Tag: Mortgage Industry

Domain announces broking joint venture

From Australian Broker.

Domain Group has announced it is expanding into home loans broking with the launch of ‘Domain Loan Finder’ in partnership with digital home loan platform Lendi.

Domain Loan Finder, launching in early July, is set to become a key digital solution for customers in Australia looking to secure a home loan. It offers consumers a simple and stress-free online process to connect with more than 30 leading lenders, including major banks, coupled with access to a national community of home loan specialists for personalised help and expert advice.

Domain chief executive officer, Antony Catalano, said: “This is a very important strategic announcement for Domain, and means we are the first major real estate listings portal to move beyond helping our audience find a home to helping them secure a home. Domain will be Australia’s first end-to-end property search and finance platform.

“Lendi is a fast-growing consumer brand with a superior product offering, and we are very excited that Lendi will be powering Domain Loan Finder to help Australians secure the best home loan available to them.

“Domain Loan Finder helps consumers apply for loans that are genuinely available in the market – it is not just another rates comparison website.

“We expect Domain Loan Finder will quickly become a must-use and valuable digital tool for all Australians looking to secure a home loan. We will actively market our home loan solution to our large and highly engaged audience of more than 4 million a month in a highly relevant, personalised and timely way.

“Domain is well positioned to utilise its popular consumer technology platforms to enter into a partnership in the Australian home loan broking market, which generates about $2bn a year in commissions, and to expand beyond its current home loan lead referral business.

“This new offering is part of the full complement of real estate products and services that Domain is building out to deliver on the modern needs of today’s property buyers, owners and sellers, as well as to grow new transactional revenues.

“Domain Loan Finder adds to Domain’s other investments in utilities connections business Compare & Connect, home improvement and maintenance business Oneflare, and open for inspection check-in management system Homepass.

“We are very much looking forward to working with Lendi to pursue this significant opportunity to continue to create value through digital innovation for audiences and customers.”

Lendi managing director, David Hyman, said: “We’re excited to be working with Domain to bring the Lendi experience to a wider audience.”

“Tapping into Domain’s strong market position, we’re looking forward to bringing an integrated home loan experience to the property buying process.

“With more and more consumers turning to online channels as part of their home loan research, there’s a huge opportunity to enhance that journey with contextual and relevant engagement as they progress through the property buying journey.”

Domain Loan Finder will operate as a joint venture with Lendi’s parent entity, Auscred, with Domain holding a 60% stake. The amount invested in the JV is not material and remains confidential.

Lendi started in 2013 as an online and phone-based broking business and is backed by major institutional investors and venture capital.

Mortgage Growth In Adelaide and Hobart

We finish our series on mortgage growth by looking at data from Adelaide and Hobart and plotting the relative change in volumes of loans between 2015 and 2017, by post code, drawing data from our core market models, and geo-mapping the results.

Here is Adelaide.

Here is Hobart.

The yellow shades show the areas with the largest growth in the number of mortgages, the red shades show a relative fall in volumes. You can click on the map to view full screen. This is a picture of mortgage counts, not value, we may look at this later.

Compare these pictures with those for Sydney, Melbourne, Brisbane and Perth and we see just how different these markets are!

Of course this is just one of the many potential views available from the 140+ fields which are contained in our Core Market Model.

Mortgage Growth In Greater Perth

We continue our series on mortgage growth plotting the relative change in volumes of loans between 2015 and 2017, by post code, drawing data from our core market models, and geo-mapping the results.

Here is the Greater Perth picture.

The yellow shades show the areas with the largest growth in the number of mortgages, the red shades show a relative fall in volumes. You can click on the map to view full screen. This is a picture of mortgage counts, not value, we may look at this later.

Of course this is just one of the many potential views available from the 140+ fields which are contained in our Core Market Model.

Next time we will look at Adelaide and Hobart.

Mortgage Growth In Greater Brisbane

We continue our series on mortgage growth plotting the relative change in volumes of loans between 2015 and 2017, by post code, drawing data from our core market models, and geo-mapping the results.

Here is the Greater Brisbane picture.

The yellow shades show the areas with the largest growth in the number of mortgages, the red shades show a relative fall in volumes. You can click on the map to view full screen. This is a picture of mortgage counts, not value, we may look at this later.

Of course this is just one of the many potential views available from the 140+ fields which are contained in our Core Market Model.

Next time we will look at Perth.

Majors Loosing Relative Mortgage Share: AFG

Australians are testing the competitiveness of the lending market with  AFG showing the non-major lenders picking up nearly 35% of the market, according to the latest AFG Competition Index. This of course is myopic, in so far as it looks at traffic though the aggregator. But it does confirm that some majors are intentionally slowing business via their third party channels. This phenomenon is one we already discussed on the DFA Blog.

AFG General Manager of Sales and Operations, Mark Hewitt said the data reaffirms the value the mortgage broking channel delivers. “Mortgage brokers deliver true competition in the lending sector and provide real choice for consumers. If a lender is out of the market on service or price they will look beyond the majors to meet the needs of their client.

“Today’s figures show CBA continues to slide with their overall market share down from 20.5% this time last year to 11.8% last month.

“With CBA, AFG believes this is the result of a deliberate strategy to pull back from the investor and interest only markets to meet the lending caps mandated by APRA,” said Mr Hewitt.

“When combined with their subsidiary Bankwest, CBA has dropped their total market share from 25.5% to 15.5% in the same period.

Amongst the other majors, NAB is continuing to win market share.

“NAB have benefited from their recent actions to align their broker products with their direct channels,” he said. “Until recently there was a difference between the products made available to their direct and broker introduced customers which created confusion for borrowers.”

“Westpac has taken the lion’s share of the fixed rate market for the majors, doubling their share from 10.98% this time last year to finish May 2017 with 22% of fixed rate mortgages.

“Westpac subsidiary St George is also picking up market share of those seeking to refinance.

AFG has 39 home loan lenders on its panel and flows of business to the non-majors are significantly higher through brokers than in the broader lending market. Last month 34.95% of all mortgages lodged by AFG brokers went to the non-majors. This is in stark comparison to the 17% market share of the non-majors outside of our channel.

“Suncorp is the big winner for the non-majors, picking up market share in the fixed rate, investor and refinancing categories.

“Increased competition delivers value to the consumer. Many of the non-major lenders on our panel do not have a branch network. Without the competitive tension mortgage brokers bring to the market, prices would inevitably rise,” he concluded.

Tracking Mortgage Growth In Great Melbourne

We continue our series on mortgage growth, plotting the relative change in volumes of loans between 2015 and 2017, by post code, drawing data from our core market models, and geo-mapping the results.

Here is the Greater Melbourne picture.

The yellow shades show the areas with the largest growth in the number of mortgages, the red shades show a relative fall in volumes. You can click on the map to view full screen. This is a picture of mortgage counts, not value, we may look at this later. Relative to other states, there was significant expansion over this period.

Of course this is just one of the many potential views available from the 140+ fields which are contained in our Core Market Model.

Next time we will look at Brisbane.

 

Where Is The Mortgage Growth In Greater Sydney?

One of the measures contained in the Digital Finance Analytics household surveys is the number of households with a mortgage in each post code across the country. By comparing our data from 2015, with 2017 we can spot some interesting growth trends, especially when we geo-map the data. Today we begin with Greater Sydney.

The yellow shades show the areas with the largest growth in the number of mortgages, the red shades show a relative fall in volumes. We see significant growth in western Sydney, where there has been significant residential development over this period. You can click on the map to view full screen.  This is a picture of mortgage counts, not value, we may look at this later.

Of course this is just one of the many potential views available from the 140+ fields which are contained in our Core Market Model.

Next time we will look at Melbourne.

The Great Lending Rotation Is Upon Us

The bumper edition of ABS data today, just before the long weekend included both the housing finance data and the lending finance data for April. Investor lending is on the turn now, and first time buyers are also retreating. The question now is what will this do to house prices, and the debt burden many households are currently under?

We think this marks a significant point of rotation for the housing market. However, business lending is not accelerating, leaving a significant growth hole in the economy.

Looking at the housing lending, overall lending flows fell 0.4% in trend terms from March, to $32.8 billion. Within that owner occupied loans fell 0.1% to $19.9 billion and investment lending fell 1% to $12.6 billion.

Refinance loans fell significantly, and the proportion of loans for investment purposes also fell.

Looking at the number of commitments, overall this fell by 0.5% to 53,062, with the purchase of new dwellings down 0.7% to 44,443. Purchase of new dwellings was down 0.1% to 2,755 and the construction of dwellings was up 0.6% to 5,864.

Revisions to the data have changed the trends, with owner occupied loans stronger, and investment loans weaker.

Looking at the stock of loans, overall values were higher again.

Owner occupied loans net rose $5.7 billion, or 0.56%, whilst investment loans rose $2.1 billion or 0.39%. Both Building Societies and Credit Unions saw a net loss in portfolio value.

In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 13.9% in April 2017 from 13.5% in March 2017. The number of first home buyer commitments decreased by 17.5% to 6,547 in April from 7,939 in March; the number of non-first home buyer commitments also decreased.

There was a big fall in the number of first time buyer commitments, offsetting the rise in the previous month.

We continue to track momentum in investor first time buyers, another 4,000 joined the ranks this past month.

The ABS says that in this issue, revisions have been made to the original series as a result of improved reporting of survey and administrative data. These revisions have affected the following series:

  • Owner occupied housing for the month of March 2017.
  • Investment housing for the month of March 2017.
  • Housing loan outstandings to households for owner occupation series for the periods January 2017 to March 2017.

 

NAB’s Advantedge Offers New Mortgages

The white label sector of the mortgage market has been growing in recent times, and given the changes in pricing, and underwriting standards is one to watch. This is underscored by today’s news that Advantedge Financial Services has launched two variable rate special offers for new owner occupier and residential investor principal and interest loans as well as a simpler pricing structure for these products.

Advantedge is part of the National Australia Bank Group (NAB) and is a wholesale funder and distributor of white-label home loans.  

They say white label loans are an alternative to major bank loans, designed to give customers the essential home loan features they need, at competitive rates.  These white-label home loans are available through just over 85% of Australia’s mortgage brokers, and distributed under the brands of mortgage aggregators and mortgage managers. Those mortgage aggregators include PLAN Australia, FAST, Choice Aggregation Services, Australian Finance Group, Connective, Smartline, Astute, Loan Market and LJ Hooker Home Loans.

The new loans are:

  • 3.74% per annum for new owner occupier P&I variable rate loans
  • 4.24% per annum for new residential investor P&I variable rate loans

These rates will be available for mortgages with a minimum loan amount of $200,000 and a maximum LVR of 80%.

A simpler pricing structure for variable rate loans of $200,000 or more was also brought in today (31 May) across all loan purposes and repayment types.

General manager Brett Halliwell said “This new offer reflects Advantedge’s commitment to offering sharp rates that brokers can give to clients”

“Our white-label products are high quality and high value solutions and this new offer is yet another way Advantedge is proving its competitiveness to brokers.”

Advantedge will be further simplifying its pricing structure and rate cards to streamline the process for brokers, he added.

AI and the Future of Mortgage Lending

From The Adviser.

The managing director of online mortgage broker uno. has suggested that artificial intelligence in mortgages could disrupt the industry and change the way broking works.

Speaking to The Adviser, Vincent Turner outlined that currently, online mortgage platform uno. allows users to look at different loans suited for their needs, which are then supported by a team of advisers.

Mr Turner said: “There is the presumption that if it’s digital, it means you’re doing it yourself. But, today, our advisers look at deals in the same way a broker would. We work out things the platform doesn’t, yet, work out.”

However, the managing director suggested that as technology catches up, the role of brokers and advisers will change.

He said: “Every month, we improve the insights available in the platform, or the rules that are in the platform, so that more and more of the stuff that we get a broker to do today – looking at it, and having credit knowledge — will be in the platform. Anything that a human can learn about credit policy, you can teach a computer.

“Now at that point, the intelligence in the platform starts to surpass that of an individual broker because it’s across every lender we deal with, and the service person’s role becomes less around who will approve it (because that logic will be inside the platform), and more about how do we structure this deal.”

Mr Turner estimated that uno., could, “within a year from now”, have the algorithm rules to know who will lend the money, how much they’ll lend, how much will cost, and whether they’ll approve it.

However, he said that if the lenders “work out how to do lending decisions in real time, without involving people at their end”, there could be a point where the intelligence “gets beyond our own”.

Mr Turner explained: “If you move forward 10 years, the lenders, I believe, are going to make lending decisions quite differently. With the advent of ubiquitous machine learnings and AI, the credit policies could be evolving on a minute-to-minute basis. That’s where I think it’ll end up on the next five to 10 years… And, if that’s all changing real time and the algorithms work out how to get smarter and smarter, then, the concept of a broker doesn’t really exist. It’s basically platforms that are plugged into what the lenders are using to make decisions.”

When asked whether AI could spell the end of brokers, he said: “Well no, not now. Not two years from now, five years from now. Even seven to 10 years from now, I doubt it. But, I don’t know.

“Each year, we get closer to where technology can make the entire lending decision. As long as you give it all the data and the documents, and you can assume that any documents you give it, it’ll be smart enough to pull the data off those documents, populate it into a data file, then the lenders who can make decisions just based on uploading all of the documents you need for a particular person, they will win.

“And, if there’s still the concept for broker, it’ll be a platform that has access to all of those lending algorithms.”

He concluded: “Inevitably, a mortgage will be: have you enabled me to do the thing I want to do, as fast as possible, with the least amount of effort, at the lowest possible cost?… It’s competition, you know.

“It’s annoying, but it’s good for the customer.”

“Absolute rubbish” that brokers are being replaced by technology

Many in the broking industry have been quick to reassure that AI and fintech would not threaten the mortgage industry, with former RESI CEO Lisa Montgomery telling The Adviser earlier this week that the proliferation of technology companies coming to the fore is actually of “detriment” to the borrower.

She explained that this was because you “cannot run your personal financial platform without the guidance and support of someone who knows how to articulate it correctly to pay the least amount of interest and to pay things off quickly”.

Likewise, the former chief executive of the Stargate Group and a leading fintech consultant has said that despite technology becoming more prevalent in the mortgage space, “brokers aren’t going anywhere” and could actually be on their way to writing 80 per cent of home loans.

Speaking to The Adviser, Brett Spencer, the former CEO of the Stargate Group and executive director of TICH Consulting Group, said that he thinks anyone who believes the broking industry is being replaced by technology is talking “absolute rubbish”.

Mr Spencer said that the fact an abundance of “fintech” solutions are coming to the market is exactly the main driver behind brokers remaining relevant and increasingly relied upon by consumers.

He explained: “The reason brokers are here and will continue to be here, and market share will grow… is that the sheer proliferation of the number of mortgage products in the market today is in the thousands.

“You talk to any one lender and they might say they have three products, but there are probably 30 variations on those products. Joe Consumer just doesn’t understand it.

“No matter how good an online platform you have, no matter how good a technology solution you have — Joe Consumer still wants to talk to a broker who is the expertise. And so, brokers will be here to stay. There is no question about it.”