Non-bank lender happy with support for latest RMBS deal
La Trobe Financial credits the success of its recent capital raise to its track record of originating high-quality mortgage loans, which appeal to investors.
In November, La Trobe Financial shared details of its 14th residential mortgage backed securities (RMBS) deal, which was upsized from a $500 million pre-placed RMBS to $750 million. Despite “choppy” global funding markets, which the non-bank lender acknowledged had created problems for some issuers, it was pleased with the level of investor demand the latest deal received.
La Trobe Financial treasurer Paul Brown (pictured above) told MPA that the capital raise was launched as part of the non-bank lender’s normal funding program. It was backed by a diversified pool of residential mortgage loans, which Brown said were typical of the types of residential loans that La Trobe Financial originates.
“We have built a highly diversified funding platform to give our business resilience through the cycle and RMBS issuances are part of that program,” Brown said.
The funds would be used to continue to support La Trobe Financial’s lending program, which Brown said offered “one of the broadest product sets in the market” with its range of financing solutions encompassing residential, commercial, SMSF, development finance, and other types of loans.
Brown said La Trobe Financial was well known to RMBS investors, and that its portfolios had a long history of performing across the cycle. At a time of increased volatility, that track record was “prized by investors,” he said.
The level of investor support for the 14th RMBS deal highlighted La Trobe Financial’s approach to lending, which provided confidence to brokers and borrowers.
“Our investors are particularly attracted to La Trobe Financial’s long track record as an originator of high-quality mortgage loans,” Brown said. “Australian housing is also viewed favourably by global investors as a sound and conservative asset class.”
With recent monthly falls in new lending, September ABS figures showing new loan commitments for housing fell 8.2%, due to its diversified product range, Brown said La Trobe Financial was able to assist brokers considering moving into new areas of lending.
“We have purposely engineered our products and processes to ensure all products look and feel the same, meaning that if a broker can write a residential loan, they can write a commercial loan just as easily,” Brown said.
La Trobe Financial had also removed the barriers to entry for many of its specialised products including commercial, SMSF and development finance, all of which often required additional specific accreditation and training with each lender, he said.
“We understand these accreditation barriers are a major reason many brokers fail to expand their product writing capability,” Brown said.
As a further example of its diversified product offering, La Trobe Financial’s Parent to Child (P2C) product assists parents in helping children with home ownership. Parents have historically used their home or themselves as guarantors, or have gifted money, leaving them open to risk in the event of a default, or subsequent separation.
The Parent to Child product formally documents the assistance, registering a mortgage on the security property, and independently manages the parent’s assistance to ensure it is repaid according to the agreed terms.