Brighten comes home to resident lending in ongoing growth drive
Publication Date: Monday, 3 October 2022
This article originally appeared in KangaNews
Adam Moore, director and head of funding and securitisation at Brighten Home Loans in Sydney, discusses the lender’s return to public capital market issuance, the funding model for its nonresident programme and the strategy to expand its presence in the Australian prime lending space.
Brighten completed its second-ever public securitisation transaction this year, from its Solaris programme of loans to nonresidents and prime residents. The issuer has been focused on expansion into the resident lending space and as a result has enjoyed rapid growth in origination volume.
With an initial strategic focus on a niche of loans to nonresidents and residents with offshore income, Brighten says it has profitably and sustainably grown its loan book since it commenced lending in 2017. In 2021, the nonbank further broadened its product offering to include prime and nonconforming loans. It has since grown its assets under management to more than A$1.8 billion (US$1.2 billion) and its team to more than 90 finance professionals.
Adam Moore, director and head of securitisation and funding at Brighten in Sydney, says the lender has been undergoing a period of rapid growth. In the last 12 months it has added a dozen new team members across its credit, operations and sales areas. Origination volume for the lender’s resident-focused mortgage offerings have also grown by 187 per cent. Moore says the growth reflects the increased attention the business has put toward this area over the past two years.
“Resident borrowers have always been a part of our lending, but two years ago we ramped up this focus by expanding our operational and funding capabilities to support resident-specific credit policies and funding lines, as well as establishing a dedicated resident programme,” he explains.
Brighten believes this area is brimming with opportunity, particularly for a business that already has a place on lending panels and established distribution partners. “We are actively investing in the growth of our broker network, including aggregator channels, to enable us to provide home loan solutions to a wider range of customers,” Moore continues. “We have since established an expansive network with access to more than 15,000 brokers Australia-wide.”
So far, Brighten’s suite of products include loans for prime and nonconforming borrowers, self-employed borrowers, those requiring alternative documentation loans, expats and nonresidents. Moore explains: “Our reliable and stable funding platform provides us flexibility in the types of loans we write. Our goal is to have a comprehensive offering that caters to every type of customer.”
To support this growth, a further securitisation – of prime and nonconforming mortgages – could be on the cards as soon as late 2022. Brighten is also in the process of onboarding new warehouse partners to keep up with demand. “Each time we speak with investors, we provide an update on how the resident book is growing, and our credit and operational capabilities in this area,” Moore says. “We are also talking through how the first resident transaction might look.”
Brighten’s developments in the resident space come in addition to its established Solaris nonresident programme, which the issuer says is also faring well. Brighten executed its second deal off the programme in June, a A$523.6 million (US$371.5 million) trade that printed with a significant upsize despite relatively challenged market conditions.
Moore attributes this success to a longer lead time and careful investor work, having announced the deal a month before it priced. “We proactively engaged with the market prior to launch and worked hard to understand where investor appetite was,” he says. “By the time we launched, it became evident there were extra pockets of demand. This is what allowed us to upsize.”
While Brighten’s first public securitisation, priced in April 2021, was a smaller deal, the latest transaction was about freeing up funding capacity for further growth. On this basis, Moore says the issuer was more than happy to take advantage of the extra buy-side interest. “The portfolio has grown considerably over the last 12 months and we wanted to take advantage of public market demand to free up warehouse capacity,” he notes.
Moore says Brighten is well-placed to continue to sustainably scale its business to be a significant player in the nonbank lending space. “We expect to continue to write good volume over the next 12 months, particularly as we continue to onboard new distribution partners.”