Mortgage House back on track

Ken Sayer kept his mortgage business going over the past three years from rent the company, Mortgage House, earned sub-letting part of its small office building in Parramatta.

The mortgage book that had grown at a compound annual growth rate of 300 per cent between 1999 and 2006 shrank over the past three years.

But in the December quarter Mortgage House went positive for the first time since the financial crisis hit and Sayer expects to finish the March 2010 quarter with 10 per cent growth in the $2.3 billion book.

Sayer said the group, which operates through 50 outlets, has warehouse funding and has been talking to ratings agencies about the quality of its book ahead of a securitisation later this year.

Sayer, who last week had a Supreme Court case brought by a former partner dismissed, said there was still a role for small originators in the big bank-dominated market.

He said: "Our customers are mums and dads and small business owners who don't want to borrow from a big bank because they don't want to be a number."

While he argues there is still room for non-bank competitors he said it would be tough. "What we offered up to 2006 was a better price. We lost that but I am hoping we can get the funding in place to win that competitive position back this year."

Sayer's view of the market is probably right. Guy Debelle, assistant governor of the Reserve Bank of Australia, said at an industry event yesterday that the market share of the big banks in Australia had peaked.

 "My guess is that (the market share of major banks) has topped out," Debelle told a Mortgage Finance Association of Australia event in Melbourne.

"As securitisation comes back, it does make the non-banks and regional banks more competitive."

Debelle added: "I'm not sure there will necessarily be lower home loan rates. It's not going to put downward pressure on mortgage rates but it will prevent upward pressure."

The Supreme Court action affecting Mortgage House arose when Zoltan Tomanovic made a claim against the Mortgage House holding company, Global Mortgage Equity Corp, in a bid to resolve a long-running dispute over the terms of a break-up of the partnership.

Tomanovic claimed that Sayer had acted oppressively but the court found that Sayer had acted in good faith in negotiating the separation.