02 Jun 2020

Firstmac reveals sharp fall in new hardship applications

In news that will reassure nervous RMBS investors, non-bank lender Firstmac has revealed that the number of new applications for COVID-19-related hardship arrangements fell faster than expected in May.

Managing Director Kim Cannon said a full analysis of the trusts in Firstmac’s $12.8 billion loan book showed that, as of May 31, the impact of the COVID-19 crisis was not accelerating as investors had feared at the outset of the pandemic.

“Covid-19 Hardship requests peaked in late March, coinciding with the Federal Government’s announcement of the JobKeeper package,” Mr Cannon said.

“From that time, daily new Covid-19 Hardship requests have only continued on very low daily increments. The balance as at 31 May was 5.65%, up only slightly from 5.32% last month.”

“Our Trusts can withstand stress levels many times higher than the current levels experienced,” Mr Cannon said.

Firstmac Portfolio Summary

 

30/04/2020

31/05/2020

Total Balance

$12.797 bln

$12.806 bln

Gross Arrears ((incl'd COVID) 30+

0.51%

2.36%

less COVID Arrears 30+

0.12%

1.88%

Net Reported Arrears 30+

0.39%

0.47%

COVID Arrangement

2.22%

2.51%

COVID Hardship

3.10%

3.14%

Total COVID impacted borrowers

5.32%

5.65%

 

Mr Cannon said Firstmac was well positioned to minimise the impact of COVID-19 hardship arrangements on its loan book going forward because it had started with a different approach to many lenders.

“From the outset we worked with each customer individually to help them tailor the best arrangement for their unique circumstances, instead of just ushering them through onto a a default six-month hardship arrangement,” Mr Cannon said.

“We will continue that tailored approach next month when our three-month hardship arrangements come up for review, working with each person to ensure that they are making whatever level of repayments they are comfortable with, leaving them better off in the long run.”

Of the total 5.65% of customers currently on hardship arrangements, only 1.88% were in 30+ days in arrears. This is because many of these accounts were in advance and/or are making partial payments. Of the total 5.65%, 44% are making partial payments.

The positive information on arrears is that latest good news for Firstmac, which in March completed a $1 billion RMBS raising, becoming the first Australian company to successfully tap the funding market after the COVID-19 crisis hit. In April, it decisively expanded 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).

About Firstmac

Firstmac Limited is an independently-owned, Australian financial services provider with more than four decades of experience in home and investment loans. Firstmac has written approximately 130,000 home loans and manages $12.8 billion in mortgages and $300 million in cash investments. Firstmac is a premier sponsor of the Brisbane Broncos.

Media enquires to: Duncan Macfarlane on 0434 184 264

Firstmac RMBS issue receives more than $2 billion in orders, deal oversubscribed

Non-bank lender Firstmac Limited has completed a $1.3 billion RMBS raising with a record $2 billion in orders, after both the securities themselves and the roadshow were specially tailored to the COVID-19 environment.

Chief Financial Officer James Austin said the issue was oversubscribed from an early stage and supported by a record 31 institutions which was more than double the 10-12 that had typically invested in the past.

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