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Non-bank completes Australia’s first 100% green RMBS transaction

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Australians can now take advantage of $230 million in discounted green home-loan finance, with a $750 million green mortgage-backed securitisation raised by non-bank lender Firstmac, backed by the Clean Energy Finance Corporation (CEFC) and Japanese bank Norinchukin.

All the underlying mortgages in the securitisation were backed by environmentally friendly housing, according to a report by Energy Magazine. The securitisation drew $637.5 million in investment support from Norinchukin and $108.5 million from the CEFC, investing on behalf of the Australian government. This marks the first 100% green RMBS transaction in Australia.

Firstmac will make the full $750 million available to offer its first green home loan product, according to Energy Magazine.

“Green home loans are an effective way to use our finance to benefit Australians over the long term,” said CEFC chief executive Ian Learmouth. “With this new investment we have now committed more than $580 million to cleaner, greener homes Australia-wide, including more than $220 million to green home loans. With the average home having a lifespan of 50 years or more, these investments have the potential to lock in lower energy consumption over the long term, as well as deliver more comfortable homes that are cheaper to run.”

The homes will be among Australia’s most energy-efficient, meeting or exceeding a seven-star rating under the Nationwide House Energy Rating Scheme (NatHERS), according to Energy Magazine.

Qualifying green mortgages will allow borrowers to benefit from a 0.4% finance discount for up to five years on loans of up to $1.5 million. Construction loans can receive an interest-rate discount of up to 1.58%.

The initial seed pool of mortgages will include existing Firstmac loans valued at about $520 million. Firstmac will offer the green mortgages nationwide, with an expected average loan size of $450,000.

Firstmac said it has seen increased customer demand for green financial products.

“We are pleased to support efforts for a sustainable future and deepen our existing relationship with similarly minded organisations like Norinchukin and the CEFC, in issuing the first Australian 100% green RMBS transaction,” Firstmac managing director Kim Cannon told Energy Magazine. “Firstmac has offered discounted green car finance to buyers who choose low-emission vehicles. The success of that program has led Firstmac to now develop this innovative green home loan product. If you are environmentally conscious, then Firstmac is the logical choice for your financing needs.”

Learmouth told the publication that the CECF was pleased to have participated in the country’s first 100% green RMBS deal.

“This is an exciting model for a new investment product for institutional investors wanting to put their money to work in cutting carbon emissions,” he said. “Norinchukin’s substantial backing for this securitisation shows growing investor confidence in backing tailored finance for green homes. This is delivering benefits to families, investors and our environment.”

The property sector accounts for almost a quarter of Australia’s greenhouse gas emissions – with about half of that coming from residential buildings, Energy Magazine reported. Only 10% of new homes built last year achieved a NatHERS rating of seven stars or more, and more than 9 million existing homes failed to meet the seven-star standard.

Ryan SmithRyan Smith is currently an executive editor at Key Media, where he started as a journalist in 2013. He has since he worked his way up to managing editor and is now an executive editor. He edits content for several B2B publications across the U.S., Canada, Australia, and New Zealand. He also writes feature content for trade publications for the insurance and mortgage industries.
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