While I have previously warned investors here to take care not to be overly enthusiastic about the upswing in home building – my concern being that many housing related stocks, particularly some construction material firms, were already priced for a significant upswing – that doesn't mean that the trend of increased home building isn't an appealing tailwind, nor does it mean that there aren't still opportunities.
One area that could provide opportunities for investors to profit from an upswing in housing is financial services related to mortgages.
Homeloans Limited (ASX: HOM) offers competitively priced home loans to borrowers, which it finances through its Residential Mortgage Trust. With Macquarie Group Ltd (ASX: MQG) on the share register with a 19.8% shareholding, Homeloans not only enjoys a close association with a major financial institution but also the interesting possibility of being acquired.
Mortgage Choice Limited (ASX: MOC) has been an impressive competitor in the mortgage broking market, thanks to its mobile workforce who offer a personalised service to potential borrowers. This service offering has allowed the company to grow its mortgage loan book uninterrupted for over a decade.
While Yellow Brick Road Holdings Ltd (ASX: YBR) is primarily a wealth management company offering financial advice, given it is chaired by Mark Bouris, the founder of Wizard Home Loans, naturally the company has a mortgage offering. With the company aggressively expanding its branch network, it is well positioned to grow its commissions from mortgage broking too.
Foolish takeaway
The dynamics of Australia's property market and mortgage financing have been hugely beneficial to the 'Big 4' banks and their shareholders. After a retreat in competition following the global financial crisis, customers are again likely to be drawn to more nimble and keenly priced offerings available outside of the 'Big 4'.
