Macquarie Group (ASX: MQG) now has a 1.1% share of the domestic mortgage market, having increased its origination volumes five-fold since mid-2010 according to a report in the Australian Financial Review. It’s good news for shareholders given the profitability of the mortgage market in Australia.
It looks like Macquarie will prove the sceptics wrong (again!) as the investment bank sets about re-inventing itself for a post-GFC world. With 83% of the mortgage market controlled by the four major banks, there is certainly scope for Macquarie to capture further market share. Not only is increased competition good for home buyers but Macquarie’s aggressive move into the mortgage market has also been a blessing for mortgage brokers, who are a major distribution channel for Macquarie’s products. The three main listed players – Homeloans (ASX: HOM), Yellow Brick Road (ASX: YBR) and Mortgage Choice (ASX: MOC) – all have distribution agreements with the bank.
News of Macquarie’s growing position in the mortgage market comes as the bank looks to raise $500 million in debt from bonds backed by residential mortgages. This highlights the clever thinking of Macquarie’s management with the bank benefiting not just from the profitable mortgage sector but mortgages also offer a sound asset on which to boost the bank’s balance sheet.
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Motley Fool contributor Tim McArthur owns shares in Macquarie Group.