Resimac prices $1bn non-conforming RMBS

Resimac has announced it will finalise a $1 billion residential mortgage-backed security (RMBS) transaction — its first of 2023 — which will help the lender continue to provide alt doc and specialist products to self-employed and credit-impaired borrowers.

The lender upsized the deal, which is expected to finalise on Thursday (20 April) from its initial $500 million, after receiving strong investor interest.

Speaking of the transaction, Resimac’s chief treasury officer Andrew Marsden said the RMBS deal would mean the business could “continue providing brokers with flexible products for self-employed and credit-impaired borrowers”.

“These products give brokers the opportunity to diversify their business and respond to market conditions,” Mr Marden said.

“Resimac is continuing to pursue this type of customer using our proven products and strong relationships with brokers.”

He added that the upsizing of the deal reflected “a great show of support in [Resimac’s] non-conforming issuances” as well as the skill of the team in “providing attractive investment opportunities”.

National Australia Bank Limited and Citigroup Global Markets Australia Pty Ltd acted as co-arrangers for the transaction.

Citigroup Global Markets Australia Pty Ltd, National Australia Bank Limited, Barrenjoey Markets Pty Limited, and Commonwealth Bank of Australia acted as joint lead managers.

Resimac focusing on specialist

With many borrowers expecting to roll off super-low fixed rates this year onto much higher variable rate loans, there have been growing expectations that there will be a significant increase in the number of borrowers who will no longer qualify for prime or ‘vanillla’ loans given higher serviceability buffers and tightened risk appetite at the banks. As such, non-bank lenders have been specialising in servicing this segment of the borrower market.

Earlier this year, Resimac revealed that specialist loans continued to dominate its flows (as has been the case ever since financial year 2022), with $1.6 billion of new loans being specialist in 1H23. This was broadly in line with the previous half.

Speaking to Mortgage Business in February, Resimac Group chief executive Scott McWilliam commented: “We are active and competitive in the prime space at different times through different cycles; but the focus right now — from a mortgage perspective — is absolutely in the specialist market.

“We are not looking to follow the bank’s lead, where they’re willing to write business below cost of capital.”

Mortgage brokers were responsible for 100 per cent of specialist home loan flows and around 90 per cent of prime loans were written by brokers.

[Related: Resimac increases upfront and trail commissions]