Mark Bouris ties up with Macquarie to fund mortgages in repeat of Wizard Home Loans success
Financial and banking entrepreneur Mark Bouris has teamed up with Macquarie Bank to deliver billions of dollars' worth of home loans through his own Yellow Brick Road network, in a repeat of his Wizard Home Loans success.
The financial entrepreneur built the company in the 1990s and eventually sold it to GE in a deal worth $500 million – he's credited with opening up the non-bank lending market.
The move has been welcomed by consumers and the government, painting it as yet another sign of more competition among the banking sector. Housing experts have also thrown their weight behind the announcement, saying it could help nascent consumer confidence.
"We see this as a development that has a lot of positive potential," Housing Industry Association chief economist Harley Dale told SmartCompany this morning.
"Clearly there's a lack of competition in the market right now, and there has been some noise made in the last 24 hours about the fact that household credit is slow. Any move that might engender further competition is a good thing."
Property is certainly improving. Clearance rates are besting last year's results, and building approvals increased last month. While lower consumer confidence is no doubt having an impact, economists such as Dale say more competition for loans can spur buying activity – especially during the summer months.
Another rate cut next month would no doubt enshrine the feeling that now is a good time to buy.
Following a trading halt yesterday, Yellow Brick Road announced the new deal with Macquarie Bank that will allow it to distribute billions in mortgage funding. There was a good reaction, too – YBR shares were up 25% after the release hit the market.
In a statement, Bouris said the deal would "bring back choice, access and competition like there was in the 1990s".
The big attraction – all mortgages will be offered with a 1.15 percentage point discount on new loans for the first 12 months of the loan.
It's certainly a repeat of Bouris' success. He created Wizard Home Loans in 1996, which is credited as cracking open the non-bank lending market.
The fact Bouris has returned to a similar financial scheme indicates the potential in the market. As Dale points out, with conditions in property improving, and confidence on the edge of a recovery, now is a good time to deliver value to buyers tempted by lower interest rates.
"Renewed competition emerging about the same time as we see a lift in confidence could be reflected in people's willingness to make a housing decision."