Bendigo and Adelaide Bank will buy $1.35 billion of mortgage debt from the West Australian government as it looks to expand its business outside the eastern states.
The bank said it has agreed to buy about 6,000 standard residential home loans from the state government's Keystart Housing Scheme Trust, designed to help people buy homes through low deposit loans and shared equity schemes.
Bendigo and Adelaide Bank managing director Mike Hirst said the bank will not be acquiring any loans that are more than one month in arrears.
"The customers in the portfolio we are acquiring have, on average, a track record of meeting their loan repayments for more than five years," he said.
"Keystart has a long and successful history of providing residential loans to customers who satisfy rigorous serviceability criteria but do not have sufficient initial savings for a deposit."
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He said the deal will complement and grow the group's existing business in WA, including increasing the proportion of the bank's loan book held in the state from about 11 per cent to 13 per cent.
The purchase of the loans is expected to be completed by early December.
Keystart was established by the WA government in 1989 to help people buy a home. It currently has a total loan book of about $4 billion.
Borrowers only require a two per cent deposit of the purchase price in WA's metropolitan areas and up to 10 per cent in regional areas.
