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Sandy Li

Property agencies are scrambling for the potentially lucrative business in the referral of homebuyers to banks for mortgage loans.

The prospect of earning considerable commissions from the business has prompted Centaline Property Agency, Midland Realty and Ricacorp Properties to set up mortgage-referral subsidiaries.

Agents claim mortgage subsidiaries can help buyers secure mortgages at as low as 2.5 percentage points below the best lending rate.

Agents expect banks to rely increasingly on referrals of mortgage-loan customers as they try to reduce marketing and other overhead costs after interest-rate deregulation, which comes into force in July.

The deregulation is expected to force banks to be more flexible on interest rates to compete for deposits, increasing operating costs. This has led banks to raise charges on small-depositors' accounts which do not yield as much profit.

However, banks believe property agents are only one available mortgage-referral source, and say their role in reducing operation costs will be minimal.

Alex Tang, associate director of Centaline Mortgage Broker - a wholly owned subsidiary of Centaline Property Agency - said mortgage referral still had plenty of room for development after seeing strong growth in recent months.

In a bid to generate more business, he said Centaline had offered incentives to agency staff, who could receive extra commissions for successful mortgage referrals.

He expected to see increasing demand for mortgage brokerage services as they could help banks save manpower and resources in expanding customer base.

The company had joined about 20 banks to provide mortgage services, he said, adding the responses were not bad.

Ricacorp Mortgage Agency, a wholly owned subsidiary recently formed by Ricacorp Properties, has formed alliances with 30 banks to focus on mortgage-referral business.

Hendrick Leung, director of Ricacorp Mortgage Agency, said banks tended to become more aggressive in generating mortgage business but in a low-profile way.

Banks were reluctant to reveal terms and conditions to avoid direct competition as they faced a slowdown in mortgage demand, he said.

Ricacorp Mortgage could negotiate terms with individual banks to meet homebuyers' demands, he said.

Midland Realty's indirectly owned mReferral Corp said its month-on-month revenue had recorded strong growth since it was formed last September.

Kelvin Lo, chief executive of mReferral, said customers were referred mainly from its partner Cheung Kong (Holdings) and Midland Realty.

He said the company also offered insurance and personal-loan referral services.

However, HSBC general manager Raymond Or Ching-fai said the bank's main sources of referral came from customers' friends and relatives, developers and law firms.

He said successful mortgage applications referred by property agents remained insignificant in the bank's mortgage portfolio.

However, he believed such a service could help facilitate home purchases.

Citibank country officer Chan Tze-ching doubted banks could reduce operating costs by increasing reliance on mortgage referrals.

He said banks would still need to maintain branch-office networks and manpower to process mortgage applicants' credit capacity.



Agencies aim for mortgage referral role