Mortgage Choice has announced that it settled a record $6.4 billion of loans in the half year ending December 2016, up 2.4 per cent on the prior comparative period.
According to the preliminary half year report for the period 1 July to 31 December, the strong settlement growth was partnered by a strong loan book growth, which reached $52.4 billion at the end of December last year, 3.3 per cent more than the same period the year before.
Cash profit was also up 6.4 per cent on the same period the year before, rising to $11.4 million. This was driven by higher settlement volumes to record a 4.4 per cent increase in upfront commissions.
The results also show that the financial planning business delivered profit in the half for the first time, helping the overall company reach a net profit after tax (NPAT) on a cash basis of $11.7 million (up 16.2 per cent on the first half in 2016).
The Mortgage Choice CEO John Flavell said: “In the six months to 31 December 2016, Mortgage Choice recorded its best ever home loan settlement result, with settlements reaching $6.4 billion. This, in turn, helped us to further grow our mortgage book, which surpassed $52 billion for the first time.
“Throughout 1H17, the financial planning division has gone from strength to strength, with this business now consistently profitable on a monthly basis.
“Our network of mortgage brokers understands the value of providing their customers with access to professional financial advice. As a result, a larger proportion of our customers’ wealth needs are now being met.”
He added: “We have started the 2017 calendar year off strongly, with growth in the network, growth in home loan applications, growth in the number of referrals going to our financial advisers, increased momentum in Mortgage Choice Asset Finance and a continued focus on investing for the future whilst prudently managing operating expenses.
“We look forward to continuing to deliver strong results and addressing the market again at financial year’s end.”
Buying v renting
Touching on housing affordability, Mr Flavell said that while Australian housing was expensive, he still believed owning property was good for consumers in the long run.
He said: “At the end of the day if you have a look at housing in Australia, there is no doubt that it is expensive. It’s expensive in terms of multiples of household income, expensive in terms of proportion of income that we're actually devoting towards debt servicing. But actually owning a home compared to renting a home is relatively affordable.
“The part of the market that is most disadvantaged in terms of housing affordability are renters, and the proportion of houses that are actually dedicating more than 30 per cent of their household income to servicing the rent is more than 35 per cent, whereas in terms of those with mortgages its only 20-25 per cent.
“Overall, people are well served by buying a home as opposed to being perpetually tenants. Increasing levels of debts don’t service people but over the longer-term household ownership does serve people and it serves them well.”
To try and improve the affordability of housing in Australia, Mr Flavell called on government to do more.
He said: “As far as affordability is concerned … a lot of the commentary that we’ve seen I think goes to treating some of the symptoms, like wiping your nose when you have a cold. Things such as FHB grant concessions on stamp duty ... those things might treat some of the symptoms but if the government, both at a federal and a state level, is actually focused on delivering an outcome in terms of housing affordability that is sustainable then they need to get to the core of the issue.
“The core of the issue certainly comes down to supply and demand, and demand continues to grow, we have a growing population — 1.4 per cent per annum, that's twice the rate of most OECD nations — and we need 200,000 units of housing every single year.
"So, what can we do in terms of increasing supply of housing into the market, what can we do in terms of increasing the infrastructure and the linkages that allow people to travel from more affordable parts of our regional centres to where the work and education and amenities are? And what can we do in terms of potentially even dispersing the population to other regions through economic stimulus or tax concession or location of maybe critical government functions to those parts of the country where there are employment issues? There are things that do treat the symptoms but there is the root cause that we need to address as well.”