Digital mortgage provider Lendi says it can manage its ties with other banks and will keep its brand name after signing a deal with the Commonwealth Bank.
CBA announced plans on Wednesday to buy 45 per cent of Lendi and merge the company with its own home loan provider, Aussie Home Loans. CBA hopes the deal will inject innovation into its old fashioned mortgage broker that has 210 stores and 970 brokers across the country.
Lendi manages about $7 billion in home loans through its digital questionnaire and loan matching website and has relationships with other lenders including Westpac, Suncorp, AMP and IAG. ANZ Bank is also a major shareholder and chief executive David Hyman said autonomy from lenders was crucial to his company’s success.
“A big part of our customer proposition is about creating a platform that has choice. Ultimately to deliver on that, we need to ensure we can stay true to that word,” he said. “There’s a real strong buffer between the businesses and while they’re a shareholder, they don’t control the company.”
Mr Hyman said he expects to see record growth in the mortgage market over the next 12 months, as responsible lending laws are stripped back and interest rates remain at record lows. “We’ve got rates to customers at 1.89 per cent, which is crazy. Genuinely speaking, if you have a job and you can save a deposit you should buy a house.
“The cheap money and stimulus are big drivers that feed into property transaction flows. We think there are a lot of tailwind volumes for next year.”
Mr Hyman said the deal with CBA would be an opportunity to invest in the company’s technology to speed up the approval process, adding plans to list Lendi on the ASX had not been abandoned.
He said Lendi had strong governance policies that would prevent CBA from exerting pressure over the company to sell in-house products. “We don’t put any bank or lender above the customer’s interest,” he said.
The banking royal commission highlighted inherent conflicts of interest in the vertically integrated model – that enables advisers to sell in-house products – and the practice has been forced out of the finance industry.
The deal is subject to approval from the Australian Competition and Consumer Commission which is expected to occur by mid-2021.
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Source: Thanks smh.com