Mortgage Choice rides the recovery in housing finance

Mortgage Choice chief executive Michael Russell said yesterday that he has received calls from a growing number of lenders in recent months, inquiring about going on the broker's panel.

In the past six months the group has lost Rams but has gained CUA (the first credit union it has had on its panel for two years) and Macquarie Group.

Russell said: "Lenders are jockeying for position."

This is good news for the broker, as is the recovery in the housing finance market.

Mortgage Choice reported cash earnings of $7.8 million for the six months to December, up 21.9 per cent on the previous corresponding period.  

Growth was driven by a 17 per cent increase in settlements over the December half in 2008. Compared to the June half, settlements were up seven per cent.

The group took the knife to expenses, cutting them by 14 per cent. Chief financial officer Susan Mitchell said there would some extra budget for marketing in the second half.

Approvals averaged $900 million a month throughout the half but dipped to $883 million in November and $822 million in December as higher interest rates started to bite.

Russell said he expected growth in approvals in the second half to be around seven or eight per cent. The group's loan book increased 9.6 per cent to $37.7 billion.

Origination commission of $20.2 million was up eight per cent on the previous corresponding period. Trailing commission was down one per cent at $25.8 million.

Last year the group introduced risk insurance business to broaden the product base. Non-core product (insurance commission) revenue was a modest $231,000.

The average upfront commission is now sitting below 60 basis points. During the half St George cut commissions.

At December ANZ was the number one lender on the Mortgage Choice panel, followed by Commonwealth Bank and ING Direct (which increased its share by 42 per cent over the previous corresponding period and jumped from sixth position on the panel).

Other big movers were Homeside (now NAB Broker), which doubled its share, and BankWest, which increased its share by 26 per cent.

The group increased its franchise owner numbers from 322 to 325, although there was a small reduction in the number of outlets - down from 350 to 349.