Household Capital, a provider of home equity retirement funding, has completed its first rated mortgage securitisation, the HHC 2024-1 RMBS Trust.
The $263 million transaction, arranged by Citigroup Global Markets Australia and rated by Moody’s, marks a significant step in addressing the financial needs of retired Australians, the company said.
The securitisation will enable Household Capital to cater to the rising demand from retired homeowners seeking long-term, responsible funding solutions.
With more than $1 trillion in home equity available, this financing is crucial for helping retirees manage their financial needs, according to Household Capital.
“Our inaugural mortgage portfolio securitisation is a great outcome for Australian retirees and a big step forward in the evolution of Household Capital,” CEO Joshua Funder said.
The Household Capital mortgage portfolio, which began in 2019 and has grown to more than $420m, has attracted significant interest from investors.
The transaction was 1.6x covered and upsized, reflecting the quality and low-risk nature of the mortgages.
“The quality of our customers and the low-risk nature of the mortgages we originate were critical in attracting local and global investors to sustainably scale retirement housing and funding,” Funder said.
The HHC 2024-1 RMBS Trust includes features allowing customers to draw on their home equity under existing and potentially increased credit contracts.
“Household Capital has pioneered the delivery of home wealth to Australians. The securitisation of our mortgage portfolio is a milestone in the growth of our business,” said Household Capital chair Nick Sherry (pictured above).
The transaction’s Moody’s rating underscores the unique aspects of Australian equity release mortgages, such as higher voluntary discharge rates and lower negative equity risk.
“We have achieved a strong Moody’s rating and innovated significantly to obtain a premium to par for the rated notes,” Funder said.
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