A group of Western Australian entrepreneurs played a significant role in changing the nature of the national home loan market, which as recently as 15 years ago offered consumers little choice in lenders.
A group of Western Australian entrepreneurs played a significant role in changing the nature of the national home loan market, which as recently as 15 years ago offered consumers little choice in lenders.
The establishment and expansion of the mortgage broking industry, led by WA, has transformed the market.
The industry estimates that up to 45 per cent of all new housing loans are sourced through mortgage brokers.
The industry’s pioneers included Howard Lewis’ Access Home Loans, Neil Pinner’s Mortgage Force and Gary Ralston’s Select Mortgage Services, which all opened for business in Perth in the very early 1990s.
It was 15 years ago that the industry started to really take off.
John Bignell set up Residential Mortgage Services in Perth in 1992.
He remains the sole owner of the business, now known as The Mortgage Gallery, which opened its 43rd franchise in Morley this year.
Perth brothers Rod and Peter Higgins took an even bigger step in 1992, when they established Mortgage Choice in Sydney.
Their business, now listed on the Australian Securities Exchange, has grown to have 445 franchises and 663 loan consultants.
Its establishment coincided with Sydney entrepreneur John Symonds setting up mortgage originator Aussie Home Loans, which has arguably done more than any other firm to change the housing loans market in Australia. (Mortgage brokers arrange loans for third-party lenders and are paid a fee by the lender, while mortgage originators have their own funding and manage the loans.)
Industry veterans like John Bignell and Howard Lewis trace the mortgage broking industry’s emergence back to the late 1980s and another Perth entrepreneur, Glenn Wheeler.
Many people remember Mr Wheeler for his involvement in the 1991 collapse of Permanent Building Society, and more recently his role in national property services company Wentworth Mutual Ltd.
However, before its collapse, Permanent set up what was arguably Australia’s first mortgage broking business, trading as Capital Mortgage Services and Roy Weston Mortgage Services.
It started as a deal between Permanent and the Roy Weston real estate group, which was owned at the time by yet another Perth entrepreneur, Tony Trevisan.
The concept was simple; the mortgage brokers would arrange a loan for people buying a property through Roy Weston and would be paid a fee by the lender.
That was a radical change from the traditional finance broking model, in which the borrower paid the fee.
It also created a new service for homebuyers, who previously had to investigate the housing loans market on their own.
The business was highly successful, to the point where it quickly exhausted the ability of Permanent to fund all of the loans.
That’s when two of its early employees, Messrs Bignell and Lewis, started knocking on doors to find other lenders.
“It was a real battle,” Mr Bignell said.
Some of the early supporters included Advance Bank, National Mutual Royal Bank, and Challenge Bank.
Another supportive lender was International Financing & Investment, established by Tim Holmes and Rob Salmon in Perth in 1985.
IF&I originated mortgages for a Victorian building society, and morphed over the years into Homeloans Ltd.
The big, traditional banks baulked at the idea of paying a fee to a mortgage broker but progressively they have all been compelled to reverse their position.
The first big bank to come around was the R&I Bank (now BankWest), which used the mortgage broking channel as a means of achieving faster growth, in WA and especially interstate.
Murray Sebbes, who retires this week as state manager of Mortgage Choice, previously worked for the bank, where his role was to build its links with mortgage brokers.
Howard Lewis left Permanent in 1990 to set up his own mortgage broking business, Access Home Loans.
Mr Lewis also traded as Peet Mortgage Services and First National Mortgage Services after setting up deals with the respective real estate groups.
“It was so easy for me to set up the business because Perth was such a small town then,” Mr Lewis said.
“If people knew you, they would do business with you.”
Access’ office in Newcastle Street became something of an incubator for the industry.
The firm employed Gary Ralston and Les Gray, who set up Select Mortgage Services, and Ross Begley and Gary Pennells, who established Choice Home Loans.
“I just surrounded myself with a really good bunch of people and they went off and did their work,” Mr Lewis said.
“Most of them run their own companies now.”
Access also shared premises with Brett McKeon, Bradley McGougan and Malcolm Watkins, who at the time were in the insurance business but in 1994 set up Australian Finance Group, which has become Australia’s biggest mortgage aggregator (i.e. mortgage wholesaler) with nearly $45 billion in loans.
“All of these wonderful ideas came out of the Newcastle Street office,” Mr Lewis said.
