Australia’s largest independently-owned mortgage broker, Mortgage Choice is pleased to announce it has entered into an agreement to make its first purchase after recently declaring acquisitions a key strategy for future market share growth.

The deal with mortgage aggregator Loankit heralds Mortgage Choice’s first step into aggregation via its fully owned subsidiary, Beagle Finance Pty Ltd.

The publicly listed broker is buying selective Loankit assets including its information technology platforms, loan book and contracts with 50 mortgage brokers. Loankit is well respected within the industry for its superior business systems, and was rated No. 1 Aggregator in Mortgage Professional Australia magazine’s ‘2009 Annual Brokers on Aggregators Survey’.
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Australia’s largest independent mortgage broker has called for brokers to be given greater freedom to switch between aggregators.

Loan Market Group Executive Director John Kolenda said some broker teams wishing to move between aggregators were being prevented from doing so because of the loss of trail commissions.

“We have found many brokers are handcuffed to their current aggregator by the trail component,” Mr Kolenda said.

“If they decide to leave they could lose hundreds of thousands of dollars and this is a common situation throughout the industry.”
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National Australia Bank Ltd (NAB) will pay $385 million to purchase Challenger Financial Services Group Ltd’s mortgage management business.

The acquisition includes Challenger’s PLAN, Choice and FAST mortgage aggregator businesses and Challenger’s multi-branded mortgage origination business.

As well, NAB will acquire about $4 billion worth of residential mortgages held in warehouses from Challenger, at a price reflecting a 22 basis point discount for loan loss provisions, Challenger said in a statement on Tuesday.

NAB will also acquire a 17.5 per cent stake in listed mortgage origination company Homeloans Ltd, with the potential to increase to about 41 per cent subject to Homeloans’ shareholders approving the deal.
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By Jill Fraser for Lending Central

MFAA Chief Executive Officer Phil Naylor told Lending Central that he has instigated negotiation with aggregators and lenders regarding the contentious issue of volume-based accreditation.

“We think a far better measure of determining quality is not through volume as a surrogate,” he said.

“We think a better measure is some sort of a definition of professionalism as a criteria, which is what we’re currently working out with lenders.”

Naylor agrees that the accreditation criteria of some lenders, which limits supply, has the potential to “chop a lot of brokers out of the market” because it will impact on their ability to deliver a wide choice of products.
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By Jill Fraser for Lending Central

Melbourne-based broker Daniel Thorpe, Managing Director Thorpe Financial Services Pty Ltd says; “in the coming New World it will only require a minor shift in lenders’ policies to do away with aggregators”.

Thorpe contacted Lending Central and offered to put forward the broker’s perspective regarding the changing market.

He maintains that the broker perspective is constantly being trivialised as “whinging”. His argument is that the opposite is true - brokers are adapting to change but not so lenders and aggregators to anywhere near the same extent.

“It’s becoming increasingly clear to me that aggregators - the middlemen - are the one part of the equation that could disappear,” he says.

“The banks have established individual criteria. Their rules vary but essentially they all state that unless brokers submit a specified number of loans a quarter they’ll lose their accreditation.
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By Jill Fraser for Lending central

Continuing our series on aggregators Lending Central spoke to Mortgage Wisdom CEO David Smith who maintains that as long as brokers and lenders continue to see issues as black and white the stalemate will persist.

LC: Are your brokers angry about the current situation with the big four banks?

DS: Yes, but I’d say they are equally frustrated. They’re actually extremely frustrated at present.

They’re trying to do everything that’s asked of them but the rules are constantly changing and they’re getting very concerned about where it’s all heading.

LC: What do you do in response to the frustration? Where do you go with it?

DS: Our brokers try to solve their issues by conventional means and when all else fails they call on Head Office for assistance. Head Office then escalates the issue accordingly.

Where the broker might be speaking with the BDM Head Office would be speaking with the National Manager, Lending Manager or even the General Manager.
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By Jill Fraser for Lending Central

In our continuing series on aggregators PLAN Australia CEO Ray Hair told Lending Central that a win/win situation between banks and brokers is possible. But first the conspiracy theory that banks are working against brokers has to be debunked.

“There is clearly a perception within the broker industry that banks are either favouring the branch network and/or the direct channel over indirect,” says Hair.

“This has been born out of history - a lot of brokers are ex-bankers who worked in banks when they were less broker friendly and continue to project this historical perspective - plus the fact that the marketing arms of all banks are trying to drive customers through branches.”

But banks pushing for effective and efficient branches does not automatically mean wanting to eliminate the broker channel, he says.

Hair believes that some brokers have developed a persecution complex.
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By Jill Fraser for Lending Central

In the second interview in our series on aggregators Lending Central spoke to Connective Principal, Mark Haron and learned that it’s not only brokers who are experiencing frustration.

Haron says he is acutely aware of the issues facing brokers and agrees that much of the anger and concern is justified.

“The problem is that at the moment banks are not overly keen to lend a lot of money and when they do their lending policies are very restrictive,” he says.

“Their knee jerk reaction has been to minimise both lending and broker relationships, at the same time maintaining an element of business through areas they think are most profitable.”
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By Jill Fraser from Lending Central.

Is FirstMac’s Chief Executive Officer, Kim Cannon emerging as the brokers’ champion?

Not long ago he issued a warning about banks playing with commissions and broker loyalty. Now he’s committing to ease brokers’ suffering brought about by “the credit hold-up handcuffs the banks have the industry in” by guaranteeing a 24-hour turnaround of loan applications.

Is there an agenda? Of course there is. FirstMac along with all other non-bank lenders have been doing it tough and Cannon needs brokers’ business. But that doesn’t dilute the message.

Hearing brokers voice their grievances at the MFAA industry round table and watching the banks “turn around and tell them, you’re the problem” infuriated him.

He admits to Lending Central that it’s a hard battle re-building the non-bank brand from the ground up after so much damage has been done by “thoughtless” companies like GE and that he is trying to rally other non-bank lenders to present a unified front.
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BankWest will reduce its distribution to just 17 brokerages and will break ties with all other groups within 28 days.

Mark Reid, head of retail sales with BankWest, told Mortgage Business that the move was part of a strategy to improve distribution efficiencies and third-party relationships. Full Story

The aggregation sector is geared for consolidation as sweeping changes to broker remuneration and cost pressures intensify.

Regulation, online lodgements and commission restructuring are expected to pile pressure on the aggregation industry, with the smaller groups tipped to struggle the most.

Mark Hewitt, general manager of sales and operations with Australian Finance Group (AFG), described smaller aggregation groups as “dead men walking”. Full Story