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The ASX-listed property platform group has revealed details around its plans for major brokerage Mortgage Choice, including an ongoing recruitment drive.
In an investor presentation last week, REA Group pointed to growth potential for its financial services unit, which includes Mortgage Choice.
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The company is aiming to grow its broker volumes and loan books, as well as to drive leads and conversions through its realestate.com.au website.
REA has noted that while customers have increasingly engaged online through guides or calculators, brokers are still preferred, with the distribution channel’s share of the market increasing from 44 per cent in the 2013 financial year, to 67 per cent in the first half of FY22.
“Brokers offer [a] trusted service at no charge to consumers,” the slides in REA’s investor presentation stated.
“Younger consumers show a distinct preference for brokers.”
The company has outlined plans to increase its broker scale, with a “continued recruitment focus”.
Currently, there are around 1,000 Australian brokers working under the Mortgage Choice and Smartline brands, with the two currently being integrated under the Mortgage Choice name.
Mortgage Choice officially joined REA Group in July last year.
“Brokers command increasing share (67 per cent of mortgages) and we aspire to build Mortgage Choice to be the clear #1 branded franchise in the market,” the REA slides stated.
At the end of FY21, the two Mortgage Choice and Smartline brands had a combined $85.3 billion loan book, overtaking Aussie, with its $71.8 billion portfolio.
However, Mortgage Choice had $21.3 billion in settlements over FY21, lodged by 945 brokers, compared to $20.2 billion being settled at Aussie, with its 987 brokers.
Thus, Mortgage Choice has estimated that its average productivity is equivalent to around $22.5 million, compared to Aussie’s $20.5 million.
“Broker productivity exceeds [the] closet peer, with opportunity to further leverage REA’s unique data assets,” the investor presentation stated.
It also noted that its significant scale has enabled cost efficiency and that its brokers will be more assisted by technology in future.
Recently, a trading update showed the acquisition of Mortgage Choice had helped drive a 23 per cent year-on-year revenue jump for REA, when it generated $278 million in the third quarter of FY22.
REA commenced rebranding its Smartline brokers to the Mortgage Choice name during the quarter, with the full integration of the brokerage brands expected to wrap up by the third quarter of FY23.
The investor presentation also showed REA has also looked to capitalise on a shift towards digital mortgage valuations through its platform, aiming to grow its market share in the space.
Currently, it has estimated that the majority (55 per cent) of lenders rely on physical valuations, which can take around two to five days.
Around 15 per cent of lenders are said to use digitally assisted valuations, which take one day, while 30 per cent have opted for real-time valuations, through a digital automated solution.
[Related: CBA flags importance of brokers in rising rate environment]
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