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Major aggregator losing $300m a month in foreign investor loans

ybr mark bouris  x ybr mark bouris  x
James Mitchell 6 minute read

A leading third-party mortgage business has seen a significant reduction in mortgage settlements as a direct result of the foreign lending crackdown.

Yellow Brick Road’s 2016 annual report revealed that the group’s mortgage settlements lost momentum in the second half of the 2016 financial year as banks began pulling out of home lending to overseas borrowers.

YBR’s CEO of lending, Tim Brown, said the 2016 financial year began well with the company’s H1 settlements up 41 per cent versus prior comparable period (PCP) behind strong lead flow during Celebrity Apprentice Australia and a competitive rate on YBR’s lead white label product.

“The Yellow Brick Road network alone saw 50 per cent growth in that period and leads quadrupled feeding a significant improvement in the mortgage pipeline,” Mr Brown said.


However, by Christmas the regulator had started to apply pressure on banks to slow investment lending by limiting growth to no more than 10 per cent of lenders’ current investment portfolios. Mr Brown said the impact of this, while not immediate, did start to filter through to loan approvals as banks tightened credit policy to meet the targets set by APRA. 

“By February, many of the banks who deal with overseas lending to foreign buyers withdrew funding due to verification issues on borrower incomes,” he said.

“This then impacted pre-approvals and lodgements to our business by as much as $300 million per month.”

Settlement growth slowed to 17 per cent in the second half of 2016. However, Mr Brown said multiple changes to lending rates throughout the financial year created an opportunity to increase margin on both new and existing white label business.

“With the major lenders also taking margin, the group was able to maintain rate competitiveness and still provide good value to the existing customer base. This helped contribute to a healthy increase in scale income which grew by 74 per cent,” he said.


Challenging market conditions have also reinforced the importance of productivity and in turn the need for quality recruits, according to the YBR chief.

“Accordingly in the branded Yellow Brick Road network, we are now pursuing predominantly candidates with industry experience — now only around 30 per cent of recruits are new to industry vs 70 per cent previously,” Mr Brown said.

“This is helping accelerate the ramp-up of new branches and contributing notable improvements in productivity.”

[Related: Lending curbs, taxes cut Chinese property investment by 50%]

Major aggregator losing $300m a month in foreign investor loans
ybr mark bouris  x
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ybr mark bouris  x
James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.



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