La Trobe’s RMBS platform expands as cumulative losses remain at 0.03%

RMBS issuance reaches $20.1 billion

La Trobe Financial’s securitisation machine has now issued $20.1 billion of residential mortgage-backed securities across 23 transactions, with cumulative losses amounting to just 0.03% of original issuance volume, according to the group’s audited FY2026 report. The latest post-year-end deal, La Trobe Financial Capital Markets Trust 2026-3, added $1.25 billion of prime and non-conforming Australian residential mortgage loans to the platform.

The 2026-3 transaction was not part of the 30 June balance sheets, but its completion is significant for the funding program. La Trobe said it expects to maintain a regular rhythm of two to three RMBS transactions a year, supported by more than 90 active investment partners and warehouse facilities with nine domestic and international financiers.

Active trust portfolios continue to grow

The report covers 12 trusts at different stages of their lives, from recently launched vehicles to trusts being called or wound up. The newest active portfolio, LFCMT 2026-2, held $850.8 million of loans receivable at 30 June, backed by 1,500 loans. Its weighted average loan-to-value ratio was 67.7%, while the weighted average interest rate was 7.7%.

LFCMT 2026-1 was larger, with $919.5 million of loans receivable and 1,674 loans. Across the newer pools, the loan books are less seasoned than the older transactions: the weighted average seasoning for LFCMT 2026-2 was 2.1 years, compared with 5.4 years for LFCMT 2023-1. That makes the performance of the newer pools an important part of the platform’s next phase, because their longer credit histories are still developing.

Credit provisions rise in newer pools

The trust accounts show credit loss allowances of $1.98 million for LFCMT 2025-1, $1.45 million for LFCMT 2026-1 and $1.21 million for LFCMT 2026-2 at year-end. Those provisions are not the same as crystallised losses, and the report states that all transactions continued to perform in line with expectations. It also records only $36,000 of charge-offs in LFCMT 2026-2 during the year.

La Trobe uses an expected-credit-loss model that incorporates arrears, borrower characteristics, property prices, unemployment and lending indicators. The model also applies an economic overlay based on three scenarios: a 60% weighting for the most probable outcome, and 20% each for less favourable and more favourable conditions. The figures therefore combine observed portfolio performance with management’s assumptions about future conditions.

Called trusts leave a timing question

Two older vehicles were completed during the year: LFCMT 2021-2 was wound up on 24 September 2025 and LFCMT 2022-1 on 24 June 2026. LFCMT 2022-2 was called on 15 May 2026 but had not yet been wound up at the reporting date, so its accounts were prepared on a liquidation basis. Ernst & Young issued an unmodified audit opinion while drawing attention to that accounting basis.

For noteholders, the headline is therefore less about reported profit than about orderly amortisation, repayment and credit performance. The trusts distribute their net income to residual unitholders, while borrowings fund the mortgage pools; at 30 June, LFCMT 2026-2 carried $1.003 billion in borrowings against $852.9 million of loans receivable and $156.0 million of cash and reserves, reflecting the structure’s financing and reserve arrangements rather than a conventional corporate balance sheet.