YBR to enter securitisation market

Yellow Brick Road plans to enter the mortgage securitisation market, with its first issue scheduled for the December quarter.

The securitisation plan is one of a number of initiatives the company outlined in a strategy update yesterday. It is also planning a three-fold increase in its marketing budget and the introduction of new products, including personal loans and life insurance.

YBR said it was on track to report "operating break-even performance" for the year, with earnings before interest, tax, depreciation and amortisation of around A$1 million.

It said it would report a net loss after tax of around $1 million, compared with a loss of $5.1 million in 2013/14.

YBR's mortgage book, which jumped from $2.7 billion to $27.6 billion after the acquisitions of mortgage aggregator Vow Financial and mortgage manager Resi Mortgage Corp last year, is now worth $30.8 billion.

In its wealth business funds under management have grown from $427 million last year to $668 million now.

The company said the planned securitisation program would give it the flexibility to fill gaps in product segments not being serviced by mainstream lenders.

It will also give the group funding diversification and a higher margin. According to YBR the "retained value" of a loan originated using securitised funds was four times more than the margin on a typical broker loan.

YBR acquired securitisation resources when it took over Resi, which had a funding entity in place and credit capabilities.