April 18, 2010

Were it not for the global financial crisis, Geoff Brown says, he would be on the way to paying off his own home by now.

But the 28-year-old fitness trainer has only just emerged from the “hell” of the global downturn to start thinking about buying his first home.
He is among the growing legion of renters hoping to take the plunge into the housing market this year, according to eChoice ….Read more

April 15, 10

Firstfolio CEO Mark Forsyth is on the hunt to buy up loan books from brokers wishing to exit the industry.

The aggregator is believed to want to increase its $20bn loan book to as much as $30bn by the end of the year.

“We see opportunities in buying books from businesses which have gone to the wall, or increasing geographic presence through groups that survived the crisis,” Forsyth said.

Firstfolio recently acquired Xplore Capital, Loan Services Australia and First Chartered Capital, which added $6bn to its loan book.

April 07, 2010

The recent history of the mortgage sector suggests that as soon as the big banks grab an indecent portion of market share, new players emerge to nibble away at the spoils.

In the early 1990s, new rivals such as Aussie Home Loans, Wizard and RAMS sprung from the scorched landscape, before themselves being subsumed. Firstfolio a mix of mortgage broker, wholesaler, originator, processor and manager continues the perennial cycle.

Southern Cross Equities describes Firstfolio as a “bank in everything but name”, a vital distinction being that it has no need for capital to support loans… Read more…

April 12, 2010

• Breakdown of property buyers over next 12 months:
  • 38% were first home buyers heavily influenced by rising rent
  • 31% existing homeowners wanting to upgrade and relocate
  • 32% investors
• Big 4 banks on notice that borrowers intend to shop around for the best deal
• Interest rates still need to rise by 2% or more before 49% of first-home buyers, 57% of existing homeowners say they will reconsider intentions to purchase
• Property investors more resilient to rate increases

A survey released today by national online mortgage broker eChoice reveals that two out of five Australians are actively considering purchasing property within the next 12 months, drawn by still-low interest rates and, in the case of first-home buyers, a desire to avoid paying high rents.  

The survey from eChoice, a division of ASX-listed mortgage and financial services group Firstfolio, was conducted in the weeks prior to the 0.25% increase in the cash rate announced by the Reserve Bank of Australia on Tuesday.

It confirmed rising interest rates would act as a speed bump to surging interest from potential property buyers, with almost half of first-home buyers and 57% of existing home-owners saying they will reconsider their intentions if rates increase by another two per cent (including the RBA’s most recent move). The survey also suggested the Big 4 banks – Westpac, NAB, ANZ and CBA, which have dominated growth in new lending in the past 18 months – can expect intensified competition in attracting new borrowers as interest rates rise.

Among survey respondents, 37% of first-home buyers said they intended to explore lenders for the best deal and 18% would use a non-bank lender or mortgage broker, with only 22% intending to use their existing Big 4 bank. Among existing homeowners, only 20% said they would refinance a new purchase with their existing Big 4 lender, while a quarter intends to shop around for a better rate and 12% plan to have a mortgage broker do this legwork.

Firstfolio executive director and eChoice spokesperson, Mark Flack, said rising rates made it more likely home buyers would look to second-tier banks or non-bank lenders to get the best possible mortgage deal, ditching their existing Big 4 bank lender if necessary.

 “The charmed run the banking majors have enjoyed over the past 18 months, when the global downturn effectively closed out non-bank lenders and regional banks, may be coming to an end. The Big 4 should not expect default new business from their current customers or existing borrowers as they finance a new property purchase,” Mr Flack said.

 ”In this environment mortgage brokers will have a bigger role in helping borrowers source the cheapest loan. Certainly the volume of inquiries coming through our platform, www.eChoice.com.au, is increasing and we expect that to continue,” he said.

Of the 1,000 survey respondents who said they were actively considering buying property in the next year, 38% were first-home buyers, 32% were investors, and 31% were existing homeowners wanting to upgrade or relocate.

When asked why they were now considering buying, 57% of would-be first-home buyers cited low interest rates or other conditions allowing them to consider buying for the first time, while 40% said rent was becoming too expensive. Only 21% said the opportunity for a good deal or low price had attracted them into the market.

Mr Flack said while existing homeowners and investors were well represented among those considering a property purchase, first-home buyers was the dominant force driving the current market.

“The mix of high rents, low interest rates and incentives such as the first-home buyers’ grant continue to underpin the interest of first-time buyers,” Mr Flack said.

“However, we know the RBA is on a path to increase rates up to two per cent higher than today. Our survey suggests an increase of this magnitude will affect demand, with consequences for clearance rates and sale prices in the short term. But we don’t believe the market will dry up. Rather, limits on supply and population growth driving demand will underpin strength in residential property over the medium term,” he said.

According to the survey, property investors are more relaxed about rate rises. Only 41% of would-be investors said they would reconsider if rates rose by two per cent or more (including the most recent rise), compared to 49% for first-home buyers and 57% for existing home-owners.

“Our view is the present outlook is actually a good one for investors,” Mr Flack said.

“First-home buyers are saying rents are too high, but more and more will be deterred from buying as rates increase. This puts a floor under demand for rental housing and therefore rental prices, ensuring investor yields remain strong.”

The survey raised questions about whether the aspirations of many would-be first-home buyers were matched by their savings. Two-thirds (67%) of people looking to buy their first home had saved less than $35,000 and 45% had a deposit of less than $20,000. Only 20% had savings of more than $50,000, which itself would not cover a 10% deposit on a $500,000 property purchase once transaction expenses were taken into account.

In other survey findings:

• 24% of first-home buyers said rising interest rates were their biggest concern in purchasing a property, compared to 17% who feared losing their job, 12% not being able to find the right home, and 12% having to compete with other buyers.
• NSW residents, who faced the highest property prices, were 16% more likely to believe current interest rates were low than the national average, and half as likely to be affected by a 0.5% interest rate increase. Nationally, 21% of potential first-home buyers would reconsider their interest if mortgage rates increased by one per cent (or 0.75% after the RBA’s move last Tuesday).
• When asked why they were considering buying a new house, 49% of existing homeowners said they wanted to upgrade to a bigger or smarter house or a better location, while 35% needed to relocate for personal or professional reasons. Only 8% were looking to capitalise on the value of their existing house.

 April 07, 2010

Listed mortgage and financial services group, Firstfolio Limited, today announced it had acquired selected key assets of Sydney-based LeaseChoice, a leading specialist in business equipment finance and leasing solutions, in a deal that will immediately diversify Firstfolio’s earnings.

The assets acquired include the LeaseChoice business name, web-site, origination systems and associated trademarks. Firstfolio will also have access to wholesale funding arrangements previously enjoyed by LeaseChoice Pty. Limited. 

The acquisition is expected to be earnings accretive in the first 12 months, contributing up to $750,000 to Firstfolio’s group EBITDA in that period. Initial income will come from fees received on new transactions.  Future earnings should be increased as the assets under management originated under Firstfolio ownership deliver additional post-finance term income flows. Loan contracts at the settlement date will be managed by the Vendor and all new contracts will be originated and managed by Firstfolio. 

Under the terms of the transaction, Firstfolio will pay $2.4 million for the specified LeaseChoice assets, comprising a cash payment of $1.75 million at settlement, shares issued to the value of $500,000 with agreed escrow or equivalent cash payment within 14 days, and a deferred payment of $150,000 on 31 December 2010.

The LeaseChoice deal will enable Firstfolio to rapidly deploy a new suite of financial products with strong reach into SME and corporate markets through its existing distribution network, centred on the eastern seaboard.

Firstfolio CEO Mark Forsyth said: “Diversification of product and client portfolio has been a major goal for Firstfolio, and we have always been opportunistic in adding new financial service components that could benefit from our existing distribution platform.

“We have also put a priority on expanding into adjacent segments, particularly the SME market. As a leading provider of asset finance to sole traders, successful SMEs and larger companies, LeaseChoice fits this bill perfectly,” Mr Forsyth said.

“LeaseChoice has a strong distribution network through introducer relationships, such as Mortgage Choice, The Rock Building Society and AMP financial planners, and blue-chip government and institutional clients. Its leading proposition to these businesses and its specialised focus on business equipment made it a compelling proposition for us as we continue to grow our business in Australia,” he said.

LeaseChoice offers a range of business equipment for finance, including office equipment, furniture, computers, security systems, trucks and buses, salon equipment and medical equipment. LeaseChoice provides a complete asset management solution through procurement, financing, management and disposal.

The LeaseChoice’s origination team will join Firstfolio and LeaseChoice founder Kirk Tsihlis will maintain a close relationship with the business. Mr Tsihlis will focus on introducing or enhancing existing wholesale funding arrangements on an exclusive basis in Australia.

 February 01, 2010

Listed financial services group Firstfolio kicked off 2010 on the front foot having completed three acquisitions and signed off on a major distribution deal. Two acquisitions – First Chartered Capital (a $3.5bn loan portfolio and 35 retail franchise outlets) and Loan Services Australia ($2bn in mortgage managed loans) – were completed just before Christmas, while the third, that of Xplore Capital’s $400m mortgage-managed book was due to be completed in the early part of 2010. The settlement of $5.5bn worth of loan acquisitions (First Chartered and LSA) took the fast-expanding group’s mortgage managed and aggregation porttblio to $18bn. The First Chartered acquisition gives Firstfolio access to SMEs along the eastern seaboard with franchise owners seeing “an increase in demand for finance”…Read More

February 25, 2010

Firstfolio Ltd has increased its profit almost fivefold as the company aims to grow across multiple financial products apart from mortgages, its main growth driver so far.

Net profit rose to $2.2 million for the six months to December 31 compared with $475,000 in the prior corresponding period, Sydney-based Firstfolio said in a statement on Thursday.

Revenue rose 32 per cent to $28.1 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) jumped fourfold to $4.45 million and the company affirmed full year guidance of EBITDA of $10 million to $11 million.

“Having turned the business around, we are now accelerating growth across multiple fronts, based on a strategy of building distribution and leveraging scale in mortgages and financial services,” chief executive Mark Forsyth said in the statement.

The company runs eChoice, a website that allows consumers to choose between mortgages and financial services online.

Firstfolio bought mortgage assets from First Chartered Capital and Loan Services Australia in December, boosting the total loan book to $18 billion.

The company also signed corporate partnerships with AV Jennings and Medibank Private which allows Firstfolio to offer mortgage finance to customers of both partners.

AAP