The latest was Interstar’s first New Zealand issue, $125 million of prime fixed and floating rate RMBS via its Interstar NZ Millennium Series 2004-A Trust.

Ratings agency Standard & Poor’s has rated the first two tranches of $50 million and $70 million "AAA" ratings and its third tranche of $5 million a "AA-" rating.

Other recent issuers of prime securities in New Zealand include Australian Mortgage Securities and Medical Mortgages while Liberty Financial and The Bluestone Group have issued sub-prime securities.

Gary Tucker of S&P’s structured finance team says while the non-banks have grabbed significant market shares in Australia, it has taken them several years to build up their New Zealand mortgage books.

"Interstar, for example, commenced business in New Zealand three or four years ago and it’s taken them some time to get any traction," Tucker says.

"They’re very reliant on (mortgage) brokers and third parties to refer business to them," he says.

But brokers have reasonably well entrenched relationships with the banks and it has taken Interstar time to establish its credentials.

On the other hand, AMS, which has the advantage of being able to sell loans through sister firm, Wizard Home Loans, has issued a number of RMBS, he says.

Rod Smith, head of structured securities at Westpac which has been the major distributor of RMBS, says the recent RMBS issues have mostly been sold to New Zealand institutions.

However, a couple of sub-prime issues for Bluestone under the Saphire brand have been repackaged for retail investors by broker First NZ Capital.