Macquarie axes mortgage business

Macquarie axes mortgage business

March 05, 2008 09:05am

MACQUARIE Group is to wind back its retail and wholesale Australian residential mortgage origination services due to higher funding costs. In a statement to the market this morning, Macquarie said its subsidiary, Macquarie Securitisation, also was reacting to “current conditions in the global mortgage securitisation market''. Macquarie said it “would wind-back its Australian residential mortgage origination services for both retail and wholesale customers due to the significant increase in the cost of funding mortgages.'' The Head of Macquarie's Banking and Financial Services Group, Peter Maher, said the Bank would “substantially reduce'' origination of new residential mortgages in Australia from March 7, 2008, but would continue to provide full service to existing customers.Macquarie customers in Australia currently hold 95,000 facilities with the bank. ”There will be no impact on these customers and we will continue to provide to them the range of existing customer services including mortgage variation services,'' Mr Maher said.”It will be business as usual for our existing customer base.''He said new mortgage business would still be written albeit at much reduced volumes. Mr Maher said Macquarie's mortgage portfolio represented around 2.5 per cent of the total outstanding housing loans market in Australia. The portfolio is funded mainly by wholesale securitisation markets. ”As noted by numerous market participants, deteriorating conditions in these markets over the past six months have resulted in a sharp rise in the cost of funding mortgages and significant reductions in the availability of funding from both the domestic and international mortgage securitisation markets,'' Mr Maher said.Macquarie Group chief financial officer Greg Ward said the decision would not be significant to Macquarie's overall financial position. ”We have previously advised the market that in full year 2007, the retail and wholesale residential mortgage businesses represented less than 1 per cent of Macquarie Group profits,'' Mr Ward said. ”The impact of the decision to wind-back the business is not financially material. We have also previously advised that the mortgages business has no sub-prime exposure, default rates are low and the credit quality of the portfolio is good.''