MARCH 2021 ISSUE 18.04
THE PROMISE OF COMMERCIAL LENDING Australia’s economy is rebounding from the COVID-19 pandemic, boosting demand for commercial loans. Lenders in this space are encouraging brokers to tap into this diverse and lucrative market /14 ALSO IN THIS ISSUE… Big deal MLS Finance’s Sze Chuah helps a property investor refinance loans /20 Opinion NAB’s acquisition of 86 400 is welcomed by FinTech Australia /25 Finsure hits loan settlement record Aggregator reaches $2bn in settlements for the first time, and its broker network increases by 15% /06
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Creating opportunities for women MFAA releases latest report on female participation in the broking industry, led by key adviser Jane Counsel /22
Female brokers bring compassion to role Green Apples Finance Australia founder Jenel McClelland shares her views on women in the indusry /24
In the hot seat Bloom Finance broker Fi Dimos talks about transferable skills /30
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NEWS
IN THIS SECTION
Lenders La Trobe Financial partners with NBL to help SMEs /04
Aggregators Finsure celebrates $2bn in settlements /06
Market Demand for consumer credit continues to fall /10
Industry bodies MFAA pushes for better lender turnaround times /12
Technology Envestnet | Yodlee wins open banking rights /08
GLOBAL WATCH What’s happening in the mortgage, broking and banking world in the United States and Canada? Here’s your snapshot of the news that matters most in North America
SUPPLY SHORTAGES PUSH UP U.S. INFLATION, MORTGAGE RATES mortgage rates have reached their highest point since mid-November, according to Freddie Mac’s Primary Mortgage Market Survey. The average 30-year fixed rate mortgage jumped from 2.73% to 2.82% week-over-week. Freddie Mac chief economist Sam Khater said the rise was mainly driven by supply issues. “Economic spending has improved due to the most recent stimulus, but supply chain shortages are causing downstream inflation, leading to higher mortgage rates,” he said. “While there are multiple temporary factors driving up rates, the underlying economic fundamentals point to rates remaining in the low 3% range for the year.” The 15-year mortgage fixed rate also increased, from 2.19% to 2.21%. Meanwhile, the five-year Treasury-indexed hybrid adjustable rate mortgage dipped two basis points to 2.77% week-over-week. US
www.brokernews.com.au MARCH 2021 EDITORIAL
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CANADIAN MORTGAGE DEBT RISES AMID LOW RATES, HIGH DEMAND the prevailing environment of low interest rates and sustained housing demand, Canadian households added approximately $108bn to outstanding mortgage balances by November 2020, according to Statistics Canada. This far outstripped the levels of borrowing in 2018 (roughly $46bn) and 2019 (around $72bn). “Governmentorchestrated measures, such as the Canadian Economic Recovery Benefit, the six-month mortgage deferral option offered by financial institutions and reductions to the Bank of Canada’s policy rate to its lowest level since the 2009 financial crisis have helped support the housing market while mortgage borrowing has remained resilient,” StatsCan said in its latest report. Another factor was robust growth in disposable income, which increased by 12.7% on a seasonally adjusted basis between the fourth quarter of 2019 and Q2 2020. IN
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U.S. NON-BANK LENDER LOANDEPOT REPORTS RECORD RESULTS cutting its IPO size, US non-bank mortgage lender loanDepot has announced a net AFTER profit of $547.17m for the fourth quarter of 2020 and $2bn in net income for the whole year. The non-bank’s earnings plunged 24.8% due to downsizing and its gain-on-sale margin fell 338 basis points to 498 basis points quarter-over-quarter. Its net profit for the fourth quarter was below its third-quarter result of $728.3m. Adjusted net income was also down to $375.7m from $524.8m quarter-over-quarter. Despite the quarterly decline, the lender’s full-year revenue skyrocketed from $415m to $1.3bn. The quarterly drops were driven by the decline in its gain-on-sale margin, increased expenses from higher loan origination volume, and factors such as extra staffing costs to support business growth and marketing costs of its national brand campaign.
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This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss. Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008. The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.
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Justin, surfing pro
Mark, lawn bowls enthusiast
Fernanda, loves regional Victoria
Masih, Persian BBQ connoisseur
Dino, Italian food lover
Alan, motorbike fanatic
Sarah, women’s advocate
A network that celebrates you
“
Home loan specialist with heart.
With LNS you get the best of both worlds: The support of a team and the freedom to build your own business. We celebrate you as an individual, while offering the benefits of a strong and vibrant community.
Helping people is not just a 9-5 job for Maria Finneran. While by day her passion is to help homebuyers find the finance solution to suit their needs, out of hours, one of her many activities is volunteering with St Vincent de Paul helping the homeless. It’s with this compassion and empathy that Maria helps customers get financial and into a new home, whatever their circumstances. Thank you, Maria.
...PS, and when I’m not helping you build your business; you’ll find me on the bike. - Brendan O’Donnell Managing Director, Liberty Network Services
Maria, volunteer
We’re more than just an aggregator, because you’re more than just a mortgage broker. To find out more about becoming a Liberty Adviser, visit liberty.com.au/LNS.
Inspiring borrowers and footballers alike. Whether it’s securing a loan or securing a win on the football field – as a broker and coach, Brett Foster knows the importance of having a strategy in place to achieve one’s goals. Waking before 5am to carry out his own fitness regime each day, Brett brings the same discipline and determination to his work - staying sharp to help more people get financial. We reckon that makes you best on ground, Brett.
Brett, coach
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NEWS
LENDERS FIRSTMAC DIVERSIFIES INTO SMSF LENDING MARKET lender Firstmac is aiming to boost its presence in the SMSF lending space through the launch of a simple mortgage product designed to cut through the complexity of the market. Firstmac’s Residential SMSF mortgage is offering both variable and fixed rate options, in addition to boasting low fees and interest rates starting at 4.75%. Firstmac managing director Kim Cannon said the new offer aimed to deliver a streamlined and good-value alternative to “a poorly-serviced market segment”. NON-BANK
CLARKE TAKES HELM AT GROW FINANCE SME lender Grow Finance has announced the appointment of its new chief operating officer. Lee Clarke will bring his more than 30 years of experience in the finance industry to Grow Finance’s executive management. He has held leadership positions at GE Capital, Allianz Finance, ANZ and Orix Australia and managerial roles at Bank of Queensland and St. George Business Finance. Clarke will oversee the company’s daily operations, help implement its business plan and manage more than 50 employees. SYDNEY-BASED
“Brokers are perfectly placed to help us with this important Bounce Back initiative as they have an intimate knowledge of their SME customers” Cory Bannister Chief lending officer, La Trobe Financial
Commercial Loans
Andrew Gaze, renowned Australian basketball player
LA TROBE FINANCIAL HELPS SMALL BUSINESSES BOUNCE BACK SME owners have done it tough during the pandemic, but La Trobe Financial and the NBL want to put a spring back in their step non-bank lender and wealth manager La Trobe Financial has joined forces with the National Basketball League to help struggling small businesses ‘Bounce Back’ in 2021. La Trobe Financial has partnered with the NBL – which the group has sponsored since 2006 – to provide 10 Australian small businesses that have been negatively impacted by COVID-19 the chance to obtain a $10,000 grant. Cory Bannister, La Trobe Financial’s chief lending officer, said the initiative was a natural extension of the group’s decades AUSTRALIAN
of helping support its customers. “We’ve worked closely to support our customers through some challenging times over the last year, and now we want to help Australian businesses propel forward to make up for lost time,” Bannister said. “Brokers are perfectly placed to help us with this important initiative as they have an intimate knowledge of their SME customers and are often their clients’ trusted adviser, so they know better than most which small businesses could really do with a helping hand.” The Bounce Back promotion runs through the NBL season and is fronted by Australian basketball legend Andrew Gaze.
There are ten $10,000 grants, totalling $100,000. The program aims to help SMEs adapt to a new way of working, be it pivoting to outdoor dining or home delivery, improved online capabilities or other means of boosting their ability to operate in the current climate. Entries close at 10am AEDT on 10 March. “I’m enjoying bringing this promotion to life during the NBL matches and looking forward to connecting with the winners and sharing their stories with basketball fans across the country,” Gaze said. Small businesses interested in applying should head to nbl.com.au/LaTrobe and describe in 250 words or less how a $10,000 grant would help them recover momentum. “We are pleased to partner with La Trobe Financial to help small businesses in need bounce back,” said Hungry Jack’s NBL owner and executive chairman, Larry Kestelman.
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NEWS
A G G R E G AT O R S PURPLE CIRCLE ADDS LENDERS TO PANEL Purple Circle Financial
AGGREGATOR Services has welcomed
three new non-banks to its panel of lenders. Products from RedZed, Mortgage Mart and Valiant Finance will now be available to its network of brokers as part of the group’s larger efforts to widen its range of solutions for consumers. “As an aggregator, it is essential we partner with innovative lenders who offer a wide range of products and services to suit the ever-changing lending landscape,” said COO Frank Paratore.
MORTGAGE CHOICE OFFERS NEW WHITE LABEL PRODUCT has announced its second white label solution, to address the “common broker pain point” of delayed lender turnaround times. Unveiled at the aggregator’s 2021 national conference, Home Loans Propel is the first white label product on market to be backed by Australian Mortgage. “[It] will revolutionise the way our brokers serve their customers, giving them the ability to offer a verified home loan approval in 15 minutes,” said Emma DupontBrown, general manager of product. MORTGAGE CHOICE
John Kolenda, CEO, Finsure
FINSURE HITS NEW RECORD OF $2BN IN SETTLEMENTS Major loan settlement growth and a big bump in broker recruitment at the back end of 2020 have provided a huge boost to Finsure Finsure closed December 2020 with settlements for the month up 37% from December 2019, achieving $2bn settlements in one month for the first time. Additionally, Finsure recruited 94 brokers during the last quarter, bringing its network to 1,910 strong – a 15% increase year-on-year. In results announced by the group’s ASX-listed parent, BNK Banking Corporation, Finsure’s total loan book sat at $50.2bn at the turn of the year. AGGREGATOR
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“We are pleased by the momentum in the Finsure business,” said CEO John Kolenda. “Loan lodgements during the quarter surpassed $12.89bn, up 46% year-on-year and 15% quarter-onquarter – a good forward-looking indicator for the business. With record-low interest rates, Finsure expects continued buoyant demand for residential mortgage finance.” Finsure is celebrating its 10th year in 2021 and started the year with a revamp of the group’s branding. “I am very proud of all we have
achieved over the past decade, and the Finsure offering has been significantly enhanced since the business commenced trading in 2011,” Kolenda said. “Finsure has become one of the fastest-growing aggregation businesses by offering a diverse lending panel, flexible commission models, academy, marketing and lead generation and comprehensive mortgage broker support services.” Kolenda said Finsure’s growth had been accelerated by its merger two years ago with BNK, which recommenced on-balance sheet lending during the reporting period and recorded its third-highest quarterly settlements on record of $36m. As a result of the settlement growth, on-balance sheet loans grew to $306.2m, up 14.4% year-on-year and 8.9% quarter-on-quarter.
“We are pleased by the momentum in the Finsure business. Loan lodgements during the quarter surpassed $12.89bn, up 46% year-on-year” John Kolenda CEO, Finsure
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In real life, your clients need alternative solutions.
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Disclaimer: All applications are subject to the credit provider’s credit criteria. Terms, conditions, fees and charges apply. ©Pepper Group Pty Limited ABN 55 094 317 665; AFSL 286655; Australian Credit Licence 286655 (“Pepper”). All rights reserved. Pepper is the servicer of home loans provided by Pepper Finance Corporation Limited ABN 51 094 317 647. Pepper Asset Finance Pty Limited ACN 165 183 317 Australian Credit Licence 458899 is the credit provider for asset finance loans. Pepper Money Personal Loans is a brand of Pepper Group Pty Limited. Credit is provided by Now Finance Group Pty Ltd, Australian Credit Licence Number 425142 as agent for NF Finco 2 Pty Limited ACN 164 213 030.
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NEWS
TECHNOLOGY TWO CATEGORIES ADDED TO FINTECH AWARDS has announced that two new categories will be included in its fifth annual Finnies awards. “One of the reasons we adjust the awards on offer every year is to ensure they truly represent the remarkable achievements of our sector,” said FinTech Australia CEO Rebecca Schot-Guppy. Excellence in Open Data and Hall of Fame will be included among the 18 categories at the 2021 Finnies on 9 June at the Forum, Melbourne. The Excellence in Open Data award will go to the company best managing and controlling its data. The Hall of Fame will commemorate a group that has made a lasting impact on the Australian fintech industry’s overall development. FinTech Australia is calling for entries and also taking enquiries for further sponsorships and partnerships for this year’s Finnies.
CONSUMER DATA SHARING: KEY DATES Source: ACCC
FINTECH AUSTRALIA
EFFI RAISES $1.2M FOR SMART BROKER PLATFORM broking technology company Effi has raised $1.2m in seed funding to propel the development of Australia’s “smartest mortgage broker platform”. The funding comes at an opportune time for Effi to boost its expansion locally and offshore. The fintech also recently partnered with RateCity to showcase brokers who are using Effi as top brokers, and to help build their profiles on high-traffic websites. Effi is now gearing up for the next stage of growth following the successful closing of a seed funding round that included leading Australian seed investment group Investible and US-based Hustle Fund, as well as mortgage industry leaders and brokers. “We’re delighted to announce we’ve raised a significant amount of funds to propel the company’s growth,” said Effi founder and CEO Mandeep Sodhi. MORTGAGE
“This [CDR] accreditation will enable Envestnet | Yodlee to continue to bring the best financial data and intelligence to Australia’s banks and fintechs” Tim Poskitt Country manager Australia and New Zealand, Envestnet | Yodlee
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Major ADIs
Phase 1: 1 July 2020
Phase 2: 1 Nov 2020
Phase 3: 1 Feb 2021
Non-major ADIs
Phase 1: 1 July 2021
Phase 2: 1 Nov 2021
Phase 3: 1 Feb 2022
Reciprocal data holders
Phase 1: March 2021
Phases 2 & 3: July 2021
Phase 1 includes Savings accounts, call accounts, term deposits, current accounts, cheque accounts, debit card accounts, transaction accounts, personal basis accounts, GST or tax accounts, personal credit or charge card accounts, and business credit or charge card accounts Phase 2 includes Residential home loans, investment property loans, mortgage offset accounts and personal loans Phase 3 includes Overdrafts (personal and business), business finance, investment loans, lines of credit (personal and business), asset finance, cash management accounts, farm management accounts, pensioner deeming accounts, retirement savings accounts, trust accounts, foreign currency accounts and consumer leases
ENVESTNET l YODLEE GRANTED OPEN BANKING DATA RECIPIENT RIGHTS The ACCC has approved American fintech data provider Envestnet | Yodlee as an accredited data recipient in Australia’s fledgling open banking scheme data aggregation and data analytics platform for digital financial services Envestnet | Yodlee has qualified as an accredited data recipient under the Consumer Data Right. The ACCC made the announcement on 19 February, meaning the fintech is one of the few firms to receive ACCC approval as an accredited data recipient under the CDR open banking scheme. The others are Frollo, Credit Simple, illion Open Data Solutions, Regional Australia Bank and Intuit QuickBooks Australia. The open banking scheme provides consumers with access to their banking data, as well as the ability to safely transfer it to trusted parties to receive personalised advice, products and services. LEADING
Tim Poskitt, country manager for Australia and New Zealand at Envestnet | Yodlee, said being one of the first global data aggregators to receive CDR accreditation was testament to the US company’s commitment to innovation in Australian financial services. “This accreditation will enable Envestnet | Yodlee to continue to bring the best financial data and intelligence to Australia’s banks and fintechs,” Yodlee said. “By collaborating with regulators and delivering these capabilities to financial service providers, consumers will be in a position to make better financial choices and decisions based on their data, behaviours and personal situations.”
Envestnet | Yodlee head of international business Jason O’Shaughnessy said the company was committed to Australia, “a key market where we’ve been for more than a decade”. “Our active engagement with the CDR regulator and Australia’s open banking regime will continue, as will our adherence to the highest local and international standards for data security, regulatory compliance and consumer privacy,” O’Shaughnessy said. The company also launched its Australia and New Zealandspecific responsible lending product last month. The Envestnet | Yodlee Credit Accelerator will enable financial service providers to access quick and accurate consumer data. It can generate a comprehensive report with minutes instead of weeks, including income and expense summaries demonstrating compliance with responsible lending guidelines so lenders can make educated decisions.
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HELPING SMALL BUSINESSES BOUNCE BACK
WIN $10K
FOR YOUR SME CLIENT
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Simply visit nbl.com.au/latrobe and tell us in 250 words how your client could use $10k to bounce back
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NEWS
MARKET BUYERS KEEN TO PURCHASE PROPERTY — SURVEY intentions to break into the housing market remained strong despite the COVID-related lockdowns in some parts of the country at the start of the year, the latest poll by CommBank shows. The homebuying intentions of Australians continued their upward trajectory in January after consistently increasing towards the end of last year, according to CommBank’s Household Spending Intentions series. The poll showed that the number of mortgage applications and Google searches related to home purchasing were higher in January than a year ago. AUSTRALIANS’
LOW INTEREST RATES PREDICTED TO CONTINUE record-low home loan rates continue to be set, with a 1.69% offer having just appeared on the market. “Interest rates will remain at rock bottom for the next three years,” said Canstar money editor Effie Zahos. “Fixed rates are likely to rise before variable rates do as the longer-term bond market starts to anticipate monetary tightening a few years ahead.” There are currently 138 home loan rates below 2.0% on the market, according to Canstar data. Customerowned Greater Bank is offering the market-leading low of 1.69% on its one-year fixed rate for owner-occupiers paying principal and interest. NEW
CONSUMER CREDIT DEMAND DECLINES AS MORTGAGE DEMAND RISES The latest quarterly Equifax Consumer Credit Demand Index shows the appetite for credit is waning, but on a positive note the rate of decline is slowing credit demand continued its decline in the December quarter, down 21.9% year-on-year. But data shows the volume of credit applications for mortgages has remained notably robust. Despite the overall continued downward trend for consumer credit, the Equifax Quarterly Consumer Credit Demand Index found “encouraging signs” that the rate of decline is slowing compared to the prior quarters of 2020. While demand for credit cards (-31.7%) and personal loans (-28.13%) is still depressed, the buy now, pay later (BNPL) and auto loan categories seem to be stabilising. Generation Z continues CONSUMER
to be the strong driver of BNPL demand, accounting for 25% of total applications. Equifax general manager of advisory and solutions Kevin James celebrated the positive signs. “Despite the decline in overall credit demand year-on-year, we have seen some steady growth from the September quarter, which is a positive sign following the more extensive COVID-19 lockdowns,” James said. “This has been driven by improvement in auto lending in many states, as well as personal loan applications. Across all states, the market showed strong resilience, even in Victoria, which was affected by the second wave of
COVID-19, with numbers in the last quarter of 2020 improving considerably.” While mortgage applications are not part of Equifax’s Consumer Credit Demand Index, the group acknowledges that they are a good indicator of homebuyer demand and housing turnover. Equifax’s housing data revealed home loan applications for the December 2020 quarter were up by 19.3% from a year ago, with WA the true standout, recording the highest growth at 50.9%. “Demand for mortgages has now experienced growth for the sixth consecutive quarter driven by low interest rates, stimulus for first home buyers and the HomeBuilder program, as well as Aussies returning home.” Strong mortgage demand was also seen in Queensland (+28.2%) and the ACT (+26.6%). NSW and Victoria were more subdued, increasing by 16.4% and 9% respectively from the December quarter the year before.
“Despite the decline in overall credit demand year-on-year, we have seen some steady growth from the September quarter, which is a positive sign” Kevin James General manager advisory and solutions, Equifax
DEMAND FOR CONSUMER CREDIT CONTINUES TO FALL Source: Equifax Consumer Credit Demand Index, December 2020 quarter
Consumer credit demand Credit cards reduced
Buy now, pay later reduced
-31.7%
-1.5%
Mortgage demand Mortgages increased
+19.3% 10
-28.1% Auto loans
Auto loans reduced
-2.8%
Personal loans reduced
Down by -2.8% Demand up in NT (+7.4%), WA (+6.8%), ACT (+2.7%), SA (+0.4%)
Led by Tasmania (-15.5%) Improved demand for auto loans in all states except Victoria and Tasmania
Demand down in Victoria (-11.7%), NSW (-0.8%), Queensland (-0.3%)
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NEWS
INDUSTRY BODIES FHLDS GIVES A BOOST TO CUSTOMER-OWNED BANKS First Home Loan Deposit Scheme has boosted home loan growth in the customer-owned banking sector, according to the Customer Owned Banking Association. The sector posted a gain of 1.32% over the December quarter, more than double the average increase for the overall banking system of 0.57%. COBA CEO Michael Lawrence said the FHLDS scheme was a substantial contributor to this growth, as it encouraged young buyers to enter the market and explore lending options. “More than 8,300 first home buyers have now purchased a property with a loan from one of the 20 customer-owned banking institutions on the scheme’s panel of lenders.” The reissuance of about 1,800 unused guarantees from the previous financial year will also provide aspiring buyers with an opportunity to break into the market. THE
LAST-MINUTE RUSH FOR HOMEBUILDER GRANT number of successful sales of new homes is expected to surge again in March as buyers try to take advantage of the government’s HomeBuilder scheme before its extended deadline, according to the Housing Industry Association. The scheme was extended beyond its original deadline to 31 March. However, the grant has been lowered to $15,000. “The March surge will not be of the same quantum as December due to the lower grant offering,” said HIA chief economist Tim Reardon. There was a substantial surge in demand for new homes in the December quarter as buyers finalised their contracts before the deadline. Home sales during the month increased by 91.8%, making it the second-strongest month for new homes in the 20-year history of the HIA sales report. THE
Mike Felton, CEO, MFAA
MFAA ENCOURAGED BY LENDERS’ COMMITMENT TO FASTER TURNAROUNDS The peak body representing brokers is working hard to shorten lender turnaround times and is confident these efforts will eventually pay off MFAA is hopeful lender turnaround times will improve this year, says CEO Mike Felton. In a video message to MFAA members, he outlined the peak body’s efforts to tackle long loan application processing times. “We’ve had extensive discussions with lenders,” Felton said. “We’ve focused on the four majors for two reasons – one because of the concentration of volume but also because that is where the majority of the branch competition is at play.” Felton said there was “almost a perfect storm” in December with larger loan volumes than anticipated and a shortage of lender resources. THE
“I had distressed calls from many of you, some close to tears to express just how impossible the situation was and the dire risk that it posed to your business.” Felton said the difference between branch and broker turnarounds made it hard for brokers to compete and posed a “serious threat to our industry”. “When you hear about turnarounds of three to five days in branch and yet in broker of 10, 15, 20, 25 days, clearly there is a problem.” Contributing factors included responsible lending changes, COVID-19 disruptions, record loan volumes, staff shortages, cashback offers, different first and
third party processes, and rework on applications. Felton said he had also spoken to aggregators, the Australian Banking Association and the government, and had placed the issue on the agendas of the MFAA national forums. “It is a top priority for the MFAA and should be a top priority for everyone.” The big four banks had expressed an intent to align first and third party channel processing times. “Now that’s a major acknowledgement I found exceptionally encouraging and is fundamental to our broker channels being able to compete going forward,” Felton said. “I’m confident that from the work the MFAA, aggregators and lenders are doing … we are finally on the right track on this one to get some meaningful traction, to get some long-term improvement.”
FIRST HOME BUYERS BENEFITING FROM FHLDS Source: ABS/NHFIC
FHLDS settlements as a proportion of total first home buyer purchases, March–June 2020
20%
“When you hear about turnarounds of three to five days in branch and yet in broker it’s 10, 15, 20, 25 days, clearly there is a problem” Mike Felton CEO, MFAA
15% 10% 5% 0%
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Qld
NSW
Tas
ACT
SA
Vic
WA
NT
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FE AT URES
COVER STORY
COMMERCIAL PROMISES CUSTOMER GROWTH
As Australia continues to recover from 2020’s pandemic-driven recession, the commercial loan market is also picking up speed and brokers are being encouraged to get on board businesses have experienced a tough time over the past 12 months, and while conditions are not likely to return to normal until the population has been vaccinated, there are plenty of positive signs of a post-COVID-19 recovery. Continuing low interest rates and Australia’s low number of pandemic cases compared to Europe and the US is helping the country’s SMEs. There’s been a strong uptick in local manufacturing and a demand for light industrial and commercial warehouse space. A rebounding SME market is providing opportunities for brokers who don’t operate in this space to offer commercial loans to their residential customers who run businesses. Australian Broker asked representatives from commercial lenders NAB, Pepper Money, Liberty, La Trobe Financial, Thinktank and Equity-One to explain what services they offer and how brokers can diversify into this space. AUSTRALIAN
Commercial loan products NAB’s executive for commercial broker, Chris Thomas, says the bank has supported Australian businesses for more than 160 years and currently lends around $3bn a month to SMEs. “The broker channel is a crucial component of this,” he says. “Leveraging the strength of Australia’s largest business bank, brokers can access NAB specialists across a broad range of industries, including health, aged care, agriculture, manufacturing, transport and logistics and professional services.” Thomas says NAB prides itself on the quality of its bankers and their ability to work in partnership with brokers. “Structuring credit for SME customers is the art of banking, and to do that you need to understand the industry, macro and micro economic factors impacting cash flows and the customer’s strategy.” Malcolm Withers, head of commercial at Pepper Money, says
“Brokers can access NAB specialists across a broad range of industries, including health, aged care, agriculture, manufacturing, transport and logistics and professional services” Chris Thomas, executive for commercial broker, NAB the non-bank lender started offering commercial loans in 2019 after being asked to do so by its broker partners and to bring the customer approach Pepper is known for to commercial. “Understanding each individual customer’s story in order to assess an application is so important. You don’t get through box-checking. Truly understanding who the customer is and what they’ve gone through provides a better outcome,”
Withers says. “There was a big gap in the marketplace of underserved customers who weren’t really seeing the support they needed … they were looking for a real alternative to what the lenders and what the current market was there to offer in a tightening credit environment.” Pepper’s commercial loans include full-doc and alternative-doc products for prime and near prime customers. Withers says the near prime product is designed to support customers
COMMERCIAL BROKING SPIKES TO NEW HIGH Based on a survey of 12 aggregators:
27.4% of brokers are now writing commercial (up from 22.1%)
Year-on-year settled volume grew 10%, with book values up 6.7%
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Source: MFAA Industry Intelligence Survey Report, Oct 2019 to March 2020
4,486 brokers in the 6 months to March 2020 were actively offering commercial products – up from 3,670 in the previous 6 months
State growth period-on-period: NSW +21.5%, Vic +22.6%, Qld +24.4%, WA +23.7%, SA +18.8%
From Oct 2019 to March 2020, the value of commercial lending settled by mortgage brokers totalled $9.7bn, up $700m or 7.78%
Estimated total book value of those surveyed was $44.4bn
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Chris Thomas, executive for commercial broker, NAB
with commercial loans who have gone through a life event that may have caused them to shut down their business or start up a new one. “We know business can be a very fickle thing,” he says. Pepper caters for all customers who need commercial lending solutions for up to $3m in loan size, whether they want to buy an investment property or commercial property to operate their business out of, or to access equity and cash flow to support them in growing their business. Liberty recently celebrated its 15th year in commercial lending and has earned a solid reputation as one of Australia’s leading specialist lenders, says group sales manager John Mohnacheff. “We have continued to enhance our commercial product range, creating flexible processes that make it easy for business partners to help customers get financial,” he says. “By assessing each application on a case-by-case basis, Liberty can provide more tailored options and offer commercial lending solutions that other lenders can’t.” Liberty offers prime, non-prime and low-doc loan options to suit all kinds of commercial borrowers. It also has SMSF lending solutions for those looking to grow their super funds by investing in commercial or residential property. Mohnacheff says the non-bank lender also provides secured
and unsecured loan options for business customers. “So, whether you’re supporting a business owner looking to buy office space, shopfronts, warehouses or perhaps helping an investor to grow their portfolio, Liberty can help.” La Trobe Financial is one of Australia’s oldest non-bank lenders, operating for almost 70 years. It has been providing commercial property financial solutions to finance brokers for over 30 years..
Malcolm Withers, head of commercial, Pepper Money
profiles, including self-employed business owners, investors, developers and SMSFs. Commercial loans are available on a Full Doc, Lite Doc® and Lease Doc basis and can cover individuals, companies, trusts and SMSFs, as well as catering for retail shops, offices, light industrial and rural. “We have engineered our products and removed additional product accreditation requirements that other lenders may require, to
“Pepper Money is the only non-bank in Australia that provides a 100% offset sub-account against commercial loans” Malcolm Withers, head of commercial, Pepper Money “We are focused on providing finance brokers with a genuine alternative to the major banks for commercial funding across a variety of borrower and asset types and are renowned for our willingness to assist those who have been overlooked by major lenders to find suitable solutions,” says chief lending officer Cory Bannister. He says La Trobe Financial is known for having one of the broadest product suites in the market, catering for a range of funding scenarios and borrower
ensure first-time users can write them confidently and competently,” Bannister says. Thinktank general manager partnerships and distribution Peter Vala says the non-bank lender was formed in 2006 “to simplify commercial property lending for both brokers and customers, and provide flexible solutions (full-doc, mid-doc, quick-doc) to improve a borrower’s cash flow position – both personally and professionally”. “Although well known as a commercial property funder, we
continually seek to enhance our product range, which now includes commercial SMSF, residential and residential SMSF,” Vala says. “All our offerings are straightforward set-forget facilities with no annual reviews, no regular revaluation requirements and no ongoing fees. Our extended loan terms available up to 30 years also greatly assist a customer’s monthly cash flow.” Equity-One was established in the late 1990s as a specialist non-bank commercial lender. Managing director Dean Koutsoumidis says the term ‘private lending’ was used back then, but the market has matured and there are now several alternatives to banks. “We like to think we are one of them,” Koutsoumidis says. “We focus on commercial loans (purchase, refinancing, cash-out of residual stock) for short terms (one to two years), but our pricing and terms are much more competitive than other short-term options.” He says Equity-One tries to be relevant to borrowers who cannot be accommodated by their mainstream bank in the time frame required. “We understand that once our clients get ‘their ducks in a row’, they sell, restructure their debt, or go back to their mainstream bank. For this reason, all our loans have no break costs or exit penalties, so as to provide the greatest flexibility to our clients,” Koutsoumidis says. www.brokernews.com.au
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Advantages of commercial loans Bannister says La Trobe Financial commercial loans offer a number of benefits to both brokers and borrowers. For brokers, there is less “touch time”, with easy-to-use products and processes, no commission clawback, and access to a broad product range that is “unmatched in terms of breadth, depth and flexibility” and supported by a $5.5bn Credit Fund. Brokers received the support of an experienced team. “We have 45 dedicated and experienced commercial credit analysts standing ready to assist brokers and their clients,” Bannister says. “We understand commercial loans often require a conversation, so we make all credit staff directly contactable.” For borrowers, the benefits include set-and-forget products; multiple income verification options for PAYG employees, self-employed owner-operators and property investors; and a flexible approach to credit. At Thinktank, Vala says while its loan products provide competitive solutions, it is how these products are applied to a customer’s unique situation that creates various advantages. “Such as using projected contributions when servicing a loan for a newly established SMSF,” he says. “Or using a mid-doc loan as a solution today that converts to a full-doc loan in a few months’ time at a lower rate with no conversion fee.” Vala says this is why every broker accredited with Thinktank has a dedicated relationship manager to workshop all loan applications to identify and structure the right lending solution. For the customer, the main benefit of Thinktank’s set-forget solutions is simplicity. “With no annual reviews or regular revaluations, there’s less admin time, accounting fees and risk. Borrowers also have the flexibility of committed terms of 25–30 years,” Vala says. Equity-One’s Koutsoumidis says while there are a plethora of lenders in an ever-maturing market, brokers typically only need a cache of four or five that specialise in their fields. “A reliable non-bank commercial lender plays an important role for brokers because it may be their ‘second phone call’ after hearing that the bank cannot help,” he says. As a specialist lender, Liberty’s 16
commercial loans are highly flexible and can be tailored to suit an extensive range of lending needs, Mohnacheff says. “We know that not all customers fit into the same box, and our goal has always been to help more customers get financial.” Mohnacheff says Liberty continues to receive positive feedback on its fast response times and free-thinking approach. “Customer service is something we take seriously. One of the ways we demonstrate this is by offering direct access to our underwriting teams to discuss any unique or complex scenarios.” There are three main advantages of Pepper loans, says Withers: “very fast” assessment of applications, “seamless” settlement, and an easy commercial lending process. Once approval occurs, Pepper is able to successfully turn around settlement from the point of application in as little as four weeks, allowing businesses to quickly access cash. The loan process is easy for brokers to understand and use – they can submit online directly into credit queue, removing all the “traditional roadblocks” that slow applications down, Withers says. “But the biggest thing is allowing the brokers to talk directly to our credit managers … which is really important to ensure the broker is able to tell that customer’s story
John Mohnacheff, group sales manager, Liberty
urgently looking for a small loan, a farmer seeking to acquire a new header, or large enterprise seeking expansion finance, our relationship-centric bankers are
“By assessing each application on a case-by-case basis, Liberty can provide more tailored options and offer commercial lending solutions that other lenders can’t” John Mohnacheff, group sales manager, Liberty directly to the credit manager if there are any questions.” Withers says Pepper also provides customers with more access to equity through higher LVRs; cash flow flexibility with longer loan terms; and online banking tools. “We’re the only non-bank in Australia that provides a 100% offset sub-account against commercial loans,” he says. Thomas says NAB understands that SME customers come in all shapes and sizes. “Whether it is a sole proprietor
there to work with brokers to match banking solutions to the need at hand,” he says. “There is no business too small or large for us to help prosper.” Benefits of diversification The commercial loan space offers plenty of scope for brokers, says Mohnacheff. “In the residential arena, brokers hold around 60% market share, which is significantly higher than the commercial space. As a largely underserviced industry, commercial
lending offers ample opportunity for brokers to spread their wings and take advantage of this untapped potential, he says. “Diversifying into this space can help brokers not only attract new customers but also service their existing customers who may require commercial lending support,” Mohnacheff says. Withers says for brokers diversification is all about providing more solutions to the customer and integrating commercial into their offering. “They build stronger ties with the customer, certainly a longer-term relationship with the customer who’s reliant on them not just for their home loan but also the success of their business. It increases and strengthens the revenue stream of any broker’s business by providing an additional product which the client can take to their customers.” Withers says he keeps being told by brokers that commercial loans are too hard and complex. He received an email from a broker recently thanking the Pepper BDM for the training provided to help him write his first-ever commercial loan. “They found it easier and less work to do the commercial loan themselves than the process the
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He says the benefits are many, including diversified revenue sources; expanding business capability, which attracts more customers; protecting your existing customer base; and regulatory protection. “Brokers would find it highly unlikely that trail commissions on commercial loans would ever be reviewed or removed,” says Bannister. The opportunities are right there: “Brokers already have all of the lead generation tools to make the transition to commercial lending they need: their CRMs,” he says.
Cory Bannister, chief lending officer, La Trobe Financial
banker had them complete just to refer someone to him. The banker had them running around, chasing the customer and the accountant for everything while he sat there and wrote the paper.” Withers says Pepper is seeing growth in the number of brokers taking up commercial, because the lender has simplified the process for lodging transactions. For the broker, the commercial space offers varied lending solutions, says Vala, therefore more avenues for income and, critically, client retention and network expansion. “It also opens up new opportunities in meeting customer needs and developing deeper relationships with their advisers,” he says. “Financially, there is a higher level of income (trail and upfront commissions) over residential, and the duration of a commercial loan and SMSF is longer than residential, so it stays on the books for longer.” Thomas says that as many brokers are small business owners themselves, they can bring empathy and understanding that resonates with business customers and makes the role “highly rewarding”. “It also means products and
services can be closely tailored to specific needs of the customer across all aspects of their working and personal life,” Thomas says. A broker’s key asset is their relationship with their client,
Broker training and support Thinktank uses a dedicated relationship manager model so a broker can workshop all transactions, whether commercial, residential or SMSF, to find the best way to assist their customer and a structure finance solution. “We also regularly assist in marketing activities and the education of a broker’s referral partners to assist in gaining traction and then momentum in the commercial lending arena,” Vala says. “A broker does not have to have any commercial experience to deal with Thinktank. Our dedicated RM team will workshop every transaction with a broker to find an effective solution.” Vala says this approach offers hands-on one-on-one direct training for brokers so they can progressively
“We have streamlined our lending processes to keep approval steps simple. If you can write a residential loan, you can write a commercial loan” Cory Bannister, chief lending officer, La Trobe Financial says Koutsoumidis. “A key part of this is the relevance of the services they offer, and commercial non-bank lending is one part of it. Consumer lending will invariability flow on to business or commercial enquiry, at the very least at some later point for their clients. It’s good to be ready to be able to service this area,” he says. Bannister says diversification proves a finance broker’s core value proposition – choice, trusted advice and finding solutions where others could not, with current market conditions prime for showcasing that.
improve their knowledge and quickly gain the confidence to pursue more commercial and self-employed finance opportunities. More formal education is offered through initiatives such as Commercial 101 and 201 sessions and training on Developing Prospecting Skills. Brokers can contact their CRM or Thinktank for more information. “We also set out to develop educational content for brokers wanting to enhance their commercial lending knowledge and facilitate a wider range of lending
solutions to their customers, ” says Vala. At Equity-One, the focus is simply to be available to brokers to walk them through any part of a commercial quote, approval, settlement, and post-settlement service, Koutsoumidis says. “We pride ourselves on word-of-mouth and repeat business, so our connection to our brokers is our main focus.” Withers says more brokers are starting to do commercial loans “off the back of making it a more simplified process for them to lodge transactions”. “I’m regularly asked by other lenders how we do it because they haven’t yet cracked the approach of being able to do this for brokers,” he says. “We do a lot of training for our brokers in this space and also our aggregator partners.” Withers says the training helps brokers understand their capabilities, identify opportunities within their customer base and build their confidence to be able to approach customers and have a conversation. “The biggest part of any credit assessment is gathering the information to tell the customer story,” he says. Pepper holds broker training quarterly, but it can be offered more regularly if needed. Withers says two thirds of training is helping the broker get comfortable and one third is technical. “It starts at the next self-employed application for a home loan. By applying the process, they’ve gathered that information to be able to understand that customer’s story and create opportunities on that journey for commercial and asset finance.” There is a big gap in the market “where customers are begging to tell their story”, Withers says. Diversification allows brokers to become that person who listens to their story and becomes their business relationship manager. “You’re their go-to person – customers are looking for that.” As the bank behind brokers, Thomas says NAB continues to support brokers as trusted advisers to their customers. “Our national team of dedicated BDMs continue to be available and active both in person and via digital tools where it makes sense. They are a dedicated team very focused on service and bringing the best of NAB to our brokers,” he says. www.brokernews.com.au
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first point of call and to provide the guidance they need, when they need it.” Mohnacheff says through its highly regarded ‘Do More’ training programs, Liberty BDMs work closely with brokers to help them explore and gain knowledge of new areas of lending. “We know that branching out can sometimes feel overwhelming, but our BDM team is here to walk you through the process from start to finish.”
Commercial Broker home loan applications process for “complex” home loan transactions. “Improved processes are helping us manage the high volumes of applications we are receiving and mean commercial broker BDMs and broker-aligned bankers can be engaged from the very beginning of the application prior to lodgement,” Thomas says. Commercial lending SLA turnarounds have actually improved compared to previous
“All our offerings are straightforward set-forget facilities with no annual reviews, no regular revaluation requirements and no ongoing fees’’ Peter Vala, general manager partnerships and distribution, Thinktank
Peter Vala, general manager partnerships and distribution, Thinktank
NAB’s more than 600 brokeraligned bankers are embedded in the local community and work with brokers to back business customers via 160 business banking centres with a focus on customer satisfaction and honouring the broker partnership. Thomas says brokers who are looking to diversify into business lending have an obligation to build up their commercial acumen to be the trusted source of advice and support for businesses. He says the banks supports numerous education and training initiatives, such as the NAB Digital PD Day, and there are also regular seminars on complex finance options such as trade and invoice financing. “For those already established, brokers have access to NAB bankers and credit managers to speak directly about transactions.” La Trobe Financial keeps the commercial process easy for new broker entrants by mirroring its residential loans process, Bannister says. “We have streamlined our lending processes to keep the approval steps simple. If you can write a residential loan, then you can write 18
a commercial loan, and with our experienced commercial team of 45 senior commercial underwriters and 25 dedicated national BDM support staff, we can provide the necessary assistance and training. “It is important for lenders to support brokers who are not familiar with commercial lending and to encourage them to explore these options, assisting them with growing their business.” Bannister says La Trobe Financial’s processes are uniform, so that brokers who write residential can easily diversify into commercial. Brokers who want to specialise in commercial lending should align themselves with financial planners and accountants as a good source of referrals. “They should also make themselves known to their aggregator BDM/state manager as a broker who specialises in commercial transactions.” Liberty is committed to helping brokers build strong, resilient businesses and is always looking for new ways to support their success, Mohnacheff says. “With access to one of the largest BDM teams outside the major banks, we strive to be our business partners’
Lender turnaround times Bannister says regrettably turnaround times did push out a little over the past 12 months during the pandemic despite the best efforts of La Trobe Financial. “In a matter of days, we were faced with the need to pivot their full credit teams to a work-from-home environment and a need to help existing borrowers navigate an uncertain repayment environment, meaning credit staff were redeployed to handle a significant increase in hardship requests,” he says. “We were also required to take a cautious approach to credit assessment in unprecedented times to ensure the broker and the lender were protected from any undesired outcomes. “I am pleased to report today that things are looking much brighter and our turnaround times have normalised as a result,” Bannister says. He says it is also worth noting that commercial loans take longer due to commercial valuation reports taking five to 10 days, compared to two to three days for residential. Mohnacheff says by opening the lines of communication between Liberty and its business partners “we have been able to significantly improve our turnaround times, which benefits brokers and customers alike”. Thomas says NAB is in the business of service, and “improving our time to credit approval remains a key priority”. The bank has taken steps to speed up and simplify its processes, including streamlining its NAB
years, Vala says. “This is because we have continued to invest in more staff and integrated digital technologies to improve processes and service levels. A side benefit of this process improvement is the time returned to a RM to invest in relationships with brokers and aggregator partners,” he says. Pepper is able to “deliver an answer to a customer on whether we can support them in a very fast manner”, Withers says. “It’s a market-leading pace. We’re delivering answers to customers on assessment within three days, which is unheard of in the commercial space.” Koutsoumidis says he has a simple answer: “We’re fast.” “Brokers need access to their lender, and they want it ‘now’. This is only a flow-on from their clients’ expectations,” he says. “We live in a world where waiting for returned phone calls is not OK any more. From customer engagement to document preparation, and even aftersettlement service, brokers have high expectations, and rightly so.” Market trends as support ends Mohnacheff says despite the challenges faced throughout the pandemic, the commercial property market has held up remarkably well, and some experts believe it could be set to boom. “As more Australian consumers turn to online shopping, demand for commercial warehousing continues to grow. And, with record-low interest rates, savvy investors are eager to get in on a
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slice of the action,” he says. While government stimulus has played a vital role in supporting the commercial market, the support won’t continue indefinitely. “We’ve seen states around Australia act hard and fast with snap lockdowns – and witnessed the outstanding results in terms of stopping the spread,” Mohnacheff says. “While some businesses will still experience interruptions, these are likely to be far less severe than those experienced in 2020, which is good news for all.” Vala says the retail and office markets have suffered, with a slower and lower volume of sales and some commercial tenants needing rental relief. However, sectors such as industrial and warehouses continue to perform well. “Initial indications point to a market that is continuing to stabilise if not generally improve, with economic confidence returning as well as the desire to borrow,” Vala says. Borrowers are reacting to ongoing uncertainties by putting adapted plans in place when looking to buy a property, including alternative exit strategies. “We’ve observed that borrowers have been factoring in the removal of government incentives to minimise future impact,” he says. Koutsoumidis says, “To say that
presented many challenges and uncertainty for the commercial lending sector, including affecting borrowers’ cash flow and property values. “From mid-March, when the nation went into lockdown … the outlook for commercial property in particular looked bleak,” he says. However, the government’s quick actions, including JobKeeper and a moratorium on commercial lease evictions, along with an improving COVID-19 outlook, stabilised property values. Bannister says over the past 12 months there has been steady demand for SMSF loans secured against commercial property, “typically from SMEs looking to purchase the premises they operate their businesses from, in many cases reducing their monthly cash flow requirement as they shifted from renters to property owners”. La Trobe Financial is actively promoting the SMSF sector to brokers. Bannister says there has been a recent return of investors into the small- to medium-scale commercial property space, with a particular focus on light industrial properties as investors look to take advantage of higher yields than residential can offer. “We are settling a high proportion of what were traditionally seen as ‘bank deals’ due to our speed of delivery and the ease of dealing with
“All our loans have no break costs or exit penalties, so as to provide the greatest flexibility to our clients” Dean Koutsoumidis, managing director, Equity-One Mortgage Fund 2020 has been ‘interesting’ is an understatement. The effect of COVID has been felt differently in each state, with Victoria having felt it the hardest due to the lockdowns. That said, commercial lending continued (from remote offices), but we did see an interesting development – rates dropping.” While there are positive signs in the market, activity may be patchy depending on how COVID-19 plays out in 2021, Koutsoumidis says. “The withdrawal of government subsidies and stimulus measures will also be interesting to keep an eye on. I suspect such action will be measured. We are, in my view, well placed for a healthy, steady recovery.” Bannister says the pandemic has
our products and processes.” Bannister says that while the pandemic’s reveberations are likely to be felt for at least the next two years, the company was of the view “that there will be recovery of business and asset values in most segments in the longer term, and [we] have set our risk appetite accordingly”. Thomas says NAB is seeing good levels of growth in most industries as the post-COVID recovery gains pace. “Both traditional and unique borrowing opportunities are emerging, either for acquisition of plant and equipment or digital transformation,” he says. “With low interest rates and government tax incentives it is a good time to borrow to meet these needs.” Thomas says there’s a resurgence
Dean Koutsoumidis, managing director, Equity-One Mortgage Fund
of niche manufacturing as Australia looks to shore up its supply chain, which is encouraging for business capital investment. “The positive flow-on impacts for jobs and allied industries is very exciting,” he says. Many of NAB’S business customers have come back strongly from the market challenges of 2020. “This sentiment is echoed by the NAB Monthly Business Survey, which shows most indicators are now broadly at or above pre-virus levels,” Thomas says. Industries such as tourism and hospitality continue to face challenges, and this will need to be watched as support measures taper off, but encouragingly “a large section of the Australian business community is strongly rebounding and no longer reliant on these measures”. Withers says the biggest trend he has seen is the strong performance of manufacturing and wholesale businesses, industrial warehouses and factories. “We’re starting to see a lot more customers who were traditionally renting premises now start to look to buy their own commercial property to operate out of.”
He says Pepper is very focused on supporting Australian businesses buying commercial premises, especially in a low-interest rate environment. Demand for boarding houses has been strong on the east coast, but retail and office space has “softened considerably”. “We have a two-speed market. If you look at retail and office space in the suburbs, it’s performed at a different speed than retail and offices in the CBD. It’s the workforce working from home going down to the local cafe to get their coffee of a morning that’s having a real impact,” Withers says. “People have been doing a lot more work around their homes, so businesses attached to the renovation industry operating out of industrial warehouses are doing well.” Pepper is monitoring what the end of government support, such as JobKeeper, will mean for businesses going forward. Withers says with business sentiment coming back strongly, including solid retail growth, he is hoping the impact of the removal of JobKeeper won’t be harsh. AB www.brokernews.com.au
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PEOPLE
Have an interesting deal? Have a particularly difficult or interesting deal? Why not share it with us? Email:
antony.field@keymedia.com
BIG DEAL MPA Top 100 broker Sze Chuah is the director of MLS Finance, a Sydney brokerage specialising in property companies and investors. Chuah navigated a tricky situation to help a property investor, who had a sizeable debt on his home, refinance his loans THE FACTS
Client 36-year-old property investor
Loan size and term $7m; five years interest-only for investments; 30-year loan term
Goal To refinance all loans; improve interest rates, repayments and cash flow
Location Lender Owner-occupied Bank of property Queensland in Sydney; investments in NSW, Vic, Qld
debt and repayments, David had an executive-level income, which showed that he had the means to repay affordably. David was not the owner of the construction business. However, a significant portion of his salary was from
THE SCENARIO
The client, whom we will call David, is the general manager of a large but family-owned construction services firm. He came to MLS Finance through a referral partner, who advised us that David had approached them having had some previous loan applications knocked back over the past year. David is a pleasant and easygoing guy, but he was frustrated with the applications that went to residential and commercial lenders, which unfortunately did not succeed due to his complicated situation. He seemed to be a bit worn out and defeated, and he said he was starting to think there was not going to be any solution. Nevertheless, he decided to reach out through his property advisers and speak to us anyway. David is a sophisticated property investor with a significant investment portfolio of more than 20 properties. Additionally, he also has a sizeable debt on an owner-occupied property. He not only wanted to improve the terms across all his loans but also to position himself to continue to capitalise on opportunities in the property market and buy more investment properties. David wished to consolidate a large part of his portfolio as much of it had rolled onto principal and interest and was on high interest rates with several third-tier lenders. What appeared to be a simple task of finding a lender that allowed the servicing of such a large amount of debt became an extensive credit search. Despite his significant 20
Aggregator Vow Financial
team, and they eventually confirmed that they would accept the deal. Upon submission, with more than 20 properties there were an enormous number of documents that had to be verified. Still, once our associate Jarrod Mackenzie and our loan processor Jay Villegas got through the paperwork and submitted the deals, we managed to get the application submitted and approved. We also had some assistance from Schuster, our BDM at BOQ, with whom we have had a great relationship with for many years. David’s interest rate savings alone were over $65,000 a year, plus he received a $2,000 rebate for his troubles. Our team was also extremely pleased and proud of the outcome, not only because we were able to help a client with an extensive portfolio and complex situation, but also because the result meant so much to him. He was a bit surprised when we presented him with the approval, and became quite excited and expressed his gratitude. He said he wished he had just come to see us from the start.
We find that with a scenario that makes commercial sense, even though most lenders wouldn’t do the deal, there’s often a solution bonus income, with the complication being that this bonus income was attributable to a non-equity profit-share arrangement. Therefore, and given that this is relatively uncommon, most lenders were not willing to consider his situation. THE SOLUTION
Sze Chuah Director, MLS Finance
Based on MLS Finance’s experience with other tricky deals, we knew that we needed to get a level of assurance from a lender before submitting the application. First of all, we workshopped the scenario with credit hotlines and business development managers. We had a number of third-tier lenders who were happy to accept the income; however, we were also pleased when one of our mainstream lenders, Bank of Queensland, also confirmed it was comfortable with the type of income. Our BDM, Max Schuster, had sent the scenario to Bank of Queensland’s credit
THE TAKEAWAYS
Don’t give up. We often find that with a scenario that makes commercial sense, even though most lenders would not do the deal, there is often a solution. It involves presenting the scenario and/or client in a particular light and providing a story and mitigating circumstances for the lender’s risks. Don’t burn your relationships. The fact that we had a strong working relationship with a number of lenders allowed us to get straight answers from them. We have had many tough situations with delays and items missed in years gone by, but maintaining a reasonable and professional working relationship really helps when trying to pull favours. It was not the easiest of deals, but certainly the size and financial impact it had on the client definitely made it worth the effort. AB
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Redefining commercial finance Thinktank has a proven track record of providing straight forward commercial property finance solutions, with no surprises• Support your self-employed and investor clients with: • ‘Set and forget’ loan terms from 6 months to 30 years • Purchase, refinance and equity release ($100K – $3M) • SMSF finance options • National Relationship Manager support • The deepest commercial property and SMSF lending experience in the market
Into people. Not just transactions. 1300 781 043 deal@thinktank.net.au
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NE WS ANALYSIS
CREATING OPPORTUNITIES FOR WOMEN IN BROKING
As the world celebrates International Women’s Day, Jane Counsel, lead adviser on the MFAA’s Opportunities for Women program, is hoping the finance industry will come together to encourage more females to become brokers
22
PROPORTION OF FEMALE BROKERS IN INDUSTRY FALLS TO RECORD LOW Source: MFAA Industry Intelligence Service Report,10th Edition
Number/proportion of female brokers in the industry Number of female brokers
4,500
27.8%
28.3%
27.4%
Proportion of female brokers
30% 27.3%
27.1%
27.1%
27.0%
27.2%
26.9%
3,267
3,361
3,746
3,779
3,871
25% 3,679
3,000
3,708
3,500
3,700
4,000
3,312
MFAA has completed its third Opportunities for Women report, to be released on International Women’s Day on 8 March. It examines why females remain under-represented in broking and identifies new initiatives to turn this around. Jane Counsel, who provides leadership training, coaching, and diversity and inclusion consulting services through her company Jane Counsel & Associates, helped set up the MFAA’s Opportunities for Women program as its lead adviser. As former head of diversity and flexibility at Westpac, she helped the bank achieve 40% of women in leadership roles two years ahead of schedule and become a top three employer for LGBTI employees. Opportunities for Women is also supported by the MFAA Community Panel, made up of various brokers and sponsored by ANZ, CBA, Suncorp, AMP, Beyond Bank, Connective, Heritage Bank, ING, Prospa and Smartline. Counsel says the first MFAA report into female broker numbers was published in 2018. “That kind of set the benchmark around knowing what was our true representation, what were the key themes that were emerging, what were the differences in perceptions of men and women, and what were the key opportunities,” Counsel says. “The data was telling them that they were losing women and where they had forecast female representation to be in mortgage broking was actually not meeting that expectation and was actually going backwards.” Data from the latest MFAA Industry Intelligence Service Report THE
20%
2,500 15% 2,000 1,500
10%
1,000 5% 500 0
0% Oct 15– Apr 16– Oct 16– Apr 17– Oct 17– Mar 16 Sep 16 Mar 17 Sep 17 Mar 18
Apr 18– Oct 18– Apr 19– Oct 19– Sep 18 Mar 19 Sep 19 Mar 20
“We’re three years into this MFAA data now, and we really need the industry to start getting behind some of these initiatives” shows that the proportion of female brokers in the industry fell by 0.3 percentage points to 26.9% in March 2020. This was its lowest-ever share and the first time it had fallen below 27%. The number of female brokers also fell. Between October
2018 and October 2019, there were 412 fewer female brokers in the industry – a reduction of 11.2%. Counsel says this trend has been observed for a while, and the reasons include work-life balance and the pressure of women
being primary caregivers. Thirty-three industry participants were surveyed in October 2020 and asked why they thought more women than men were leaving the industry. The top three responses from females were: pressure of being a primary caregiver and managing their work-life balance; perception of a ‘boys club’ culture; and harder to earn an income and/or increased legislative requirements. Male respondents’ top three reasons why women were leaving the industry were: starting families and/or the pressures of family and
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caring; stress from continuous changes in compliance and lending criteria; and lack of job security and becoming harder to earn an income. “There’s definitely added stress around complexity now with the additional onus of compliance that’s putting pressure on women. It’s also putting pressure on male brokers,” says Counsel. “People say it’s harder to earn an income, and it’s much more difficult to get outcomes as a broker than it was previously.” The research also shows there has been a big improvement in male perceptions about the barriers women face in broking. When male respondents were asked in 2018 whether there were any barriers to women working in the industry, 71.73% said there were none. In 2020, that figure dropped to 50%. Counsel says there has also been a big drop in the number of males who don’t think women are under-represented in broking, from 59% in 2018 to 48% in 2020. She says this is due to a number of factors – awareness of the data, greater conversations between men and women, and even the MeToo and Black Lives Matter movements. “We’re definitely seeing a lot more awareness, we’re definitely seeing a lot more good intent; there’s a lot of investment in initiatives to support women. “I guess the question is, are we putting our focus and our money where it’s having the most impact, and is there more we could be doing, and we definitely think there is.” Another recurring barrier for new female brokers is financial outcomes not meeting expectations. “So that’s really sparked a whole heap of conversations around how do we help women better prepare for working in this industry.” There is a push to provide more support for new female brokers, especially sole traders. The MFAA is working on a pilot peer-to-peer support program for women which aims to provide career advice and professional support. It is expected to launch before the end of the first quarter 2021 in Queensland and SA. “That’s a really good opportunity for people to share their stories and say, ‘I’ve been in your shoes, and this is how I managed that challenge that you have’,” Counsel says. “If we’re going to move the dial around diversity, what are the things we can be doing to support each other as your aggregator, as a
broker, as someone with influence in this industry. We’re hoping some solutions might emerge from the peer-to-peer group as well.” Counsel says the other new initiative, which will benefit both female and male brokers, is to create an e-book to showcase brokers’ personal situations, including single parents, those caring for young children, same-sex relationships, and people with sporting or study commitments. “People are looking for that information; they’re looking for some additional stories and support.” Counsel says boosting the number of female brokers will happen through greater industry engagement. “As an industry body, all the MFAA can do is promote, encourage and be an advocate for change. We’re three years into this data now and we really need the industry to start getting behind some of these initiatives. “There’s lots of bits and pieces that are going on in the industry that different aggregation groups and banks and brokers are doing, but in terms of a holistic industry-wide approach, this is an opportunity everyone can get involved in.” Counsel says there is no industrywide program that creates training and development opportunities for
Jane Counsel, lead adviser, Opportunities for Women program
“Broking is very appealing to women for two reasons: there’s no structural pay gap, and also the flexibility of running your own business it offers” women. So she and fellow business coach Michael Trencher, who has worked as a broker manager for various lenders and mentored women, have set up thrive4women, which they hope to launch soon. “It’s actually responding to many of the needs women say they have in their industry.” Counsel says in thrive4women participants will complete a coaching and professional development program and then become part of an ongoing alumni. “This creates connectivity – it gives a sense of community and allows the participants to continue their growth and development.” Counsel says female brokers say they want a sense of community and to tap into networks. “If you’re a female, you’re working largely on your own in running a
broking business, and you’re new to the industry and you’re going to events, and there might be five other women in the room – sometimes that can feel really, really lonely.” The Pathway program is another MFAA initiative designed to attract more women to broking. Historically, the profession has skewed towards male brokers because they entered the industry from banking or other finance areas, but many younger brokers now come from a variety of different industries, Counsel says. “From the outside looking in, broking is very appealing to women for two reasons: there’s no structural pay gap … and also the flexibility that running your own business offers.” “In recent years, we’ve certainly been trying to promote that
through the various broker mags and media about what are the positives for women working in this industry, because we believe that is very strong.” Conversely, Counsel says expectations also need to be managed through the peer-to-peer and pathway programs to set people up for success. “People coming into broking might expect they would be on a salary straight away, but the reality is that it takes at least six months.” Counsel says business owners are increasingly realising the business benefits of gender and cultural diversity. “If you get the gender piece right and women are naturally 50% of our population, then it will naturally and organically help make the industry more inclusive to everyone.” MFAA CEO Mike Felton says he is pleased the industry is acknowledging the measurable difference in the experience that women have in broking. “Now we need to take action as individual businesses – and as an industry – to continue to champion and drive change.” AB www.brokernews.com.au
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PEOPLE
Do you have a question for our broker mentors? Email your question to:
antony.field@keymedia.com
BROKER ON BROKER
Jenel McClelland has been a mortgage broker for almost 30 years. The founder of Lake Macquarie family business Green Apples Finance Australia began her career in finance at Rural Bank in 1979. Here, she answers questions about women in the industry, scaling up, diversification and the end of JobKeeper
Financial support measures such as JobKeeper and rent relief will end soon. How can a broker support clients who are in financial difficulty? Keep close to your clients in A the next few months. Email to advise them you are there to help them, whatever happens financially. You are part of their team to guide them through it. If you have built good relationships with your clients, they will already know this. Keep in mind clients in industries that will be most affected when JobKeeper benefits end, for example hospitality, sales and small businesses. You can consolidate their loans, lower repayments or talk to the bank for them and discuss hardship and deferment of instalments. Often they are feeling bad enough already, so ringing the bank to ask for help is hard. Sometimes they just need someone to talk to.
Q
How do women entering the broking industry find support and mentors? I always smile when I see more A women joining our industry. When I started 30 years ago, there were very few females. Women are very compassionate and understanding, and sometimes clients prefer to deal with a woman. There are some wonderful support groups for women. I believe it is an
Q
obligation of all aggregators to form a group for women and men, with mentoring as well. My aggregator, Loankit/Finsure, has a wonderful group called Women in Finsure, and it is also open to men. This was the brainchild of my wonderful and forward-thinking Loankit BDM, Noushig Megerditchian. I am a sole broker. How do I know when to expand my business and take on more staff? Great question. It’s hard to A know. Just remember, don’t put the cart before the horse. When you feel your business is obtaining effortless referrals and you are becoming overwhelmed, you need to look at taking on more staff. The key is to hire the right staff. If you are a people person, hire admin staff to take the processing, etc., off you.
Q
As a residential broker, what steps do I need to take to diversify into other areas? You can diversify internally A and externally. Externally, I have joined amazing network groups (BNI is very good), and in these groups there are good people in your ‘circle of influence’. These will include conveyancers, real estate agents, accountants, etc. Keep looking until you find the right people, and then refer your
Q
Jenel McClelland, founder and senior mortgage broker, Green Apples Finance Australia
“I always smile when I see more women joining our industry. Women are compassionate … and sometimes clients prefer to deal with a woman” clients to them for their services. Internally, we offer all types of finance, but residential mortgages are our mainstay. Keep learning and work with what you know best,
but add more areas of finance as you grow. I often see brokers trying to offer everything in half measures. My mantra is “Do it once, do it right”. AB
PITSTOP MENTORING Are you new to the industry, or simply keen to learn from experienced brokers who have words of wisdom to share? This is your opportunity for pitstop mentoring! If you have a question you’d like a senior broker to answer, contact us and look out for an expert answer in a future issue.
24
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FE AT URES
OPINION
86 400 DEAL BOOSTS COMPETITION Rebecca Schot-Guppy is CEO of peak fintech body FinTech Australia, which represents and supports more than 300 Australian fintech companies. She has welcomed NAB’s full acquisition of neobank 86 400 as a watershed moment for the sector love an underdog. So it’s no wonder that, when we look at neobanking and the rise of fintechs in Australia, we like to position it as some form of David and Goliath battle. We get behind and champion the upstarts looking to upend our century-old legacy financial institutions. But behind the headlines and clichés, the reality is much more nuanced. The story of the growth of fintechs – both in Australia and across the world – has never been one of mass upheaval. Due to regulations, it simply can’t be. It’s one of partnerships, collaboration, evolution and overall industry growth. Never has this been more apparent than in National Australia Bank’s acquisition of 86 400 last month. Following the announcement of this deal, the questions emerged about whether the neobanking sector had reached its climax and if fintechs would actually generate competition and improve consumer outcomes. I want to stress, however, that this deal is a watershed moment for the fintech sector. It’s an exit that will encourage more local and overseas investment into Australian neobanking and bank technology. This, in turn, will over time create more innovation, further competition and better outcomes for consumers. We talk about improving competition a lot when discussing the overall impact of fintech companies in Australia. With lending, I believe there are two key areas in which the fintech sector in particular has driven change. The first of these is functionality and accessibility. I’d argue that all lenders in Australia have improved the way they process and approve loans, and that’s in direct response to the rise of fintech lending. What used to be several meetings with a bank has been boiled down to a few online forms and emails. In some instances, it’s an in-app approval process. Either through acquisitions, partnerships with fintechs or in-house
innovation, most major lenders have shifted their operations around this trend. Fintechs are driving this shift by launching new and innovative services that are forcing other companies to invest in technology to remain competitive. The second area is the reduction of fees and other hidden charges. Fintechs have cut many lending fees out of their operations and are applying pressure on the major lenders to follow
AUSTRALIANS
expect to see more acquisitions and consolidation in the lending sector as the major banks look to secure themselves a foothold in this new era of hypercompetitive lending. It’s likely that more lenders will introduce banking as a service too, as Volt has done. But in turn, I would also assume that new lenders will emerge. They may be smaller existing fintechs that are now able to raise a better valuation due to the
The underlying point about banks buying fintechs is that, by acquiring their competitors, they will ultimately end up creating more competitors
Rebecca Schot-Guppy CEO, FinTech Australia
suit. This is largely being driven by consumer education. Most fintechs promote their services as either fee-free or fee-reduced alternatives to what’s offered by the major lenders. In doing so, they explain to consumers what fees they should be looking out for and trying to avoid. This puts pressure on the entire lending industry to examine what fees they are charging consumers and look at how they can tighten their margins to remain competitive. Both factors will play a role in increasing competition as open banking technology starts to take hold in Australia. Over time it will become even easier to switch lenders. When refinancing in a few clicks becomes a reality, those who have the lowest fees and the best technology will be the benefactors. The underlying point about banks buying fintechs is that, by acquiring their competitors, the major banks will ultimately end up creating more competitors. Exits encourage investment, and that is instrumental in creating a more robust fintech industry. Going forward, I would
86 400 exit; overseas players launching in Australia; or brand-new fintechs that only now see a path towards investment and business success. What we won’t see is one home loan or business lender emerging as a dominant force and stealing vast amounts of market share off the major banks. It won’t be like Google dominating internet searches, Apple leading smartphone sales or Facebook becoming world leader in social media. There is no doubt the major banks are moving more slowly in this space, largely due to the compliance obligations and risk they have to manage. But they are not so far behind that they are obsolete. Australians recognise and trust our major banks. The majority have an existing relationship with them, be it through a home loan or a savings account. Banks, too, are key players in the fintech ecosystem, funding fintechs and partnering with them for joint innovation. The sector is heading in the right direction. Inch by inch it’s becoming more competitive and more diverse, and ultimately that is in everyone’s interest. AB www.brokernews.com.au
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DATA
NORTHERN TERRITORY
SA SPOTLIGHT
Darwin’s rental markets continue to be tight and competitive A shift in the location preferences of many house hunters due to the pandemic has resulted in Darwin becoming a competitive rental market. In fact, the rental vacancy rate in Darwin continued to fall in January, dropping to 0.8% from 0.9% in December, according to SQM Research’s latest figures. The difference was more apparent on an annual basis: Darwin reported a much higher vacancy rate of 3.2% in January 2020. Asking rents in Darwin were among the highest across state capitals in January of this year, particularly for houses. On an annual basis, weekly house rents increased by 27.5% to $580, while unit rents jumped by 5.8% to $393. Darwin Community Legal Service solicitor Caroline Deane said the current competitive rental market had resulted in tenants struggling to find long-term accommodation. “It’s low-income earners who are the ones who will have particular difficulty finding an alternative property, but it is happening across the board, to all demographics,” she said. Area
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
Metro (H)
$513,500
3.2%
3.2%
rent
yield
$450
4.8%
Metro (U)
$305,000
5.1%
-0.2%
$370
6.4%
Country (H)
$427,500
2.6%
3.0%
$490
6.1%
Country (U)
$304,000
0.0%
-4.3%
$370
6.4%
TASMANIA
Tasmania has ramped up its social housing program to build more homes The Tasmanian government has pledged an additional 764 homes to be delivered over the next three years under the Community Housing Growth Program. Housing Minister Roger Jaensch said the homes would be spread across 10 local government areas and support jobs in every region of the state. “Importantly, there are further rounds of the program to follow, and we remain committed to reaching the target of up to 1,000 new social houses to be delivered under this specific initiative,” he said. The homes are just a part of the government’s overall $300m investment in building homes and ending homelessness. The investment is expected to deliver more than 1,500 new homes over the next three years. Over 400 homes are due in the next 12 months. There are 24 homes due for delivery in July in East Devonport. The state government has provided $3.7m towards the construction of these homes. Area
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
rent
yield
Metro (H)
$565,000
2.9%
9.3%
$450
4.4%
Metro (U)
$420,000
1.2%
5.3%
$395
5.0%
Country (H)
$375,000
2.9%
9.4%
$340
5.1%
Country (U)
$294,000
0.5%
4.3%
$280
5.2%
26
‘UNUSUAL LEVEL’ OF DEMAND Significant buyer interest alongside shrinking housing supply has the potential to push up prices in Adelaide Australian property market as these markets usually take a breather over Christmas and January,” Trimble said. A 1960s three-bedroom home in Linden Park attracted 200 prospective buyers to the inspection, 74 of whom made offers. It sold well above the initial asking price, said John Cullen, director of Raine & Horne Kurralta Park. “When the property was listed for sale online, it immediately attracted 3,500 hits generated by our Amplify social media campaign. We then had 80 groups through on Saturday, a further 45 through on Sunday, with the balance attending an evening open midweek,” Cullen said. Trimble said that while demand for properties in Adelaide had remained elevated, supply was continuing to shrink. Property listings declined by 20% in January on an annual basis. “A lack of supply against a backdrop of robust demand has the potential to drive up values by between 5% and 8% in 2021.”
Adelaide housing market is experiencing a surge in demand amid tight supply – a perfect recipe for price growth, according to the latest report from Raine & Horne. Raine & Horne general manager James Trimble said the “amplified” interest in real estate could be attributed to the border closures. “With many people staying in South Australia for the summer holidays due to limited access to other states, the state’s property markets have continued to clatter along,” he said. Raine & Horne agents have reported strong interest from aspiring buyers, as evidenced by long queues at open for inspections. Trimble said this level of buyer enquiries was “very unusual” for Adelaide. For instance, a house listed in Aldinga Beach, which had a price range of $420,000 to $440,000, attracted 79 interested buyers at its first open home. “This level of interest is a significant result for Adelaide real estate and the broader South THE
HOUSING MARKET FUNDAMENTALS — ADELAIDE Source: CoreLogic
Property stats for the month to 19 February 2021
New listings (-23.7% y/y):
Houses
1,593
492
$490,000
46
House sales
Median price
Days on market
127
$343,000
53
Unit sales
Median price
Days on market
Units
SUBURB TO WATCH: HENLEY BEACH SOUTH Median price (houses) $960,000
Median price (units) $262,000
12-month growth
3-year growth
Average annual growth
Gross rental yield
2%
22%
4.9%
3%
12-month growth
Average annual growth
Weekly advertised rent
Gross rental yield
-2%
-1.5%
$340
7%
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AUSTRALIAN CAPITAL TERRITORY
The HomeBuilder scheme has been a hit among buyers in the ACT The ACT has reported unexpectedly strong take-up of the HomeBuilder scheme, Federal Housing Minister Michael Sukkar has said. The state was only expected to register 500 applications, but the actual number reached 2,000. “As far as punching above its weight, the ACT being four times higher than what Treasury expected when we set up the program is a really phenomenal result,” Sukkar said. ACT senator Zed Seselja said the HomeBuilder scheme had been received positively by many Canberrans who are in the process of acquiring properties from existing projects. For instance, the multi-unit DKSN development in Dickson has reported strong demand from buyers. Around 200 apartments in the development’s second stage were boosted due to the grant. “Here in the ACT to see those HomeBuilder projects going ahead is huge for the local industry,” Seselja said. Prime Minister Scott Morrison said the HomeBuilder scheme had exceeded expectations, with nearly 82,000 applications across the country. Area
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
rent
yield
Metro (H)
$766,500
2.7%
7.4%
$585
4.1%
Metro (U)
$477,051
1.4%
4.7%
$480
5.5%
VICTORIA
Melbourne is forecast to report house price gains in the double digits this year
HIGHEST-YIELD SUBURBS IN SOUTH AUSTRALIA Suburb
House
Gross rental yield
Median price
Quarterly growth
12-month growth
Average annual growth
SOLOMONTOWN
H
14%
$94,850
-2%
-13%
-4.9%
NORMANVILLE
H
11%
$366,250
5%
-2%
1.5%
PORT PIRIE WEST
H
9%
$116,000
5%
19%
-1.6%
VICTOR HARBOR
U
8%
$250,000
4%
-2%
1.3%
BORDERTOWN
H
8%
$165,000
14%
-1%
-0.7%
ELIZABETH SOUTH
H
8%
$166,500
-1%
-4%
-0.7%
DAVOREN PARK
H
8%
$175,000
3%
6%
-1.1%
ROXBY DOWNS
H
8%
$227,500
-12%
-16%
-0.8%
GOOLWA SOUTH
H
7%
$360,000
7%
7%
2.6%
NEW PORT
U
7%
$257,000
-3%
0%
-7.2%
Houses in Greater Melbourne and regional areas with access to the city continue to register robust demand, supported by ultra-low interest rates and strong buyer sentiment. This could result in an 8% to 12% capital gain over the next year, according to the latest prediction by RiskWise Property Research. “We’re seeing plenty of buyers who put their searches on hold in 2020 suddenly rushing back to buy. Stock levels are very low and auction markets in particular are very competitive,” said Peter Wargent, co-founder of BuyersBuyers.com. The report said double-digit growth was likely for houses in Melbourne given the low stock. “While there’s ostensibly a reasonable number of listings in Melbourne, competition for familysuitable homes in desirable areas is still running at a high level, and price growth is very likely,” Wargent said. But due to lower-than-expected population growth, some greenfield areas carry a higher level of risk in the short term due to high supply. Area
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
Metro (H)
$778,000
0.3%
5.2%
rent
yield
$430
3.0%
Metro (U)
$600,000
0.0%
5.4%
$415
3.7%
Country (H)
$435,000
4.6%
9.9%
$350
4.4%
Country (U)
$325,000
1.6%
6.9%
$300
5.0%
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DATA
WESTERN AUSTRALIA
REIWA calls for a permanent stamp duty rebate for off-the-plan deals The Real Estate Institute of WA (REIWA) is urging all political parties ahead of the state election this year to ensure the formalisation of the stamp duty rebate for off-the-plan purchases. REIWA president Damian Collins said it was crucial that the 75% rebate should become a permanent feature of the state’s property tax system to ensure ongoing construction jobs and limit urban sprawl. “Without this ongoing incentive, the demand for apartments will soften, impacting the steady supply of diverse housing and the creation of jobs,” he said. Without the rebate, off-the-plan buyers pay stamp duty on the combined value of the land and the build, unlike house and land packages which are taxed solely on the value of land. “This discrepancy puts an unfair financial burden on those looking to buy off the plan and forces some people to look elsewhere, in some cases pushing people to buy in Perth’s outer suburbs. This is in direct contradiction to the government’s commitment to reducing urban sprawl and promoting infill developments,” Collins said. Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
rent
yield
Metro (H)
$515,000
2.1%
1.0%
$380
4.1%
Metro (U)
$380,000
0.0%
-2.6%
$350
4.9%
Country (H)
$380,000
4.1%
8.8%
$360
5.2%
Country (U)
$258,000
9.0%
2.8%
$310
7.4%
73
Cleared
41
Uncleared
7
Clearance rate
85.4%
PERTH Total auctions
21
Cleared
5
Uncleared
5
Clearance rate
50%
Quarterly
12-month
Weekly
Gross
growth
growth
median
rental
rent
yield
Houses
Sydney Melbourne Brisbane
Adelaide
Hobart
Units
Darwin
$520,000
$732,500
$530,000
$443,000
$609,500
$490,000
Perth
$271,500
$0
$405,000
$100,000
$333,000
$200,000
$495,000
$300,000
$397,500
$500,000 $400,000
$520,375
$700,000 $600,000
$565,000
$800,000
Canberra
CAPITAL CITY HOME VALUE CHANGES Capital city
Weekly change
Monthly change
Year-to-date change
12-month change
Sydney
0.7%
1.9%
2.0%
2.5%
Melbourne
0.6%
1.3%
1.6%
-1.8%
Brisbane
0.3%
1.2%
1.9%
4.7%
Adelaide
0.1%
0.6%
1.3%
6.9%
0.4%
2.0%
2.8%
4.6%
0.5%
1.6%
1.9%
2.0%
Metro (H)
$1,010,000
1.2%
6.9%
$540
2.9%
Metro (U)
$725,000
0.0%
2.9%
$500
3.6%
Perth
Country (H)
$530,000
2.0%
6.3%
$400
4.1%
Combined 5 capitals
Country (U)
$452,500
2.3%
5.5%
$360
4.3%
28
Total auctions
$900,000
$700,000
There were only 565 properties available for sale in the Northern Beaches in January, according to the latest figures from SQM Research. Michael Ossit, director at STRAND Property Group, said the supply-demand equation in the region was “out of whack”. “It’s clear that one month on from the Northern Beaches lockdown, the market has strengthened even further with some sky-high prices being recorded,” he said. Some of the most popular suburbs include Allambie Heights, North Manly, Collaroy Plateau, North Narrabeen and Curl. Ossit said the low level of listings seemed to reflect that the lockdown had no adverse impact on the local property market. “Rather it may have delayed some people’s selling plans, which has dragged available listings down to critically low levels,” he said. Ossit expects conditions to remain tight, especially as interest rates stay at historical lows. “More people than ever are seeking their own slice of the Beaches real estate to call home,” he said. Median price
ADELAIDE
MEDIAN HOUSE AND UNIT PRICES
Supply of homes in the Northern Beaches has reached a ‘critical low’
Area
There were 2,094 homes scheduled for auction across the combined capital cities in the third week of February, up from 1,496 over the previous week. Of the 1,754 results collected so far, 84.4% were successful, down from the previous week’s preliminary clearance rate of 86.1%, which revised down to 77.1% at final figures. Over the same week last year, 2,517 homes went to auction and 72.7% were successful. Melbourne hosted 1,061 auctions in the week ending 21 February, up from 635 in the previous week and down from 1,248 this time last year. Of the 908 results collected, 82.2% were successful, down from the previous week’s preliminary rate of 87.8%, which revised down to 70.6% at final figures. The large revision was partly due to a spike in withdrawn auctions while the city was in lockdown. In Sydney, 769 homes went to auction, compared to 625 over the previous week and 963 this time last year. The preliminary clearance rate was 88.2%, up from 87.5% the week before, which revised down to 83.9% at final figures.
$650,000
NEW SOUTH WALES
WEEK ENDING 21 FEBRUARY 2021
$850,050
Area
CAPITAL CITY AUCTION CLEARANCE RATES
*The monthly change is the change over the past 28 days
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BRISBANE CANBERRA Total auctions
79
Cleared
61
Uncleared
5
Clearance rate
Total auctions
91
Cleared
54
Uncleared
14
Clearance rate
79.4%
92.4%
SYDNEY Total auctions
769
Cleared
577
Uncleared
77
Clearance rate
TASMANIA
MELBOURNE Total auctions
88.2%
Total auctions
1,061
n.a.
Cleared
746
Cleared
0
Uncleared
162
Uncleared
0
Clearance rate
Clearance rate
82.2%
n.a.
Note: A minimum sample size of 10 results is required to report a clearance rate.
QUEENSLAND
Area
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
rent
yield
Brisbane is poised to become one of the best-performing property markets Brisbane has remained resilient over the past year amid the negative impacts of COVID-19 on housing markets, said Michael Yardney, director of Metropole Property Strategists.“Increased demand for Brisbane houses has been underpinned by increasing consumer sentiment, historically low interest rates and internal migration considering the relative affordability of houses in Queensland compared to Sydney and Melbourne,” he said. Dwelling values in Brisbane rose by 4% on an annual basis to $527,826 in January, according to CoreLogic. A separate report from Westpac showed that prices in the city are tipped to surge by 20% between 2022 and 2023. “Brisbane is likely to be one of the best-performing property markets over the next few years,” Yardney said. He predicts several factors will drive positive growth in its property market, including the removal of overly restrictive lending rules. Furthermore, the likelihood of rates staying low for the next few years will continue to spur buyer activity.
Metro (H)
$567,000
0.8%
2.2%
$410
3.9%
Metro (U)
$407,000
0.3%
0.3%
$385
5.1%
Country (H)
$465,000
0.5%
1.1%
$400
4.6%
Country (U)
$397,000
1.3%
3.2%
$350
4.7%
Source: Except where otherwise stated, all data sourced from CoreLogic, December 2020
NICK YOUNG: TRAIL BOOK SALE EXPERT Sell your book. Keep your clients. Release working capital or start succession planning. 03 8508 6666 | 0417 392 132 | nyoung@trailhomes.com.au | trailhomes.com.au www.brokernews.com.au
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PEOPLE
Aggregator AFG
IN THE HOT SEAT
In 2019, Fi Dimos founded Bloom Finance, an Edgecliff brokerage servicing clients in Sydney and Canberra. Transferring the skills she gained from a career in reinsurance, Dimos succeeded in winning AFG’s Excellence Award just four months later Tell us about your career prior to becoming a broker. What skills were you able to transfer across to this role? A I enjoyed a wonderful career in reinsurance, working for large international companies, before starting my business as a finance broker. Reinsurance is where insurers buy insurance – they use reinsurers’ capital to protect their balance sheet and facilitate sustainable growth. There are so many reinsurance skills and experiences that I have transferred, such as understanding risk, risk appetite and the resultant impact on lender policy; as well as the importance of good relationships in all areas of the business. Clients are important, but so too are lenders, your peers, and every single person in the process. I managed large teams and budgets, where adherence to process, risk frameworks and compliance is critical. This experience is invaluable for a finance broker. I also learnt financial skills. Being able to get around a balance sheet and financials has been such an asset, particularly in the commercial finance space.
Q
What do you enjoy most about being a broker? A Of the three things I most enjoy, helping people is number one – hands down. From a residential lending perspective, it is the most amazing feeling when you help someone who can afford a loan but can’t get one. I have a wonderful client – bankrupt, but such a good person; he just had bad luck. He was finally able to buy a home with my assistance. Knowing I was able to add such value to his and his family’s lives is very rewarding. From a commercial lending perspective, it is wonderful to assist business owners in obtaining finance to enable them to achieve their vision. I have had the pleasure of doing deals for the most inspirational entrepreneurs. Secondly, I love mentoring young people, or anyone who needs guidance. I see it as a bit of giving back. I have met so many wonderful people as a result. And finally, I am delighted by the camaraderie in the finance broking industry, how we help each other. There are such wonderful people in this game.
Q
Q A 30
You are part of a female mentorship program. How has this helped your career? Yes. Katrina Rowlands has been my mentor since I started Bloom Finance in 2019 – how lucky am I! I didn’t have a lot
Fi Dimos, owner and principal, Bloom Finance
of confidence when I started. Like many women, we tend to downplay our strengths, underrate our ability, short-sell ourselves. Having a strong female mentor who has this insight as a fellow woman has been invaluable.
Q A
What drives you in your job as a broker? I’m always driven to get the best possible deal for my clients.
What are your goals for the future? Achieving a work-life balance. Starting a business at the height of A the royal commission and COVID has meant lots of hard work. My key goal is to work to live, not live to work. Be kind and act with integrity, and add value to every transaction. AB
Q
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THE CHOICE IS YOURS WITH
DECEMBER 2020 ISSUE 17.24
YEAR IN REVIEW COVID-19, a recession, bushfires and floods – 2020 threw up some monumental challenges. We asked industry leaders to look back on the year and at how 2021 is shaping up /14 ALSO IN THIS ISSUE… Big deal How Ray Ethell helped a financial adviser consolidate his debt /20 Real estate spotlight Darwin’s house prices are rising faster than in other capital cities /26 Tech partnership to speed up loans Finsure Group has partnered with fintech illion Open Data Solutions to provide a new integrated service for brokers /22
Brokers take on bankers in cricket The inaugural Bankers vs Brokers Twenty20 cricket match in Perth raised funds for the McGrath Foundation /23
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Restoring brokers’ confidence Wealth Today’s Keith Cullen suggests brokers hard-hit by regulation changes should diversify the services they offer /25
In the hot seat From restaurants to finance: GM Capital Solutions director Andrew Soo /30
9/12/2020 11:01:04 AM
MAGAZINE The only independent magazine dedicated to mortgage industry news, opinion and analysis
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SWITCHING PAYS Refinance cashback
3000
$
Switch your client’s home loan to Westpac and they could get $3000
First refinance application. Apply by 31/03/2021. Owner Occupier P&I and Investment Loans. Premier Advantage Package ($395 annual fee) and Flexi First Option Loans. Max LVR 80%. Min loan $250k. T&Cs, exclusions, fees apply.
westpac.com.au/brokers
Things you should know: Credit criteria, fees, charges apply. T&Cs available at Westpac. Offer current as at 18/09/2020. Apply by 31/03/2021 and settle by 30/06/2021. Available on Owner Occupier Principal and Interest repayments and Investment Loans. Only 1 $2,000 cashback per property refinance will be paid regardless of the number of loans involved. Only 1 $1,000 bonus cashback will be paid for the initial application regardless of the numbers of customers, properties or applications involved. Offer may be varied or withdrawn at any time. Minimum loan size $250k. Excludes Equity Access Loans, switches and refinances of home loans within the Westpac Group which include St.George, Westpac, Bank of Melbourne, BankSA and RAMS. Offer not available for Owner Occupier Interest Only loans or residential lending originated under family or company trusts. Premier Advantage Package terms and conditions apply. $395 annual package fee applies and is payable from an eligible Westpac Choice transaction account. You must hold a Westpac Choice transaction account to qualify and receive the benefits of the Premier Advantage Package. Read the Westpac Choice transaction account terms and conditions and consider if it’s right for you. See westpac.com.au. The cashback will be paid into a Westpac Choice transaction account within 60 days of settlement. The transaction account must be linked to the home loan at the time of settlement and kept open for 60 days after settlement. Tax consequences may arise from this promotion for investors and customers should seek independent advice on any taxation matters. © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714. 21052/0121
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