, broker, online) are important to us. So, for us, it’s about diversity and making sure that we are able to help customers through a number of avenues,” she said.

“This partnership enables Newcastle Permanent to build on its high-quality home loan portfolio with complimentary high-quality and diversified assets. 

“This diversified mortgage acquisition strategy will underpin the value we are able to offer our customers and support long-term organisational resilience,” she added.

Potential room for growth in Athena partnership

While Ms Inglis noted that this partnership was its first with the fintech arena, she said she “expected that this would continue”, and could result in further investment in Athena Home Loans, too.

“This is a partnership; it is not necessarily a one-off transaction. So, we would hope that there is future opportunity with Athena to extend that relationship and our partnership. And I know that Athena are of a like mind.”

The Newcastle Permanent CEO particularly noted that the two lenders were “like-minded” both in risk appetites and in cultural values, too.

Athena co-founder and chief operations officer Michael Starkey said the neo-lender was “excited to be partnering with a like-minded institution”, adding that “developing innovative solutions is a key part of [its] strategy”. 

“Since our launch in February 2019, we have been Australia’s fastest-growing fintech, writing over $1.6 billion in home loans. Strong funder support for this growth is underpinned by Athena’s best-in-market portfolio credit quality. 

“With our innovative digital mortgage platform, we are able to pass on the benefits to our borrowers via great rates and big savings,” Mr Starkey said. 

The agreement was facilitated by KPMG, whose strategy partner Hessel Verbeek lauded the partnership as “a ground-breaking transaction in the Australian market”.

“This innovative deal between a customer-focused lender and a fintech is entirely complementary and allows both parties to support their customers and continue to grow,” Mr Verbeek said.

[Related: Lender to drop rates as borrowers pay off mortgage]