The mortgage broking business is booming at the moment, reflecting brisk sales and rising home prices across Australia.
Mortgage Choice today posted its best ever net profit, growing 18.6% to $18.7 million.
Over the 12 months to June, the broker capitalised on industry tailwinds and grew its core business while expanding its offering to financial planning.
Mortgage Choice’s loan book, reached $47.4 billion, up 4.6%, and $12.2 billion worth of housing loan approvals were written in the year.
CEO Michael Russell says the outlook is very positive.
“The property market remains strong, with dwelling values on the rise and auction clearance rates continuing to hover at solid levels,” he says.
“Further, home loan approvals have hit a new high, which is reflected in the group’s strong home loan approval growth.”
Mortgage brokers make their money from the commissions paid by the banks to send business their way.
The bigger the commission the better.
Mortgage Choice’s gross revenue from commissions is up 8%, representing 90.5% of total revenue. Its profit and loss statement shows net commissions for the year at $52.5 million.
The broker gets an average upfront rate of 0.633% on the value of the mortgages it organises. Then it gets an average trailing commission of 0.193% on the value of the home loan each year for five years if the mortgage remains in place.
Here’s what the banks pay in commission, with Bankwest and Macquarie at the top end offering 0.7%:
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