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Brokers ‘screwed’ by majors must use non-banks: Driscoll Mortgage manager Mortgage Ezy has slashed rates on its product suite, with CEO Garry Driscoll claiming brokers feeling ‘screwed’ by major banks need to dole out more support for non-bank lenders. The company has reduced rates up to 40 basis points on its low-doc standard variable product, offering a rate of 6.99%. It has also lowered rates on its variable full-doc uQUIT loan by 15 basis points to 6.74%. Driscoll claimed that the rate reduction on the company’s low-doc product was evidence that hunger for low-doc lending has returned. “A sub-7% low-doc rate in 2011 is pretty conclusive evidence the market has an appetite for self-employed borrowers,” he said.
Driscoll admitted Mortgage Ezy would take a hit on margins in order to offer the rate cuts, but said the company’s move was designed to “show everyone that the mortgage manager sector is very competitive, and will remain very competitive and is an extremely attractive alternative to the majors”. In light of the company’s rate reductions, Driscoll commented that brokers should begin taking advantage of low rates offered by non-banks, and lamented brokers sending deals to major banks. “The arguments over competition impacts from 1 July are irrelevant if brokers continue to just send business to the banks. There is no point complaining
about getting screwed by the majors and then continuing to support them,” Driscoll said. Driscoll commented that he believes many brokers continue to write business through major banks because it is “habitforming” and easier to sell to clients. However, Driscoll believes NCCP regulation will help mortgage managers see increased volumes from brokers. “With the NCCP regulations, [brokers] will have to justify the product they’re selling. We believe that will really assist our sector. If a product from a smaller funder is better, they need to justify why they’re pushing the borrower into something else,” he said. Driscoll vowed that the discounts to the
Garry Driscoll
company’s rates are not a temporary promotional move, and said the product line would include a standard upfront commission to brokers.
Mortgage House sees win in appeals court loss The NSW Supreme Court of Appeal has ruled against Mortgage House in a long-running dispute, overturning a previous decision in favour of the company and owner Ken Sayer. The dispute involves Sayer and former business partner Zoltan Tomanovic, and Sayer’s buy-out of Tomanovic’s interests in their shared business. In 2004, Sayer and Tomanovic commenced negotiations for the buy-out, with Sayer paying Tomanovic $1.3m in the form of a loan. In 2008, however, Sayer demanded repayment of the loan. On appeal, however, Sayer has been ordered
to buy out Tomanovic’s 45% in their shared Global Mortgage Equity Corporation, taking into account the amount Sayer previously paid to Tomanovic. Sayer will also be ordered to pay costs. The parties will have a week to agree to the process of determining the amount to be paid to Tomanovic. Sayer has stated he is pleased with the decision, and claimed the court’s orders are tantamount to the offer he previously made Tomanovic. He claimed Tomanovic rejected previous offers because he wanted to retain the Mortgage House trademark and demanded
Sayer pay his capital gains tax on the buy-out. Sayer said the court’s decision removes these “hurdles”. “What they’ve asked me to do is precisely what I offered Zoltan three years ago, and Zoltan wouldn’t agree to it,” he commented. “I’m smiling because all the muddiness is gone. I didn’t want to force him out, I wanted to buy him out. One hundred per cent of our disagreement has just been about money.” Sayer said he plans to propose to the Supreme Court that four top tier accounting firms submit tenders to value Tomanovic’s 45% share. He claimed this would
Ken Sayer
present an objective valuation. “I don’t really care what the number is. At that point, it’s cleansed,” he said.