Hypoport sees 10% growth despite flat mortgage market

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Independent financial product B2B marketplace provider Hypoport saw transactions on the company's Europace online platform push past the €9bn level for the first time, on the back of strong demand for German home loans in the third quarter. The group continues to win market share with its online platform which matches a broad range of finance providers with mortgage and other financial product seekers.

According to Berlin-based Hypoport, total transactions reached €9.58bn in the quarter up 11% on 3Q13, making it the most successful quarter ever across all product segments. Home loans grew 13% against the 2013 period, but over the first nine months, were 11% higher at €27bn.

The company posted revenue for the first three quarters of €81.3m, while earnings before interest and tax came to €6.0m, a figure that surpassed all of last year's total.

Hypoport CEO Ronald Slabke pointed to the overall market: “Despite the availability of attractive lending rates, there has been no growth in the total value of Germany’s mortgage finance market. The expansion of the loan brokerage market has been constrained by the limited supply of real estate in popular locations. Nonetheless, our mortgage-finance business with private clients is growing. We are constantly winning further market share on the back of the superior technology used by our EUROPACE platform and the comprehensive advisory services provided for our private clients by Dr. Klein (Hypoport's network of bricks-and-mortar mortgage advisory business across Germany).”

Mortgage finance remained the largest segment, accounting for €7.4bn in third quarter, up from €6.6bn in 3Q13 and up by 6% on 2Q14. Personal loans rose to just over €400m from €376m a year before. “Although interest rates in general are extremely low, demand for building finance products is currently falling slightly,” said Thilo Wiegand, Europace's CEO. Building loans fell slightly to €1.75bn, but compared with the same quarter in 2013, were more than 6% ahead.

Europace links up 250 partners, including banks, insurers and financial product distributors, and is the largest German B2B transaction platform linking wholesale providers to brokers. A subsidiary of Hypoport, it facilitates over 20,000 deals each month, and has annual volume of over €30bn, handling more than 10% of German mortgages.

Meanwhile, the quarterly AWI residential investment index, developed and maintained by Düsseldorf-headquartered Aengevelt Immobilien, has shown a further downward move in the latest autumn reading. The index tracks the current and future outlook of the German residential market in Good, Average, and Simple quality housing categories from the viewpoint of rental and investment price expectations.

The latest reading of the composite AWI-Index is 67.7 points, down from the summer reading of 68.7 points, and down in all categories for the second quarter in a row. At the top end (Good Quality and Location) the index is down for the eighth quarter in a row to 66.2 (high point 80.8 in autumn 2012). In other words, the market at the upper end now rates further price rises increasingly unlikely.

According to Markus Schmidt, Aengevelt's head of research, "On the one hand we're seeing a natural rental ceiling being reached in a lot of places for the Good Quality category, while in many other places the big rental price increases have already been pushed through. Since much of the demand has already involved people moving to lower their living costs, new leases being signed for existing properties are becoming scarcer. Hence much of the upward potential has already been exhausted at this stage."

In the Good and Average categories, the index shows that a good half (51%) of respondents still expect rising rents, albeit down on earlier readings, but for Simple housing 44% are still expecting rent increases. Hence the nominal winners are owners of Simple housing who've seen vacancy rates falling rapidly without an equivalent improvement in housing quality. Respondents are also negative on the prospects for new construction at the lower quality level, suggesting that at the lower end affordable housing is going to remain very scarce.