Pyne Gould managing director Brian Jolliffe says that with most of the major banks having stopped paying brokers trail commissions, his company expected a declining profit stream from Mortgage Express. Pyne Gould earned just under $1 million in profits from Mortgage Express September 2002 when it bought into it and when it sold out in September last year for $2.3 million, just above book value.
Jolliffe says his company had also anticipated Mortgage Express would cross sell other Perpetual products, such as its funds management offerings and private trusts services, but that proved not to be the case.
"It was seen as a cross sell channel but the reality proved somewhat different," Jolliffe says. "Real estate agents are interested in selling real estate. They're not very interested in cross selling other products."
Harcourts was a willing buyer and Mortgage Express is a better fit with a real estate company than with Pyne Gould, he says.
Perpetual also has a $176.8 million mortgage fund but it concentrates on larger commercial, industrial and rural mortgages rather than residential mortgages.
It isn't the first time Mortgage Express has shed a financial institution as owner. This isn't the first time Harcourts has linked with a financial institution. Mortgage Express began life in late 1997 as a joint venture between it and National Mutual, which later become AXA.
Then in late 2000, AXA sold its mortgage book, aiming to refocus on its core insurance and investments business, and in September the following year withdrew from Mortgage Express.
