Aussie looks to sell bank loans
Mortgage originator Aussie Home Loans is seeking to enter the mortgage broking market – arguably the fastest growing sector of the home loans market – which will enable it to provide borrowers with a choice of loans from a panel of lenders, including the big banks. An Aussie spokesman confirmed that John Symond had spoken with staff this week on entering this market but has not yet decided on when or how.
Since launching in 1992, Aussie's catch-cry has been to “save” Australians from the big banks by offering cheap home loans, relying primarily on a mobile sales force and major offices to sell its own branded loans through non-exclusive wholesale funding alliances with Macquarie Bank and the ANZ's Origin division. This strategy was initially very successful, but the banks are now more competitive, and in recent years have been seeking to offset falling interest margins by effectively outsourcing loan distribution to brokers and paying variable commissions. Major mortgage brokers such as Mortgage Choice and AFG now make up around 25 per cent of new home loans. Aussie's move into the broking market may be due to this growth, which has probably eaten into its market share.
If it does enter mortgage broking, Aussie will have to ensure that it offers borrower impartial advice and does not favour its own branded home loans. Wizard executive chairman Mark Bouris says that his group has followed a hybrid strategy, offering a choice of other lenders' products in addition to its own Wizard-branded loans.