Mark Bouris recently sat down with Peter Switzer to discuss the state of the property market and important changes to borrowing regulations.
Mark Bouris is the Executive Chairman of Yellow Brick Road (YBR), one of the most significant players in the mortgage market in Australia.
Switzer asked Bouris to explain the role YBR plays in lending and the magnitude of their lending: “Definitely for the last five or six years, we’ve settled in excess of a billion dollars every month, to people who are buying properties or refinancing. We run a book north of $57 billion of mortgages under management. We lend our own money, we have our own programs with one of the world’s largest hedge funds in debt – that’s a company called Magnetar.”
“We’re a fairly significant player, we’re probably the second largest super aggregator in the country. Brokers cannot go direct to banks, they have to go to one of the aggregators, and we’re one of what they call a super aggregator. We probably rank number two in terms of volume.”
Why is this important? Because the broker industry is now writing more loans than those working in banking. Mark said “somewhere between 57%-60% of all loans that end up in the banks, come from the broker sector.”
“[Brokers] bank more borrowers than the banks do themselves,” said Mark.
Are home loan borrowers feeling the impact of the pandemic-induced recession?
Mark said that at Yellow Brick Road, they haven’t seen any spike in arrears or delinquency.
That of course does not include what’s going to happen now that the banks have stopped automatically allowing people to get relief from paying their mortgage.
“Six months ago, the Federal Government, along with the Banking sector, announced that if you’re having trouble paying your mortgage off, you can apply for six months relief. That was a great measure, but anyone who got that six month relief, we don’t know whether they’re suffering stress going forward. You can get an extension, but it’s no longer automatic.”
“The arrears and delinquencies, that is, those people who are more than 30 days in arrears, in this country, has not increased. But what we’re not factoring into that is the number of people who sought hardship relief from the banking sector, over the last six months has expired.”
Is Australia in good shape to recover?
Anecdotally, Bouris says that the brokering and banking sectors are not worried about a spike in arrears and delinquencies over the next three months. He said, “these are relative games. It’s not hard for us to have a spike, because Australia is so low in it’s arrears and delinquencies relative to the rest of the world – it’s sub-1% of all mortgages in the market, in excess of a trillion dollars worth of mortgages – so 1% is not much.”
“More importantly, the Reserve Bank, who does do the analytics, feels as though Australia is in good shape. They do talk about future shocks all the time, but one of the things they seem to be relatively relaxed about is future shock in relation to the quality of the mortgages that the banks and us (Yellow Brick Road and other aggregators) have on our books.”
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