Consolidation badged the 'elephant in the room'

by Adam Smith23 Jan 2012

Consolidation of mortgage aggregators is expected to continue apace in 2012, forcing the industry to assess the future viability of aggregation models.

As credit demand remains depressed and loan volumes weaken, Advantedge general manager of broker platforms Steve Weston has said aggregators will be feeling the pinch.

"Certainly all brokers know that times have become more challenging, and maybe it's a little bit like the elephant in the room that we need to be talking about how the aggregators are travelling," he said.

Key to the viability of these groups it the commission split they receive in tandem with brokers. Weston said many may now be suffering the results of drastic commission reductions following the GFC.

"If you simply look at the aggregation businesses where they're relying on a commission split, if you had 30% of your income effectively cut from 2008 when all the pre-2008 loans were paid over a five-year period, that means your future profits are determined on loans with lower commissions."

For the full interview and analysis, see the latest print Australian Broker 9.01, out now.

 

COMMENTS

  • by Daniel 23/01/2012 1:48:51 PM

    This is why I recenlty moved to a fixed price aggregator model. This allows the aggregator to have more stable cashflow projections and me to build up a more profitable business.