‘Conditions have deteriorated’: lending curbs hit aggregator

One of Australia’s largest mortgage aggregators has seen its settlement growth flattened over the three months to 30 June as lenders tighten credit for foreign borrowers and property investors.

In a quarterly trading update, ASX-listed mortgage and wealth group Yellow Brick Road noted that “lending conditions have deteriorated” as government policy reduced foreign borrowings and historically low rates increased refinance activity.

“Investment lending policies remained tight. This impacted the Vow Financial business, flattening settlement growth this quarter versus the prior corresponding period,” YBR said.

“From a cash perspective, in the June quarter the company achieved an operating surplus of $0.75m (or $0.55m if insurance underwriter payments are excluded) which compares favourably to the prior quarter (Q3 FY2016) surplus of $0.12m ($0.37m excluding net underwriter payments).”

YBR noted that the operating surplus is largely attributable to an improved mix of receipts from higher margin revenue streams including increased settlement volumes in higher margin lending channels and increased profit distribution from the company’s Smarter Money Investments joint venture.

The ASX-listed group also attributed the operating surplus to the first month’s trading of mortgage manager Loan Avenue, acquired at the end of May 2016.

The upfront cash consideration for the acquisition, $2.6m, was funded from the company’s existing CBA facilities. As at 30 June 2016, the YBR has $6.8m in cash and cash investments, and $3.7m in undrawn finance facilities.

In July YBR announced that Matt Lawler, the group’s CEO of wealth management, will step down from his role later this year.

Mr Lawler joined as CEO five years ago and was instrumental in laying the foundations for the Yellow Brick Road branch network, developing a suite of financial services products and creating a strategic platform for the wealth management business.

“Matt has delivered a strategy for the wealth management business and has developed the right talent to take the business forward. Our wealth management business is in good shape, delivering its best ever monthly result in June 2016,” YBR executive chairman Mark Bouris said.

“It remains a strategic priority and we will continue to invest in the necessary resources to make it a core contributor of revenue to our business.

“On behalf of the board of directors, our staff and our branch and broker network, I’d like to thank Matt for his contribution and wish him well for the future,” he said.

[Related: YBR announces major restructure]

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