Small mortgage managers, get bought or go broke

Mortgage aggregator Firstfolio announced a second acquisition yesterday in as many days, with exclusive negotiations beginning with New South Wales based Domain Financial Services.

Domain has a mortgage managed portfolio of $1 billion, which would increase Firstfolio's mortgage managed loan book to $2.5 billion, and the total loan book to $11.5 billion.

Firstfolio chief executive officer Mark Forsyth said consideration has been broadly agreed with Domain, but these terms have not yet been announced to the market.

Firstfolio will conduct due diligence during the 45-day period of exclusive negotiations, with Forsyth considering the deal a formality.

Forsyth expects continued consolidation within the small mortgage originator and manager set, because of business models becoming uneconomic due to not sufficiently adapting fixed cost structures to slowing revenue streams.

Firstfolio has been receiving up to three enquiries a month recently to purchase mortgage books, as small companies aim to get bought or go broke.