Ann: Becoming a substantial holder from PPT, page-4

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28/03/23

00:50

Post #: 66986275
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Originally posted by Westwind: ↑

My thoughts:

Mortgage broking is going to be tough business for at least the next 6 to 12 months. Maybe even longer, with the major banks choosing to move into this area and using extravagant incentives to capture market share.

Eventually, as the economy turns around, business lending will become more attractive and the banks will shift their efforts in this direction, leaving the mortgage brokers to resume their normal level of activity. The well established mortgage broking businesses such as AFG will bump along, surviving on their trailling interest income until this occurs.

In the meantime, the share price of these businesses will be depressed, and attractive to institutions, who have a long term view of the viability of the mortgage broking industry.

So there will be no short term outperformance by companies such as AFG, but if you can be patient, there will be attractive dividends and capital growth.

All IMHO
Cheers Westwind

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Hey@Westwind, just a counter thought here, major banks have been shutting branches left right and centre which has lead to mortgage broker share of all home loans written at/near all time highs, approx 70%. Agree it will be a tough 6-12 months for anyone that originates lending, but that will be largely due to reduced borrowing capacity thanks to higher interest rates, in turn higher stress testing assessment rates, and higher cost of living, and not as a result of 'major banks choosing to move in to this area'. The incentives used to capture market share, most commonly refinance rebate/cash backs, these are availbale to a borrower regardless of who originates their loan, whether that be bank directly or broker.

AFG Price at posting: $1.40 Sentiment: Buy Disclosure: Held
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0 Great analysis

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