Profit falling for Mortgage Choice and franchisees

Mortgage Choice yesterday endorsed broker estimates for the group's 2009 profit, and said this was likely to be between 40 per cent and 45 per cent less than in 2008. The mortgage broking group reported a profit of $19.3 million in the year to June 2008.

Reduced commissions from lenders and a slower rate of growth in credit are the main factors.

Managing director Paul Lahiff said at the annual meeting yesterday that monthly settlements were reasonably steady at between $650 million and $750 million since June.

He said Mortgage Choice was continuing to add to franchise numbers and aiming at higher conversion rates. The firm will continue to offer personal loans, leases and commercial loans as product options to interested franchisees.

He foreshadowed a shift in the model for sharing commissions with franchisees but did not spell this out, though it sounds like franchisees can expect a cut in their income on the basis of the current levels of lending and will have to lend a lot more to earn more.

Lahiff allocated part of his AGM presentation to a review of the metrics of the home loan business of Count Financial Services, which made an offer (rejected by Mortgage Choice) of $1.05 a share in August. Mortgage Choice shares are now trading around 80 cents.