03 May 2020

Firstmac reveals loan hardship applications lower than expected

Non-bank lender Firstmac Limited has moved to restore confidence in frozen RMBS markets by releasing a detailed analysis on the impact of the COVID-19 crisis on its mortgage loan book.

A report on each of the 24 trusts in its $12.8 billion loan book reveals that as of April 30, 2020, approximately 5.26% of mortgage holders had applied for hardship arrangements that would reduce or suspend their mortgage repayments.

This reflects conditions well after the crisis had hit and more than a month after the Government’s social distancing shutdown of the tourism industry and all pubs, clubs and other indoor venues which caused widespread job losses.

Managing Director Kim Cannon said the hardship numbers were less than even the most optimistic forecasts of 6-9%, and far below the level that may result in deferred RMBS coupon payments to investors.

“Investors have been on tenterhooks waiting for this information to see if Australian RMBS are in trouble so this is a huge piece of good news for them,” Mr Cannon said.

“This data will give confidence back to investors so they can keep investing in RMBS knowing that the level of hardship is very manageable. It is just a small fraction of what our RMBS could withstand.”

Firstmac Portfolio Summary as at 30/04/2020

Total Balance

$12.797 billion

Gross Arrears ((incl'd COVID) 30+

0.51%

less COVID Arrears 30+

0.12%

Net Reported Arrears 30+

0.39%

 

COVID Arrangement

2.22%

COVID Hardship

3.10%

Total COVID impacted borrowers

5.32%

Mr Cannon said the lower-than-expected hardship figures were due to Firstmac’s strong prime loan book, its tailored approach to working with borrowers, and effective government measures including the JobSeeker payment that mitigated the financial impact of the shutdowns.

“At the start of this crisis we rejected a one-size-fits-all approach to hardship and resolved to work with each customer individually to help them tailor the best arrangement for their unique circumstances,” Mr Cannon said.

“We redeployed a lot of staff into our hardship team, expanding its size eight fold, but the result was that many hardship applicants have chosen to continue making some level of repayments that they are comfortable with, leaving them better off in the long run.”

The positive information on arrears is that latest good news for Firstmac, which last month completed a $1 billion RMBS raising, becoming the first Australian company to successfully tap the funding market after the COVID-19 crisis hit.

The issue took the total value of RMBS that Firstmac has issued since 2003 to more than $25 billion.

The latest issue was achieved with the support of the Australian Office of Financial Management (AOFM), which invested in Firstmac’s RMBS in a repeat of the support it provided to the industry during the GFC.

Approximately 81% of the transaction was placed with institutional investors across the transaction structure including investors from the United Kingdom, Asia, and Australia.

Last week, Firstmac also moved to decisively expand its car loan business through the acquisition of car loan broker Carloans.com.au and car-buying service Georgie from ASX-listed Eclipx Group (ASX: ECX).

Media contact: Duncan Macfarlane on 0434 184 264

Firstmac Limited is an independently-owned, Australian financial services provider with more than four decades of experience in home and investment property loans. Firstmac has written in excess of 100,000 home loans and manages approximately $12 billion in mortgages and $300 million in cash investments. Firstmac is a premier sponsor of the Brisbane Broncos.

Victoria bucks national trend of falling COVID-19 hardship

Non-bank lender Firstmac has released a new analysis of its $12 billion loan book which shows that the number of homeowners on COVID-19 hardship arrangements is rising in Victoria, against a backdrop of falling hardship in other states.   

Managing Director Kim Cannon said that the Victorian lockdown was predictably causing increased financial hardship among Victorians, and especially business owners and the self-employed

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