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Household Loan
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Home Equity Access Scheme
Refinance for 60+
Household Capital raises $270m in rated mortgage securitisation attracting diverse global investors to expand Australian retirement housing and funding
Key points
- Innovative mortgage securitisation in Australian retirement housing and funding
- Financing to help retired Australians meet the challenges of an ageing population
- Second successful scalable financing structure to meet rapidly growing demand
- Dual-rated by Moody’s and S&P reverse mortgage RMBS securitisation
Household Capital, a leading Australian provider of home equity retirement funding, today announced the completion of HHC 2025-1 RMBS Trust, a $270m mortgage securitisation dual-rated by Moody’s and S&P. Citigroup Global Markets Australia (“Citi”) acted as Arranger and Citi and Macquarie Debt Markets team (“Macquarie”) were Joint Lead Managers on the transaction.
The innovative mortgage securitisation allows Household Capital to continue to meet the increasing demand from retired Australian homeowners seeking responsible, long-term funding for their retirement needs – a sector based on more than $1.3 trillion in retiree home equity available today.
The Household Capital portfolio attracted investment from global insurance, superannuation, banking and institutional credit fund investors from Australia, US, UK, EU and Hong Kong. The final transaction had strong investor demand and was more than 4x covered. The senior A Note was rated AAA by S&P and Aa2 by Moody’s with an average weighted life of 3.4years based on an underlying portfolio loan-to-value ratio of less than 25%. An innovative subordinate X Note with an average weighted life of 1.8years was introduced in the securitisation to provide sustainable originator funding of mortgages with lower cashflows.
The HHC 2025-1 transaction builds on the successful inaugural 2024-1 transaction to efficiently allow the trust to fund ongoing customer drawdowns on their home equity under their existing approved amounts as well as through potential future increases to their credit contracts – an important structural feature to ensure home equity is made available by the trust to fund the current and future needs of retirees.
The Household Capital mortgage securities were attractive to global investors based on meeting international risk retention standards. Household Capital intends to list the notes on the ASX subsequent to the transaction.
Household Capital is a specialist 60+ lender, originating mortgages that don’t require the borrower to have an income or make regular repayments and provides a range of home wealth access options distributed direct to customers as well as via partners, advisers and brokers. The company began mortgage origination in 2019 and has built a contracted mortgage portfolio of over AUD$730m.
Household Capital CEO, Joshua Funder, said “Our latest innovative mortgage portfolio securitisation is a great outcome for Australian retirees and a big step forward in the evolution of the sector. We are delighted to work with Citi and Macquarie to deliver the high quality of our customers and the low-risk nature of our mortgages to local and global investors. Our scalable securitisation program is essential to sustainably scale retirement housing and funding and help Australians meet the challenge of an aging population”.
“We were delighted to attract strong, global, diverse investor demand for our securitisation. The way Australian retirees access the wealth in their homes using a Household Loan is different from similar approaches here and elsewhere. The rating on our portfolio reflects a series of key differentiators of Household Capital equity release mortgages: higher voluntary discharge, shorter duration, lower negative equity risk and higher cashflows. We have achieved a very strong dual rating and continued to innovate so these securities deliver for our customers, our investors and Household Capital” Funder said.
Nick Sherry, Household Capital Chair, said “Household Capital continues to lead the way in providing access to home wealth for older Australians. The securitisation of our mortgage portfolio is a major milestone in providing billions of dollars each year in additional funding for an ageing population.”
Vixory served as strategic advisor to Household Capital on the transaction.
Citigroup Global Markets Australia Pty Limited acted as Arranger and Joint Lead Manager.
Macquarie Debt Markets team acted as Joint Lead Manager on the transaction.
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Disclaimers
The Joint Lead Managers, together with their respective related bodies corporate, shareholders and affiliates, and each of their respective officers, directors, partners, employees, consultants,
contractors, agents, advisers and representatives (each a “Limited Party”) have not authorised, permitted or caused the issue or lodgement, submission, dispatch or provision of this announcement and there is no statement in this announcement which is based on any statement made by the Joint Lead Managers or any other Limited Party. To the maximum extent permitted by law, the Joint Lead Managers and each Limited Party expressly disclaim all liabilities (including, without limitation, for fault, negligence, or negligent misstatement) in respect of, and take no responsibility for, any part of this announcement, and make no representation or warranty (whether express or implied) regarding any part of this announcement, including as to the accuracy or completeness of any information in this announcement.