Members Equity Bank chief financial officer Nick Vamvakas last night confirmed a report that appeared on Bloomberg yesterday saying that MEB was about to launch a $400 million securitisation.Vamvakas would not give details, instead referring inquiries to Westpac Institutional Bank, which is arranging the deal.According to Bloomberg, MEB is looking for pricing around 120 basis points over bills.  Earlier this week Puma priced a $315 million RMBS at 110 points over bills.In May, Members Equity negotiated a private placement of $5 billion in mortgage-backed securities with some of the superannuation funds that are also its shareholders.That pool of funding (or funding commitments) was negotiated at a spread of less than one percentage point over the bank bill rate, according to the only media report on the funding (in the Financial Review) six weeks ago.If the spread of 120 basis points over swap proves on the money, the terms of the forthcoming MEB financing help highlight how unviable mortgage pricing remains for many, if not all, lenders.Members Equity is promoting home loans with an interest rate of 8.89 per cent for members of industry superannuation funds, which leaves no margin to meet servicing costs or marketing, let alone a profit margin.The rate on some other MEB home loan products are higher (up to 9.54 per cent) though plenty of lenders would say even rates at those levels produce little profit.Challenger Financial Services Group said in a presentation at an investor conference yesterday that profitability of new loans is marginal.Challenger told the UBS conference that residential lending is down, reflecting lower origination.However, "aggregation flows continue to grow strongly," the firm said. Challenger wholly or part owns PLAN Australia, Homeloans Limited and FAST.Challenger said it had $22.6 billion in mortgages under management and $24.4 billion in mortgages under administration (through the aggregators, or brokers) as at March 2008.About $19 billion appears to relate to residential mortgages, a decline of about three per cent in the firm's mortgage portfolio since the end of 2007.