Mortgage franchise delivers record $6.4bn of settlements

by Miklos Bolza24 Feb 2017
Mortgage Choice has announced a strong half yearly financial result, hitting some company highs relating to its loan volume and mortgage books.

“If I was to summarise our half then it would be a half of records,” CEO John Flavell said at the interim financial results briefing yesterday (23 February). “In terms of the highlights, we had record home loan settlements at $6.4bn for the half – our best ever result.”

This now sets the firm’s loan book at over $52bn for the first time ever, he said.

Upfront origination increased by 4.4% to almost $39m driven by an increase in settlements and average upfront revenue rates. Incoming trailing commission rose by 1.8% to more than $48.2m for a total increase in broking commission revenue of 3%.

Upfront commission paid rose by 5% to $28.5m while trail increased by 2% to $29.4m.

Chief financial officer Susan Mitchell said that upfront commissions trended upwards from 64 basis points in the second half of FY16 to over 65 basis points in the current period.

“Our average trail rate continues a gentle slide as the older and higher rate book runs off. The average trail rate during this period was 18.9 basis points,” she said.

The past year had been a solid one overall with home loan approval volumes sitting at around $33bn per month, Flavell said.

“There has been some change in terms of construct of the market. Obviously there are regulatory pressures in terms of proportion of growth in the investment sector and there are obviously increases in terms of the proportion of refinancing activity that’s delivering to the overall solid performance of the market.”

Broker percentage and utilisation in the market has remained strong at more than 50%, he said.

“The opportunities for Mortgage Choice to continue to grow our business through participation in the market through offering a valuable proposition in complex times are very robust. Not surprisingly then, the results that we’ve seen for the first half reflect that.”

As of December 2016, there were 425 Mortgage Choice home loan franchises in Australia, an increase of around 2% from the previous half. This has been accompanied by an increase of credit advisors across the network bringing the total number to 648 in the same time period.

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