Powered by MOMENTUM MEDIA
subscribe to our newsletter

AFG Securities issues first non-conforming RMBS

AFG’s in-house lending division has announced that it has priced its inaugural non-conforming RMBS transaction worth $500 million.

The wholly owned subsidiary of aggregation group Australian Finance Group (AFG), AFG Securities, has successfully priced the AFG 2020-1NC Trust $500 million issue, the first issue under its non-conforming program.

Given that this is the inaugural residential mortgage-backed securities (RMBS) issue under the non-conforming program, the portfolio includes low-documentation and non-conforming loans originated by AFG Securities.

The issue is AFG Securities’ 10th issue since 2013, taking the total paper issued to the market by AFG Securities to $4.075 billion.

AFG told Mortgage Business that the non-conforming loan book within its warehouse had grown to a level where this type of RMBS transaction was possible.

Advertisement
Advertisement

AFG CEO David Bailey said the transaction has received support from domestic and international investors.

“We are very pleased to be able to upsize the transaction from $350 million to $500 million due to strong interest from both new and returning investors,” Mr Bailey said.

He added that AFG Securities’ loans, which are 100 per cent broker-introduced, have tracked below the Standard & Poor’s Performance Index (SPIN).

“Our underwriting standards, arrears management processes and policies, as well as our low historical arrears and loss performance, have informed the support of the transaction,” Mr Bailey said.

National Australia Bank was the arranger on the transaction and acted together with the Commonwealth Bank of Australia as joint lead manager.

PROMOTED CONTENT


According to AFG’s full-year results for 2020 (FY20), the level of COVID-19 hardship cases with full deferral of principal and interest payments in AFG Securities (operational) improved from 4.98 per cent as at 7 May to 2.03 per cent as at 21 August.

At 30 June 2020, in a book of 7,543 loans, there were only 19 loans in arrears greater than 30 days.

No losses were incurred on non-lender’s mortgage insurance (LMI) insured loans, while 50 per cent of the book has a loan-to-value ratio (LVR) of greater than 70 per cent, with loans greater than 80 per cent LVR covered by LMI.

More than half of the loans in the COVID-19 hardship had returned to either part or full payments, while total hardship reduced from 9.56 per cent as at 7 May to 5.33 per cent as at 21 August.

[Related: AFG Securities updates clawback structure]

AFG Securities issues first non-conforming RMBS
AFG Securities issues first non-conforming RMBS
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

Latest News

Reverse mortgage lenders have accessed a small fraction of the potential retiree housing market in Australia, according to Deloitte. ...

Pepper Money has priced its second I-Prime deal for the year, upsizing the figure to $850 million. ...

The LMI provider has announced a new CFO following the resignation of its current CFO, effective 24 September. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.