Renewed optimism about Australia's economy and the housing sector has prompted lender Resimac <RMC.AX> to consider returning to the securitisation market again after its latest debt offer drew solid demand, its CEO told Reuters on Friday.
Resimac's sale of A$500 million ($331.60 million) in residential mortgage-backed securities (RMBS), which closed on Thursday, was the first by the company since the COVID-19 pandemic began.
The non-bank lender still had to pay a higher cost than in the past, but the scale of demand was enough for it to consider launching another offer soon.
"The oversubscription gives us the confidence of going into the market earlier than we were previously intending to," said Resimac CEO Scott McWilliam.
"There's still strong home loan activity," he added. "There's definitely been a pick up in auction activity and, prices have held up relatively well."
State capitals are set to see their busiest weekend of housing activity since mid-April with near 700 auctions scheduled, data from consultancy CoreLogic showed.
Last week, Australia's eight state capitalss returned a final auction clearance rate of nearly 63%, the highest since mid-March when restrictions were imposed on onsite auctions and inspections.
The optimism is helped by a much lower COVID-19 death toll and infection rate compared to many other advanced economies, and Australia has returned to normal life barely halfway into the six-month shutdown first flagged by the government.
Mortgage defaults, however, are a concern.
S&P expects some Australian RMBS ratings to come under pressure due to a rise in unemployment, loss of income and slowdown in house price growth.
Resimac's McWilliam said it was too early to say if defaults would rise substantially.
"We don't know yet how many customers would return to normal payment, or some sort of payments or how many borrowers would still need continued support," he said.
"It's too early to tell how it will play out."
(Reporting by Swati Pandey; Editing by Simon Cameron-Moore)
