Shares of the Hypoport Group (HYQ.DE) are rising thanks to stable though historically very low transaction volume in mortgage financing in Q4 2022. The Hypoport Group creates a network of technology companies serving the lending, real estate, insurance and private client industries. The company's shares lost nearly 80% in 2022, although business conditions improved sharply in Q4. Total transaction volume for the company's main three product groups in 2022 amounted to €375 million and scored a 6% y/y decline, illustrating the 'panic reaction' of the market last year:
After record performance in the first half of 2022, the operating ratios of Hypoport Group's mortgage finance business models fell sharply in the second half of the year. The reason for this was the highly subdued demand for private and institutional mortgage financing since the summer of 2022. The downward trend among properties continued until October. Since then, operating results have stabilized at historically low levels. In each of the three months of the fourth quarter, volume held steady at around €4 billion. Mortgage financing, which is by far the largest product group, saw transaction volume decline 9 percent year-on-year to €77 billion.
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Open real account TRY DEMO Download mobile app Download mobile app- Cooperative banks were the company's strongest customer group in 2022 with growth of 3 percent, with a 6 percent decline recorded by savings banks. The volume of personal loans at Europace is up 29 percent.
The volume of new loans issued on the real estate financing platform for residential construction by 2 percent in 2022. The company also reported a 10 percent increase in the volume of premiums from insurance portfolios transferred to the company's SMART INSUR platform.
- Europace's transaction volume overall fell 7 percent year-on-year in 2022, with the first half of the year being significantly better. The second, however, was weak due to market conditions (down 30% y/y). Q4 transaction volume for mortgage financing was at a historic low, but is now holding steady on a monthly basis;
- Transaction volume in the second-largest product group, construction, increased by 1% to €13 billion in 2022. This growth rate was outpaced by robust growth in the smallest product group, personal loans, where volume jumped 29 percent to €5 billion in 2022. At FINMAS, a submarket for savings bank institutions, transaction volume fell 6% to €9.9 billion in 2022. In the cooperative banking sector, institutions used the dedicated GENOPACE submarket, generating a volume of €12.9 billion, up 3%.
- Ronald Slabke, CEO of Hypoport SE, summarized the challenging year as follows: "Although the first half of 2022 was extremely successful, our mortgage financing business models experienced an unprecedented decline in buyers' willingness to purchase homes after the summer (...) This was triggered by a combination of an unexpected surge in inflation, soaring interest rates, fears of recession, and hopes on the part of buyers for a sharp drop in property prices. This led to a significant decline in our business volume, which lasted until October, but the bottom seems to have been reached in the fourth quarter. Moreover, our business models are now outperforming the overall market. This is because real estate buyers are now even more willing to secure the best terms by obtaining neutral advice covering a wide range of products."
Management is cautiously optimistic about 2023 and remains moderately conservative about a possible continuation of the credit market recovery from Q4 2022. According to the CEO, the company is sticking to a scenario in which the mortgage financing market will return to normal levels four to eight quarters from the summer of 2022, which is when buyers in Germany first showed they were not eager to buy property.
In the second half of 2022, the company began taking steps to counteract the weak market conditions by adjusting cost levels to the current market situation. Hypoport intends to carry out cost reductions for the year 2023 amounting to 35 to 40 million euros. The year 2023 will also offer us significant opportunities to increase market share. According to CEO Slabke, "the situation in the mortgage finance market underscores the strength of our platform offering for the entire lending industry. If the size of the market halves, so too does the 'cost' of our platforms halve for our partners. Inefficient traditional IT solutions should encourage players to migrate towards us."
Hypoport (HYQ.DE) shares, W1 interval. The company's shares are trading below the 100- and 200-session moving averages on the weekly interval. From the technical analysis side, we can see that both of these averages are heading towards a bearish formation known as ;death cross', the SMA200 average crosses the SMA100 from above. Looking at the 23.6 Fibonacci retracement, we can see that the first medium-term resistance level is around €200 per share. Source: xStation5
