The deposit bond provider has attributed a substantial year-on-year growth in revenue to brokers increasingly processing deposit bonds online, among other factors.
Deposit Power had reported an increase of 44 per cent year-on-year growth in revenue since September 2019, as independently verified by national accounting and audit firm UHY Haines Norton.
Deposit Power general manager Grant Bailey attributed the growth to three key drivers, including brokers’ increased willingness to process bonds online.
“Firstly, the growth is directly correlated with mortgage brokers’ increased appetite in being able to process a deposit bond in real time, online, 24/7, which supports working remotely and the heightened expectation for broker-led, customer-centric solutions that’s been compounded by COVID-19,” Mr Bailey said.
According to the provider, broker use of the online real-time approvals process has consistently been over 80 per cent of transactions month in, month out. This rate of usage of the online process has remained the same through the increase in usage of Deposit Power by brokers.
“Secondly, the deposit bond product supports the growing number of borrowers seeking to purchase property that have significant equity but limited cash at hand. And thirdly, the current state of the property market.”
Elaborating further, Mr Bailey said the volatility in the property market has directly impacted the company’s results.
“After a relatively stagnant year prior, the market started to surge in the last quarter of 2019 and remained strong in quarter one of 2020. Consequently, our year-on-year sales volume was up significantly in this period,” he explained.
In comparison with the current year-on-year growth, in the first half of 2020 (three moths ending 31 March), revenue was up 36.6 per cent compared with the first quarter of 2019, according to figures provided to The Adviser.
Revenue in the second quarter of 2020 (three months ending 30 June) was down 0.73 per cent compared with the second quarter of 2019.
Mr Bailey attributed this to the impacts of the banning of property open inspections and auctions across Australia as part of measures to curb the spread of the coronavirus.
“Activity then grounded to a halt overnight when the pandemic hit at the end of March, which was exacerbated by the period of open house suspensions,” he said.
“We’re now relieved and delighted to report that since July we’re experiencing the upside of the pent-up demand that’s fuelled a robust quarter – to the extent that this September was our best trading month in two years.”
Providing his analysis of borrower segments driving the product increase, Mr Bailey said that there has been an “influx” of first home buyers who have been taking advantage of various government incentives, which has “propelled” deposit bond acquisition.
“Interestingly, there’s been significant interest from upsizers, who are considering redirecting funds earmarked for travel or renovations into a property purchase,” Mr Bailey said.
“There’s also been a rise of downsizer sales that appear to coincide with organisational restructures, redundancies and early retirements accelerated by economic uncertainty.”
With the expected COVID-19-related property price crash not eventuating, Mr Bailey added that buyer demand is outstripping property supply in many areas.
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.
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