Like other non-bank lenders, Resimac responded to rising funding costs and intense competition in the home loan market last year by shifting its focus to higher-yielding “specialist” (non-conforming) mortgage lending and asset finance. In what Resimac chief executive Scott McWilliam described as a “challenging market”, mortgage settlements were down 32 per cent year-on-year to A$2.4 billion in the six months to December. Specialist loans accounted for $1.6 billion and prime loans $800 million. The home loan book was worth $14.7 billion – up from $14.6 billion in the December half 2021 but down from $15.3 billion in the June half last year. McWilliam said he expected the prime mortgage book to decrease in the June half, while the specialist segment “continues to provide origination opportunities”. Asset finance settlements grew 18 per cent to $210 million. McWilliam has high hopes for asset finance, which has a new digital origination platform and a new funding platform. Resimac is targeting annual settlements of $1 billion in 2023/24. As a result of the change in the asset mix, Resimac’s net interest margin rose 4 basis points from 1.71 per cent in the June half last year to 1.75 per cent in the December half. Net interest income fell 6 per cent to $117.2 million, compared with the previous corresponding period. Operating expenses rose 6 per cent to $43 million. Net profit fell 27 per cent to $38.9 million. The loan impairment expense fell from $1.9 million in the December half 2021 to $564,000 in the latest half. Home loan arrears (90 days or more past due) rose from 10 basis points to 25 bps year-on-year for prime mortgages, while they fell from 69 bps to 66 bps for specialist loans. Resimac issued $1.2 billion of Australian and New Zealand prime and specialist mortgage-backed securities during the half. Margins increased by as much as 50 bps and the benchmark bank bill swap rate rose by over 200 bps. McWilliam said RMBS pricing appeared to have peaked. McWilliam said: “We will continue to focus on areas where we see the greatest opportunities in the short term. Our strategy has always been to create niche products for under-served segments overlooked by the major lenders.”