Mutual lender reveals plans for third-party channel

by Julia Corderoy07 Oct 2015
Mutual lender Newcastle Permanent has reported solid growth in its home loan portfolio and has revealed major plans to further invest in the third-party channel.

According to the mutual lender’s recently released results, home lending approvals grew 31% to $1.8 billion in the 2015 financial year, resulting in book growth of 4.9% – a 53% increase in home loan portfolio growth from the previous financial year. 

Newcastle Permanent’s chief executive Terry Millett told Australian Broker the bulk of the growth in home loan approvals came from refinancing activity. 

“Obviously our approvals are up 31% to $1.8 billion, but more than $600 million of that came from refinancing, primarily from the major banks – which really gives you an insight into how propelling our proposition is. Getting people to refinance is inherently more of a difficult activity than bringing in new lending,” he said.

According to Millett, approximately 40% of the mutual’s home loan approvals also come through the third-party channel. With such strong partnerships with brokers, Millet revealed plans to Australian Broker to further invest in the channel.

“We are actively looking – and I can’t give too many details at the moment – to expand our broker relationships, and are currently having negotiations on that front and will have some news by the end of the calendar year,” he revealed.

“These negotiations are really about expanding our broker distribution channel and involve having discussions with two of the really significant mortgage broker organisations.”

Newcastle Permanent entered the third-party channel more than 10 years ago with Mortgage Choice. In 2007, the mutual lender commenced a partnership with Plan to further engage with the broker channel.

Looking ahead, Millett said the mutual will also be focussed on maintaining organic and sustainable growth. 

“We are very focussed on this concept of having sustainable growth, not just flat out growth. Our results are all organic, which means it is recurring growth. 

“It is also very high quality growth. Our home loan quality, in terms of 90+ day arrears, is more than four times better than the four major banks. That certainly indicates to brokers that we could never let a customer borrow too much just to get more volume. We are not interested in short term return.”

Newcastle Permanent achieved a net profit after tax for FY2015 of $36.5 million, plus a $52.2 million mutuality dividend.