Royal Automobile Club of WA has exited the home lending business it entered five years ago, selling its 1,800 mortgage loan portfolio to Adelaide-based credit union Australian Central for an undisclosed sum.
RAC general manager membership and retail Michael Heath said the company had reviewed its presence in the home lending market about three months ago and put the business on the block in mid-April.
Mr Heath said the not-for-profit organisation had entered the mortgage market in 2003 after ending a joint venture with Australian Finance Group Ltd, now Australia's biggest mortgage broker.
But he said the business had not taken off.
"We pushed pretty hard into this business but it is not something that our members have taken up," Mr Heath said.
"We looked at our long-term strategy. We decided to concentrate on businesses where we have substantial market share."
The sale of RAC's Mortgage Find business, with in excess of $306m of mortgages under advice, is the subject of due diligence, and is expected to be completed by the end of June, 2008.
Australian Central said it has in excess of $3.4 billion assets under management and advice and 500 staff members throughout South Australia, the Northern Territory and Western Australia. The credit union said it plans to open 18 new sites over the next three years across this region.
"Our business in Western Australia is built around the provision of home loans and wealth management advice so the new purchase fits perfectly."said Australian Central managing director Peter Evers.
"Our existing plan to open more advice centres and expand our advice team in WA over the next few years remains firmly in place,"
The acquisition will also include a referral process and Australian Central is aiming to employ staff from the Mortgage Find business to support and service current and future home loan customers.
As part of its largest ever expansion, Australian Central has opened three new branches and two new specialist centres in South Australia over the past 12 months.
