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FirstMac is hoping to obtain a license that will allow it to tap into the retail deposit market and diversify its funding base.
According to a report in The Australian Financial Review, the lender is currently seeking to diversify and has been in discussions with the Australian Prudential Regulation Authority over the past nine months about gaining an authorised deposit taking institution license.
The major’s have been able to access large retail deposit bases throughout the global financial crisis, which has enabled them to remain relatively competitive with mortgage pricing.
FirstMac’s chief financial officer James Austin said the main lesson the lender had learned from the crisis was the importance of diversity of funding.
“Although securitisation markets are improving quite strongly, we’re looking to offer products such as cash management trusts,” he said.
FirstMac has remained relatively competitive in the mortgage sphere until now, thanks to the company’s decision to lock in long term funding at rates between 0.20 to 0.30 percentage points over the bank bill swap rate in the months leading up to the global financial crisis.
However, as the long term contracts end, the non-bank lender will be gradually forced to renew its contracts at more expensive prices, providing further impetus to diversify into deposit funding.
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