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Mortgage Choice (ASX:MOC) Shares Drop 26% – Is It Cheap?

Jaz Harrison
Jaz Harrison
Jaz Harrison

Jaz Harrison

Jaz is a Staff Writer for Rask. She is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.
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The Mortgage Choice Limited (ASX: MOC) share price is currently down 26%, is it now cheap?

Mortgage Choice is one of the largest mortgage broking businesses in the country. It was founded in 1992 and has been on the ASX since 2004. At the end of FY18 it had 449 franchises with 619 credit representatives.

Mortgage Choice shares punished

The Royal Commission Report may have been fairly benign for some of the large financial institutions, however it has not been good for mortgage brokers like Mortgage Choice.

Commissioner Hayne recommended removing trail commissions for all new loans from mid-2020, saying that it was “money for for nothing” over the life of the loan. Around 60% of all mortgages come from Australia’s 20,000 brokers.

Finance Brokers Association managing director Peter White said rates could go up by 0.1% or 0.2% if trail commissions are removed, it could also lead to less competition.

This could lead to a fundamental change to Mortgage Choice’s operating model, but the Coalition government is looking to defend the mortgage brokers.

I wouldn’t want to invest in a business like Mortgage Choice that faces that level of potential change at this stage, I’d rather stick to reliable & proven ASX shares such as the ones mentioned in the free report below.

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