Australia’s Fairfax enters mortgage broking business
Australian newspaper publisher Fairfax will foray into the mortgage broking business, following a similar move by rival News Corp, at a time when regulators are tightening the screws on bank lending in the country's red-hot property market. Domain, the real estate classifieds section of Fairfax, will form a joint venture (JV) with Sydney-based start-up Lendi in what Domain's CEO Antony Catalano said was a "very important strategic announcement". The JV, Domain Loan Finder, will be launched in early July, offering services from more than 30 lenders including the four major banks - Commonwealth Bank, Westpac, ANZ Banking Group and National Australia Bank. Mortgage lending and broking are highly lucrative businesses, with Australia's home loan broking market alone generating A$2 billion ($1.53 billion) a year in commissions. However, the nation's biggest lenders have been forced to slow down lending, mainly to speculative property investors, as regulators fret over financial stability risks amid rising housing prices and record-high household debt. Policy makers are worried excessive debt in the property market will hurt spending elsewhere in the economy and lead to financial stability risks as the household debt-to-income ratio has climbed to an all-time peak of 189 percent. Earlier this week, Domain's biggest rival REA Group - owned by News Corp - said it had spent A$67 million to buy an 80 percent stake in mortgage broking franchise Smartline. Fairfax is subject to two takeover proposals from U.S.-based private equity firms, Hellman & Freidman and TPG Capital. A consortium led by TPG has made a A$1.20 per share offer for Fairfax, valuing the country's oldest newspaper publisher at A$2.76 billion.
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