An industry stalwart has lambasted the notion that continued consolidation will benefit the mortgage broking industry.
1300 Home Loans founder John Kolenda has accused “some of the bigger bank-owned mortgage groups” of “spruiking” the benefits of consolidation. He argued that his own experience with consolidation convinced him that bigger networks are not necessarily better.
“I have experienced the pressure of thinking I needed to consolidate once before when X Inc merged with Loan Market and the big driver for that was that we believed a bigger group was more secure, especially when negotiating with lenders," Kolenda said.
"It’s true that there were many benefits of the merger to brokers, but in hindsight, while scale is one part of value, banks focus on application and loan quality just as much as size.”
Having gone through the merger, Kolenda claimed that, given the opportunity, he would not “rush to consolidate for size again”.
“Smaller groups are tighter, better connected, faster to react and more able to help each other and truly keep standards high,” he said.
Kolenda also accused larger aggregators of being too inflexible and resistant to change.
“Many of the major aggregator groups are shackled by old thinking, dressed up IT legacy systems and by their sheer scale,” he said.
Consolidation has continued to dominate the industry, with Aussie Home Loans acquiring National Mortgage Brokers, Smartline buying WA-based franchise The Mortgage Gallery and Homeloans reportedly considering throwing its support behind the embattled Refund Home Loans network. Aussie chair John Symond forecast further industry consolidation, and said the company would look to purchase more aggregators and roll them into the NMB network.
But Kolenda accused aggregators who have publicly predicted further industry consolidation of trying to pressure smaller groups. He claimed it was “obvious to most brokers” that any aggregators “spruiking” industry consolidation were themselves on the acquisition trail, and were seeking to persuade independent groups “to sell out”.
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