Mortgage broking franchisors Mortgage Gallery, Smartline to merge as mid-tier operators build scale

Mortgage broking agencies Smartline and well-known Western Australia brand The Mortgage Gallery have announced a merger as a result of industry consolidation that is pushing more mid-tier companies to chase scale or risk becoming irrelevant.

The two companies announced the merger yesterday, with the new entity to have 240 franchise owners settling $4 billion in loans ever year, with a combined book of over $17 billion.

John Bignell, director of the 20-year old Mortgage Gallery franchise, says the business has been contemplating several changes within the industry that favour large businesses over more mid-tier operators.

“We’re a private company that has obviously enjoyed its independence, but we’ve been seeing a lot of market change. The gap between large brokers, say the top 10, and the boutique operators is becoming considerable.”

“It makes you question your relevance in terms of lenders and your place in the market. That was a consideration for us, and you also have to wonder whether you’ve taken the business as far as you could.”

Smartline executive director Joe Sirianni agrees, saying in order for businesses to grow and compete they must build scale.

“The nature of this industry dictates that you’re either very small and boutique, or you’re large and have some scale. Staying in-between is a hard position sometimes, and we’re talking about being a sustainable business over a long period of time.”

Smartline was founded in 1999, has over 200 franchisees and has won a number of franchising awards in its time. The Mortgage Gallery is a smaller company, but is a distinctly strong brand in Western Australia where it has a notable presence in regional areas.

Bignell says Mortgage Gallery was very careful to look at each opportunity it had in order to grow, and agreed that Smartline provided a good mixture of scale and culture.

“We wanted to know what each business stood for, how they went about doing business, and we liked the operation at Smartline more than any other.”

“We wanted to get involved where we knew the senior management and we wanted to have an understanding of what our needs and expectations would be going forward.”

Right now, Sirianni says the businesses may eventually come under one brand. However, he notes this will need to come up for periodic review.

“The objective over the long-term is to use one brand, and we’ll continue to review that. But the Mortgage Gallery is a very strong brand in Western Australia and it’d be silly of us not to utilise that.”