Powered by MOMENTUM MEDIA
subscribe to our newsletter

Loan book values expected to rise further

The increased integration of other financial products and services is driving up the price of loan books, according to an M&A expert.

John Birt, principal of Radar Results, said the opportunity to cross-sell was driving demand for mortgage books across the country.

“The purchased loan client could end up being an ideal financial planning client, which is one of the main reasons Mortgage Choice, Australia's largest aggregator, expanded into financial planning last year,” Mr Birt said.

Other than financial planning, additional services such as accounting, life insurance, general insurance and property sales can also be offered, he said.

In the latest Radar Six-Monthly Price Guide, released 5 February, Radar Results listed mortgage books as selling for between two and two-and-a-half times their annual trail amount.

Advertisement
Advertisement

“In reality, I can see this loan book multiple moving even higher based simply on demand and supply,” Mr Birt said.

“The demand for loan books in capital cities such as Brisbane, Melbourne, Perth and Sydney is at an all-time high,” he said.

Mortgage management businesses have also been sought-after, moving up the multiple that's being paid on their earnings before interest and tax (EBIT) figure.

“A year ago you could buy a mortgage management business that had between $500 million and $1 billion in loans for three to four times its EBIT,” Mr Birt said.

“Now, you're expected to pay between four-and-a-half and five times EBIT, which can be attributed to the larger mortgage managers getting bigger by adding scale and benefiting from economies of scale.”

PROMOTED CONTENT


Loan book values expected to rise further
mortgagebusiness

Latest News

A report has found that property investor enquiry spiked and first home buyer enquiry faded on the realestate.com.au website compared with ...

The government has bumped up funding for the regulation of super funds, ahead of its incoming Your Future, Your Super reforms. ...

New home sales tumbled in April as the HomeBuilder scheme concluded but a significant volume of building work is set to commence in 2021, ac...

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.