Broker boss warns rebates from big banks could be unsustainable

Hyman, who is married with three children, grew up on Sydney’s north shore and first worked in the fast-growing consumer tech world. He says he was struck by the complexity of getting loan approval, and Lendi set out to simplify the process through technology.

The company emerged at the start of a fintech boom, picking up heavyweight shareholders including Macquarie and ANZ Bank, before a 2021 merger with Aussie (the mortgage broker founded by John Symond, which helped boost the competition in the banking sector in the 1990s, before it was purchased by the ABC).

Since Aussie Home Loans partnered with Lendi, the business has grown steadily.

To the surprise of some, Lendi has emerged as the dominant Australian merger player, despite Aussie having a much larger loan book. Hyman responds that a company’s value can also be measured by how investors view its potential for future growth, pointing out that tech companies often attract a premium.

He describes Aussie Home Loans as “the first disruptor in terms of bringing competition into banking” and says Lendi’s strategy is to combine Lendi’s technology with the well-known brand of Aussie and its army of brokers. . In its first full year since the merger, Lendi saw 35% annual growth in loan settlements to $33.6 billion. The company, which has not released full financial results, says it has a 6.3% market share of all new loans.

Hyman says a key objective since the Australian merger has been to integrate the two businesses, and the next phase will focus on rolling out Lendi’s brokerage platform to Australian brokers, with a view to making it easier and faster to underwrite. of loans.

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Although much of banking is automated, Hyman believes getting a mortgage will still involve dealing with people, so the company wants to equip brokers with better technology.

“If you fast forward 20 years, let them do it digitally, customers will still want to look someone in the eye and say if I made the right decision – it’s such a big deal. But the people they’re dealing with will have technology behind them to make that experience so much better for everyone,” Hyman says.

While the company is betting on the digitalization of mortgages, it has also signed a joint venture with Domain (majority owned by the owner of this masthead, Nine). The company, Domain Home Loans, saw 69% settlement growth last year, and Hyman’s claims targeting potential borrowers through the real estate portal could “reshape market share over the next five to 10 years.” “.

Domain’s main rival, REA Group, has also made a similar attempt to sell loans digitally to users of its real estate advertising portal, buying Mortgage Choice last year.

Lendi, like all mortgage brokers, is facing a period of weaker growth in new loans as property prices decline in response to the sharp rise in interest rates. But against that, Hyman says he remains “cautiously optimistic” about loan activity.

He points to the strength of refinancing activity (which still results in commissions for mortgage brokers) and, along the same lines as recent banking commentary, argues that low unemployment and unemployment rates High savings can keep household finances resilient.

“The average mortgage is still being prepaid many, many months in advance through these balances, so we think there’s some stability as we go through this tightening cycle,” he says.

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