Sharebrokers Forsyth Barr have decided to exit the mortgage broking business after several years, deciding they lack the scale to compete effectively.
At the same time, the other large retail broking firm, ABN Amro Craigs is busy establishing a mortgage broking service.
Forsyth Barr managing director Neil Paviour-Smith says the firm used to have four mortgage brokers and is now down to three. The firm is talking to another mortgage firm in the hope of transferring the business and staff, he says.
While building the service had been an option, "it comes down to priorities for us. It’s a relatively specialised activity. There are a number of very good mortgage brokers in the market and it’s a very competitive market," he says.
Certainly, while the firm has a high profile in other areas, it wasn’t well known that it was in the mortgage broking business.
"We would have had to spend a lot more money marketing the fact that we were mortgage brokers as well as everything else.
"We prefer to put our limited time and resources into other activities," Paviour-Smith says.
Forsyth Barr’s experience is similar to that of Ord Minnett which decided it couldn’t earn enough to make its three broker team worthwhile and sold the operation to the individuals involved.
ABN Amro Craigs started establishing a mortgage broking service about two months ago and now has four brokers on board, says Roger McDowell, who is in charge of the start up.
The firm has 12 offices nationwide, 80 or more client advisers and a client base of about 45,000 people.
"We’re wanting to provide them with a full range of financial services. We see mortgage financing as an area which traditionally share brokers and investment advisers have been rather thin in," McDowell says.
"Often we see clients who are being attracted to more traditional lenders to their detriment."
The service will be an adjunct to its existing business with potential clients dealing through their established broker, he says. The firm is focusing on Auckland, Hamilton and Bay of Plenty initially and will be looking closely at places such as Wellington in the near future.
