Mortgage Choice (ASX:MOC) was established in 1992 by Rod and Peter Higgins and listed on the ASX on the 6th August, 2004.
MOC operates a franchise model, with a national network of loan consultants supported by group and state offices. They provide guidance in selecting a home loan from a panel of 3rd party lenders (mainly major banks) , as well as assist its customers in the sourcing of risk & general insurance, deposit bonds, asset finance and commercial and personal loans.
MOC is a member of the Mortgage and Finance Association of Australia.
The mortgage broking industry is actually relatively new, being roughly 2 decades old. The basic function of the broker is to assist the customer source their required financing needs. Brokers generate revenue from the receipt of origination and trailing commissions on the loans written. These commissions are received directly from the lender. In other words, they do not charge the mortgagee a fee.
According to a JP Morgan Australian Mortgage Industry report released in April 2010, 41% of all new Australian Home Loans are sourced through mortgage brokers. Thus, the business of MOC and the industry in which it operates in appears to remain robust.
Business Model
A buyer of a MOC franchise acquires the support of the “branded” head company while they establish and grow their franchise. A large positive for the franchisee is MOCs extensive advertising capability.
A strong protection to the MOC model is that if a franchisee chooses to leave the franchise group they lose their trail book. This is definitely an incentive to stay with MOC especially if their loan book is large. This has resulted in a fairly stable franchise network.
What makes the MOC business model attractive to its customers is that the head office pays its franchise owners the same commission rates for the loans they write, regardless of the rate paid by the lender for a new customer. This means that the customer will be presented with an unbiased opinion of financing solutions tailored to their needs.
>> Read the full Mortgage Choice report
