Macquarie gets serious about mortgages
After running pilot programs with several brokers and aggregators during the second half of last year, Macquarie Group has decided to "turn up the volume" on its revived home loan offering.Macquarie got out of the residential mortgage business in 2008, when its main source of funding, the securitisation market, fell victim to the financial crisis and dried up.It started putting its distribution network back together last year and trialled a mortgage aimed at the investor market, with a line of credit facility and some package features.Australian Prudential Regulation Authority banking statistics show that Macquarie's mortgage book is still in run-off. Last year the value of the book fell by 17 per cent, from A$14.9 billion to A$12.4 billion.At its peak, in 2008, the value of the mortgage portfolio was close to A$20 billion.Macquarie's banking and financial services group executive director, Frank Ganis, said: "You can't just turn run-off into growth."We believe we will see the book stabilise in the coming months and then we will have some growth towards the end of the year. We are very comfortable."Ganis said Macquarie's distribution was not as extensive as the last time it was in the market, describing it as "narrow and deep".Some familiar names have the Macquarie mortgage on their lists, including Mortgage Choice, Aussie and AFG (in which Macquarie still holds a stake).Ganis said Macquarie was not aiming for the mass market and is not competing on price.He said service was important to brokers, and they like the fact that Macquarie underwrites every loan (rather than using an automated credit scoring system). It provides indicative approval in 24 hours and formal approval in 48 hours.The loan has a pre-approved credit card embedded in it and some insurance options. It has a standard redraw facility as well as a line of credit for people who want to use the equity in their homes as the basis for asset accumulation.Ganis said he was pleased with the take-up of the different components of the package.Macquarie will use securitisation for funding, as it did in the past. It undertook an A$750 million transaction at the end of last year.However, it will diversify its funding sources this time round. In addition to greater reliance on the Macquarie Group balance sheet, it has a funding arrangement with Bendigo & Adelaide Bank.Gains said he was looking to do white label lending deals and currently has a couple of contracts in negotiation.