Powered by MOMENTUM MEDIA
realestatebusiness logo

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.”

Loan book values expected to rise further
mortgagebusiness

Latest News

RBA governor Philip Lowe has delivered its third consecutive cash rate hike as it attempts to slow down rising inflation. ...

Home loans commitments took a positive turn in May following a fall in April, new data reveals. ...

Economists from three of the big four banks expect the Reserve Bank will hand down a similar cash rate hike of 50 bps today (5 July). ...

VIEW ALL

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

Do you think the new NSW property tax will help or hinder first home buyers?

Website Notifications

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