Australian Broker 14.13

JULY 2017 ISSUE 14.13

Competitive edge Two major real estate players break into the broking market /16

Beyond state lines The banks try to contain the SA bank levy, fearing it could spread /18

FIONA DICKSON One BDM’s story of how going above and beyond to help others in another country has deepened her connection with colleagues and clients back home /14

An unexpected outcome Industry associations band together to deliberate on self-regulation /21

ALSO IN THIS ISSUE ‌ To the rescue A no-nonsense NT broker gets her clients out of a blunder of a deal /22 Housing market data Analysis provides insight on where mortgage demand will be strongest /26 In the hot seat From hospitality to finances, this broker has figured out how to make it in a new industry /30

NEWS

IN THIS SECTION

Lenders Non-majors give the big four a run for their money /04

Associations FBAA calls on lenders to explain rate rises /06

Technology Domain partners with Lendi, expands into mortgages /10

Regulators MFAA CEO talks about self-regulating the industry /12

Consumers Property resellers earn $20.9bn in profit /08

www.brokernews.com.au JULY 2O17 EDITORIAL Editor Otiena Ellwand News Editor Miklos Bolza Production Editor Roslyn Meredith

DATES TO WATCH

Upcoming can’t miss events

ART & PRODUCTION Design Manager Daniel Williams Designer Martin Cosme

1 8 J U LY – 3 A U G U S T

2 5 J U LY

2 7 J U LY

Women in Business

MFAA skills webinar

FAST is hosting five state conferences specifically geared towards helping women succeed in broking. Women have been recognised by a number of aggregators as a growing segment of the industry

Polish your skills during this one-hour webinar hosted by the MFAA on “Responsible Lending: The intricacies that most brokers don’t get – and need to know”

MFAA National Excellence Awards State award winners will head to this national event in Melbourne to vie for the top prize at the end of July. More than 300 finalists were selected from across the country in a number of categories. The awards recognise the association’s core values of professionalism and integrity

Production Manager Alicia Chin Traffic Coordinator Freya Demegilio

SALES & MARKETING Sales Manager Simon Kerslake Account Manager Rajan Khatak Marketing and Communications Manager Lisa Narroway

CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Publisher Simon Kerslake Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

Otiena Ellwand +61 2 8437 4792 Otiena.Ellwand@keymedia.com.au

SUBSCRIPTION ENQUIRIES

tel: +61 2 8O11 4992 fax: +61 2 9439 4599 subscriptions@keymedia.com.au

2 - 10 AUGUST

15 AUGUST

16 AUGUST

Commercial Broker Forum

MPA Aggregator Roundtable

FAST is hosting four commercial and asset finance conferences to provide brokers with state-related insights that reflect the local market. Invitations will be sent out to FAST brokers

MPA Magazine is hosting a lunchtime aggregators roundtable that brokers can watch online for free. The panel features seven aggregators: Plan, Choice, FAST, Connective, eChoice, Outsource and Specialist. They will discuss commissions, the Sedgwick review and compliance

National Finance Brokers Day Dino Pacella founded this event back in 2015 to celebrate brokers and educate consumers. The goal this year is to raise $50,000 through charity drives for sick children

ADVERTISING ENQUIRIES

Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au Rajan Khatak +61 2 8437 4772 rajan.khatak@keymedia.com.au Key Media Pty Ltd Regional head office, Level 1O, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Bengaluru

26 - 27 AUGUST

11 - 13 OCTOBER

10 OCTOBER – 1 DEC

Property and Investing Expo

Credit Law Conference

Connective Conference 2017

Free seminars and over 100 exhibitors will be at the Melbourne Exhibition Centre to provide investors with insights and contacts to help build their portfolio and establish successful strategies

The 27th annual event in Surfers Paradise brings together banks, credit unions, regulators, associations and market disruptors to discuss the future of credit and lending

Connective is bringing its conference to Vic, WA, Qld, NSW and SA on various dates from October to December. The conference promises to inspire brokers with new business development strategies, marketing techniques, insights from industry experts, and workshops on health, mindfulness and more

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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.

NEWS

LENDERS Source: AFG Competition Index, June 2017

36% 32%

24% 20%

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6.67% 1.95%

2.50%

2.53%

2.61%

1.62%

2.36%

1.86%

3.49%

2.49%

4% 0%

AFG Home Loans

NEW

Mark Hewitt General manager of sales and operations, AFG

2.57%

12%

7.33%

16%

YEARLY MORTGAGE STRESS ON THE DECLINE

“If a lender is out of the market on service or price, [brokers] will look beyond the majors to meet the needs of their client.”

26.79%

May 2017

28%

8%

research shows fewer mortgage holders are under stress than they were a year ago, pointing to lower interest rates as the reason. Australian research firm Roy Morgan found that in the three months prior to April 2017, 16.8% of, or 666,000, mortgage holders were considered ‘at risk’ regarding their repayments, down from 18.4%, or 744,000, 12 months ago. These results come from a recent survey of more than 50,000 respondents nationwide, including 10,000 owner-occupier mortgage holders.

34.95%

June 2016

HOUSE

3.16%

price growth in Australia is set to slow in the second half of the year; however, it’s unlikely to prompt a housing crash, according to NAB’s economics team. While house prices and construction levels will remain elevated compared to historic norms, the “triggers for a major price fall seem absent”, NAB said. Even though significant measures have been taken to cool the housing market, demand for housing is fuelled by strong immigration and population growth. Unemployment also remains low.

NON-MAJOR LENDERS ARE BECOMING BIGGER PLAYERS IN THE MORTGAGE MARKET

7.68%

LONG-DREADED HOUSING CRASH UNLIKELY

AMP

ING DIRECT

Liberty

ME

Macquarie

NON-MAJOR MARKET SHARE ALMOST AT 35% Competitiveness among Australian banks is heating up, with the non-majors taking a much larger market share latest AFG Competition Index shows the non-majors have picked up nearly 35% of total market share – a figure that AFG general manager of sales and operations Mark Hewitt says reaffirms the value that mortgage brokers provide. “Mortgage brokers deliver true competition in the lending sector and provide real choice for consumers. If a lender is out of the market on service or price, they will look beyond the majors to meet the needs of their client.” The Index’s figures show market share slipping away from CBA, with overall share moving from 20.5% this time last year to 11.8% last month, Hewitt said. “With CBA, AFG believes this is THE

the result of a deliberate strategy to pull back from the investor and interest-only markets to meet the lending caps mandated by APRA.” Combined with its subsidiary Bankwest, CBA’s total market share dropped from 25.5% to 15.5% in the same time period, while NAB continues to increase its market share. “NAB has benefited from its recent actions to align its broker products with its direct channels,” Hewitt said. “Until recently there was a difference between the products made available to its direct and broker-introduced customers, which created confusion for borrowers.” Westpac now has the greatest proportion of the fixed market

Suncorp Non-majors total

among the majors, doubling its share from 10.98% this time last year to 22% at the end of May. “Westpac subsidiary St. George is also picking up market share of those seeking to refinance,” Hewitt said. Last month, 34.95% of all mortgages lodged by AFG brokers went to the non-majors. With 39 lenders on the AFG panel, however, the flow of business to non-majors is significantly higher than in the broader lending market, with non-majors holding only 17% market share outside the aggregator’s channel. “Suncorp is the big winner for the non-majors, picking up market share in the fixed rate, investor and refinancing categories,” Hewitt said. “Increased competition delivers value to the consumer. Many of the non-major lenders on our panel do not have a branch network. Without the competitive tension mortgage brokers bring to the market, prices would inevitably rise.”

NEWS

A S S O C I AT I O N S FBAA OFFERS REVERSE MORTGAGE TRAINING FBAA plans to offer a new reverse mortgage training course this year. It will be open to all brokers regardless of industry affiliation. AAMC Training Group, a leading registered training organisation, will run the course. It will fill the gap left by the collapse of equity release training provider Sequal earlier this year, said FBAA executive director Peter White. The training has been developed to educate financial service providers who wish to support seniors with an equity release loan facility such as a reverse mortgage. THE

MFAA APPOINTS TWO NEW DIRECTORS MFAA has appointed two independent directors to its board. Vladimir Malcik will chair the audit and risk committee and Joshua Hatten will chair the nominations remuneration and governance committee. Both have public and private expertise in education, governance and financial management. Their appointments come after Malcolm Watkins and Michael Cottier stepped down. Hatten is a former chief of staff to the NSW Minister for Education and Malcik worked as CFO of the Australian Submarine Corporation. THE

BANKS NEED TO JUSTIFY RATE MOVEMENTS, SAYS FBAA With the spate of recent rate hikes by the major and non-major banks, the FBAA has called upon lenders to justify these decisions the federal budget was

SINCE handed down in May,

investor and interest-only loans have increased by as much as 66 basis points without much explanation as to why, said FBAA executive director Peter White. “It’s not just the big four that have done this. Most banks are doing it, but they haven’t justified their reasons for going this route,” he said. “Are they passing on the bank levy to consumers before it comes into play on 1 July, trying to slow the market, or destroy small business borrowers by restricting interest-only borrowing?” White also noted that the ACCC had yet to determine whether the reason for these increases was

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legitimate. The banks could be compelled by the ACCC to account for their rate movements, he said. “While banks may claim these movements have nothing to do with the bank levy, they are leaving themselves open to criticism as it appears this isn’t the case,” White said. “Where’s their compliance? Or is the issue that the ACCC is a toothless tiger?” In response to White’s statement, the ACCC told Australian Broker that it is currently building a Financial Sector Competition Unit to undertake regular inquiries into specific competition issues within the financial sector. “The ACCC’s new Financial Sector Competition Unit’s first task is to commence a one-year price

inquiry into residential mortgage products to 30 June 2018,” an ACCC spokeswoman said. “As part of this inquiry, the ACCC can compel the major banks to explain any changes or proposed changes to fees, charges, or interest rates in relation to residential mortgage products affected.” The role of the ACCC will be to check the veracity of the banks’ claims and notify the public when these representations are misleading, she added. Furthermore, the ACCC will determine a baseline for residential mortgage products and ask the banks to explain changes. “Compulsory investigative information gathering powers will allow the ACCC to substantiate claims made by banks in relation to residential mortgages,” the spokeswoman said. “Through that, the ACCC will be able to provide consumers with a better understanding of how the big banks make decisions on changes to their mortgage rates.”

“While banks may claim these movements have nothing to do with the bank levy, they are leaving themselves open to criticism as it appears this isn’t the case.” Peter White Executive director, FBAA

NEWS

CONSUMERS CENSUS SHOWS DECLINE IN MORTGAGE REPAYMENTS monthly mortgage repayments dropped from $1,800 per month in 2011 to $1,755 per month in 2016, according to the latest census data. In general, mortgage holders are spending less of their income on repaying their mortgages, with the number of households in which loan repayments were less than 30% of income increasing from 90.1% to 92.8%. The data also shows that 34.5% of Australians own a home with a mortgage – slightly down from the 34.9% recorded previously. MEDIAN

60% OF AUSTRALIANS FAIL BASIC BANKING LITERACY is a gap between how confident the average Australian feels about their financial literacy and how extensive their actual banking knowledge is, a new survey has found. The online ME survey polled 1,500 Australians and found that while 13% said their banking knowledge was “below average”, six in 10 scored less than 50% in a basic banking literacy quiz. This suggests that many consumers may make poor decisions with regard to banking, said ME executive Nic Emery. THERE

PROPERTY RESALES BRING IN $20.9BN IN PROFIT Nine out of 10 people who sold their properties in the first quarter of this year netted a profit, new research has found the country, property resellers earned $20.9bn in profit by putting their homes and apartments on the market during the March quarter. CoreLogic’s most recent Pain and Gain report examined resales during this time period and found that 90.4% of those who resold their properties earned a profit – with the median profit sitting at $185,000. In contrast, losses totalled $493.8m during the March quarter, and the average median loss was $35,000 per resale. The report compared the most recent sale price to the previous sale price to determine the ultimate gross profit or loss. Looking at each capital city, the total proportion of houses and

apartments sold at a profit were as follows during the March quarter: Sydney (97.8%), Hobart (95.4%), Melbourne (95.3%), Adelaide (92.5%), Brisbane (90.8%), Canberra (90.4%), Perth (76.8%), and Darwin (63.0%). The top resellers in regional areas of Australia include the Southern Highlands and Shoalhaven (98.8%), Illawarra (98.6%), Newcastle and Lake Macquarie (98.2%) and Geelong (97.3%). Regional losses mostly came from areas linked to mining and resources: 11.1% of houses sold for less than their original purchasing prices in these locations. This was marginally higher than the 11.0% in losses recorded in the December 2016 quarter and the

ACROSS

“Like it or not, banking is part of our daily lives and understanding the basics is a life skill, like being able to cook and catch public transport.” Nic Emery Head of deposits and transactional banking, ME Bank

10.9% recorded in March 2016. “There is still a relatively high proportion of units in regional Australia reselling at a loss (17.2%). However, the proportion of loss making unit sales has shifted substantially lower as lifestyle markets see buyer demand rebounding and mining regions approach the bottom of their cycle,” said CoreLogic report author Cameron Kusher. At the end of last year 17.9% of regional units resold at a loss, while in March 2016 this was higher, at 19.7%. The 17.2% recorded in the March quarter this year was the lowest since the 2010 December quarter. “While the proportion of loss making sales has started to reduce in some of these regions, there remains a high willingness from home owners to sell up coupled with little demand to purchase. As a result we are seeing a high proportion of vendors materialising their losses,” Kusher said.

AUSTRALIANS ARE MAKING SMALLER LOAN REPAYMENTS ON THEIR MORTGAGES Source: ABS 2016 Census results

+$113

$2,200 -$7

NSW

Median repayments

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Victoria

Repayments less than 30% of income

SA

WA Other statistics: Change since 2011

$2,058

94.5%

0% $1,300

+1.6%

94.9%

94.5%

$2,167

$1,993

93.4%

$1,491

93.6%

Queensland

95% 94%

91.4%

$1,000

+2.3%

+2.2% -$9

+2.6% 92.5%

$1,200

+3.1% 92.6%

$1,986

$1,400

-$117 +3.3%

-$28

$1,733

$1,800 $1,600

+2.4%

+2.2%

$1,728

$2,000

96%

-$109

+$43

NT

Tasmania

93% 92% 91% 90%

ACT

NEWS

TECHNOLOGY

BDM BRINGS IN 80% OF LOANS THROUGH LINKEDIN Glynn Bruce of non-bank lender NWC Finance has brought in a total of $100m worth of loans over the past two years, mostly via a LinkedIn page that boasts over 6,000 followers and a database of 12,000 people seeking alternative finance for property and business. “LinkedIn is proving to be a winning vehicle in finance, delivering a well credentialed clientele who are net savvy and not intimidated by social media as a method of securing finance,” Bruce said. BDM

DOMAIN ANNOUNCES BROKING JOINT VENTURE The nationwide property portal will expand into mortgage broking via a new partnership with a digital loan platform Group has announced it is expanding into mortgage broking with the launch of Domain Loan Finder in partnership with digital home loan platform Lendi. Domain Loan Finder, which is to be launched this month, is set to become a key digital solution for customers in Australia looking to secure a home loan. It offers consumers a simple and stress-free online process to connect with more than 30 leading lenders, including major banks, coupled with access to a national community of home loan specialists for personalised help and expert advice. “This is a very important strategic announcement for Domain, and means we are the first major real estate listings portal to

move beyond helping our audience find a home to helping them secure a home. Domain will be Australia’s first end-to-end property search and finance platform,” said Domain CEO Antony Catalano. “We are very excited that Lendi will be powering Domain Loan Finder to help Australians secure the best home loan available to them.” Catalano said Domain Loan Finder would not just be another rate comparison website but would help consumers secure a home loan. Through its popular consumer technology platforms, Domain will actively market its home loan solution to its audience of more than four million people per month. “This new offering is part of the full complement of real estate products and services that Domain is

DOMAIN

building out to deliver on the modern needs of today’s property buyers, owners and sellers, as well as to grow new transactional revenues,” Catalano said. Domain Loan Finder will operate as a joint venture with Lendi’s parent entity, Auscred, and Domain will hold a 60% stake. Lendi started in 2013 as an online and phone-based broking business and is backed by major institutional investors and venture capital. The amount invested in the joint venture is not material and remains confidential. Lendi managing director David Hyman said: “Tapping into Domain’s strong market position, we’re looking forward to bringing an integrated home loan experience to the property buying process. “With more and more consumers turning to online channels as part of their home loan research, there’s a huge opportunity to enhance that journey with contextual and relevant engagement as they progress through the property buying journey.”

VV REAL ESTATE RETURNS ARE TRENDING UPWARDS GLOBAL Source: Standard Life Investments, Real Estate Update Q1 2017 200 180 160 140 120 100 80 60 40 20

Global

10

Asia-Pacific

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UK

Cont. Europe

North America

Jun 2016

Dec 2015

Jun 2015

Dec 2014

Jun 2014

Dec 2013

Jun 2013

Dec 2012

Jun 2012

Dec 2011

Jun 2011

Dec 2010

Jun 2010

Dec 2009

Jun 2009

Dec 2008

Jun 2008

Dec 2007

0

FINTECH LENDER BRANCHES INTO BROKER CHANNEL lender MoneyMe is expanding its broker model to bring in greater loan volumes for its personal lending products. MoneyMe CEO Clayton Howes said brokers presented a particularly strong channel proposition which he hoped could be leveraged to reach a mass audience. “We look to brokers to provide the sharpest rates in town. … Brokers are able to navigate through the noise of what’s available with the different institutions and provide a feel for a competitive rate. Those are the guys we’d like to partner with.” FINTECH

HOW MANY AVO BREAKFASTS FOR A HOUSE DEPOSIT? Source: Montgomery Investment Management

22.3 years

Sydney

Melbourne

17.8 years

Brisbane

14.8 years

Adelaide

13.4 years

Perth

15.0 years

Hobart

11.9 years

Darwin

15.0 years

Canberra

17.3 years

0

5

10

15

20

25

Years Note: The ‘Smashed Avocado Index’ calculates how many years it would take a millennial first home buyer to save enough for a 20% deposit on a capital city home if they skipped their daily $13 breakfasts

SMASHED AVO INDEX FOR FHBS newly created property tool, the Smashed Avocado Index, shows that millennial first home buyers would have to skip breakfasts for decades in order to save enough for a typical 20% deposit. Analyst Scott Shuttleworth of consultancy firm Montgomery Investment Management took the average price of a smashed avocado breakfast (around $13) and calculated the length of time it would take for young first home buyers in each capital city to save for a deposit if they didn’t go out to eat. Even if the $91 of savings (seven avo breakfasts per week) was dropped into a high interest account with 5% interest, millennials would still have to save up for more than 10 years to put down a 20% deposit on an average house in Hobart, the most affordable capital city in the country. In Sydney, they would have to save up for more than 22 years. The index was created in response to comments made by Australian columnist Bernard Salt and other mentions in the media claiming that millennials were wasting money on avo on toast and that’s why they couldn’t afford to buy a home. A

NEWS

R E G U L AT O R S

TOUGHER ASIC LICENSING POWERS new position and consultation paper released by the ASIC Enforcement Review Taskforce proposes strong licensing powers for the regulator. The paper, written in response to concerns raised in the Financial System Inquiry, lists seven preliminary positions that expand ASIC’s abilities with regard to assessing, granting, cancelling and suspending Australian credit licences and Australian financial services licences. The taskforce is asking for industry feedback on its seven proposals until 26 July. A

INDUSTRY SELF-REGULATION BEGINS FOLLOWING ASIC BROKER REVIEW CEO Mike Felton discusses the MFAA’s submission on the broker remuneration review and what this means for the industry MFAA has responded in a 46-page submission paper to the proposals made in the ASIC Review of Mortgage Broker Remuneration report. The deadline for industry feedback to the Treasury was 30 June. In an exclusive interview with Australian Broker, MFAA CEO Mike Felton commended the “tremendous amount of work” by the industry that had gone into creating the original review. “We’re sitting with a well-informed, well-considered report that affirms that brokers drive competition and great consumer outcomes. But it also goes on to say that there are six areas that require attention.” The MFAA response delves into these areas and considers the viability of the different recommendations

under each of ASIC’s six proposals. Both ASIC and the Treasury had been clear that they would give the industry the chance to self-regulate, Felton said. “Self-regulation is not a right. It’s an opportunity. It’s also not an invitation to do business as usual. We have to use it as a window of opportunity to make meaningful change so that we can drive an increase in trust, confidence and sustainability of our industry.” The association gave the green light to certain proposals while expressing concern about others. Linking upfront commission to loan size was flagged with some risks, and suggestions such as implementing a cap on the maximum LVR or paying upfront based on both loan size and complexity were shot down by the MFAA.

THE

SUPPORTING BROKERS IN TURBULENT TIMES a recent digital PD day, PLAN CEO Anja Pannek said the aggregator would assist brokers in navigating the inevitable industry movements following the ASIC remuneration review and the Sedgwick report. “One thing I am very passionate about is that we maintain competition and a very viable and healthy broker market,” she said. Pannek called on brokers to renew their focus on strong customer service and improved productivity to further grow their businesses during this challenging time.

ANNUAL CHANGE IN HOME VALUES OVER PAST YEAR*

AT

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Paying different-sized upfront commissions around a pre-agreed pivot point would also come with risks, including potential impacts on tax-based investor lending and first home buyers, Felton said. Felton said the MFAA was fully behind moving away from bonus commissions and payments, saying they caused heightened conflicts of interest. This includes scrapping lender volume-based incentives (VBIs) direct to broker as well as pass-throughs to the broker of VBIs paid to the aggregator, and removing volume bonuses and campaign bonuses and replacing them with a balanced scorecard. Soft-dollar commissions such as through broker clubs also needed greater disclosure and should also be based on a balanced scorecard rather than volume. “We need to define what falls under a balanced scorecard, which simply says that only some of it is based on volume,” Felton said. This scorecard will be jointly developed with industry stakeholders.

Source: CoreLogic data, from NAB Housing Market Report 2017

Sydney Regional NSW Melbourne Regional Vic Brisbane Regional Qld Adelaide Regional SA Perth Regional WA Hobart Darwin Canberra Combined capitals

18.9% 8.5% 15.9% 1.7% 3.7% 3.0% 3.4% 1.8% -4.7% -8.5% 10.2% -4.4% 12.8% 12.9%

Combined regional areas

4%

-10%

-5%

0%

5%

10%

*Data for homes in capital cities, houses in regional areas. Data to Mar 17 for capital cities, Feb 17 for regional areas

15%

20%

QLD, NSW, WA SHOW LARGEST SURGES IN HOME LOAN DELINQUENCIES Source: S&P Global Ratings, RMBS Arrears Statistics, April 2017

1.21%

Northern Territory -0.15%

Australia’s prime SPIN

Western Australia 0.05%

1.70%

1.66%

Queensland 0.09%

2.32%

NT QLD WA SA NSW VIC

ACT

TAS

1.64% 0.65% South Australia 0.00%

April 2017

0.91% Australian Capital Territory -0.12%

1.12% 1.27% Victoria 0.02%

New South Wales 0.06%

Tasmania -0.02%

Represents change from March to April 2017

Note: SPIN, Standard & Poor’s Performance Index, looks at the weighted average of arrears more than 30 days past due on residential mortgages in publicly and privately rated Australian RMBS transactions and is calculated on a monthly basis.

FORMER CREDIT REP’S BAN REDUCED Administrative Appeals Tribunal (AAT) has reduced the ban period for former Sydney credit representative Tony Nguyen, of Petersham, NSW, from a permanent term to four years. The AAT affirmed ASIC’s findings that Nguyen had acted in the role of a credit assistance provider to nine consumers and/or as an intermediary between those consumers and the lender at a time when he was not authorised to do so under an Australia credit licence. As an ‘introducer’ or referral partner, Nguyen was entitled to only give the consumers’ names and contact details to lenders. THE

FE AT URES

SPOTLIGHT

IT’S ABOUT MORE THAN JUST MONEY While the mortgage broking industry can occasionally get negative attention in the press, there are many people in the business who are doing good in communities here and abroad, bolstering the industry’s reputation as one that revolves around putting people first Dickson, a BDM with small business lender Moula, can trace her interest in sustainability back a couple of generations. Her grandfather started his lamb farming business while living out of an empty water tank in Orange. Nevertheless, he became one of the most successful lamb producers in NSW using sustainable practices with no chemicals or shortcutting, Dickson says. After graduating from university, Dickson left Australia and drove a GMC Safari van around the United States, working on organic farms and couch-surfing with a cast of colourful characters – from Ivy League graduates to an illegal exotic animal owner in Texas –with the intention of learning more about living within one’s means. So when Dickson decided to fundraise $10,000 and pay her own way to go to Uganda this May as part of a 20-person team of leaders supporting the Hunger Project, a non-profit organisation that aims to end world hunger by 2030 through sustainable practices, it was nothing out of the ordinary for this worldly traveller. “What made me want to go? Wow, we’re so privileged. The point is that when you are so privileged, for me, I feel a huge responsibility... How do you give back, or what’s the best way of doing that?” she says. In an industry that can sometimes get a bad rap for only caring about commissions and trail, it is worth celebrating those who are going above and beyond their own interests to improve the lives of underprivileged people in communities here and abroad. FIONA

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While they may not get as much recognition as those who settle big-figure deals, there are a lot of people doing good in this industry, something the MFAA has been

(NFBD) – is coming up on 16 August. Industry veteran Dino Pacella founded the day back in 2015 and hopes that this year brokers and other industry

“Everybody wants to be doing something where they get up in the morning and they go to work and they feel good about it” Fiona Dickson, BDM, Moula showcasing through its Community Champion Award. Another initiative meant to highlight the industry’s best side – National Finance Brokers Day

members will be able to raise $50,000 for the Make-A-Wish Foundation through various charity drives. This year, Pacella has secured a broker company, Astute

Connexion, to sponsor the day. The company will donate $10 to the foundation for every customer who visits a broker on 16 August and documents it by uploading a picture and tagging it on the NFBD social media pages. Pacella says he thinks it’s really important for brokers to get involved in positive initiatives outside of providing loan transactions. “Demonstrating to the public that the industry assists in other ways, such as helping to improve financial literacy, shows that the industry is run by people who care about people,” he says. One of the biggest hurdles of fundraising is getting over how uncomfortable it is to ask people for money. Dickson knows this well. But she says once she spoke to people candidly about what the Hunger Project was all about and why she was passionate about it, people were keen to support her. With the help of friends and colleagues from Tyro, My Accounts, Valiant, Dexus, Moula and Liberty, she was able to leverage her network and raise $700 at a Bronte Beach sausage sizzle. Moula and Liberty, the companies and her colleagues, collectively contributed $2,000 to the cause. “We all have households to maintain, bills to pay, relationships to nurture, careers, personal interests and the everyday pressures of modern living. Despite this, I

WHAT MOTIVATES YOU TO VOLUNTEER? Source: Volunteering Australia, State of Volunteering in Australia report, 2016

To give something back to the community Personal belief in a cause/issue To make a difference To gain skills and experience An existing relationship with an organisation To learn new things Other (please specify) To improve my health and wellbeing For fun To make social connections To help with activities which my children participate in As a pathway to employment To fill in time To make professional connections

0

100

200

300

400 500 No. of respondents

600

700

800

900

genuinely believe it’s important that we break state from time to time, to step outside routine and consider the greater picture in which we all operate,” Dickson wrote in a LinkedIn post about the barbecue. “Doing so is rarely convenient or comfortable, and in fact invariably further complicates our already hectic existence. … I believe that now – more than ever – in the face of global instability, rapid environmental change and political unrest, positive action driven by people like you and me is required.” Dickson was genuinely surprised by the response the post received, with supporters emerging from across the broking, lending and BDM space. The Hunger Project invests in impoverished communities, spending about 12 years in one location. First, the organisation conducts research and holds workshops with community members to find out what sort of help is needed and what residents want. Usually the wants are as basic as having a clean water source, having food to eat, and being able to send their children to school, Dickson says. Next, the organisation brings in local people to provide training, education and support so community members can learn how to build the infrastructure they need to lift themselves out of poverty. This framework gives participants the tools to find solutions that work for them, resulting in a sense of agency and ownership. Dickson visited three communities in various stages of this process and says the differences between those who were just beginning to move towards self-reliance and those who were approaching the end were stark. The self-reliant communities had transformed and their residents were thriving. Once one person adopts the methods learned and others see the progress they’re having and how their lives are improving, they want to get on board too, Dickson says. “When they start seeing these changes, automatically people are drawn to it and it pops up leaders in the community, and those leaders are super unlikely – usually they’re women. Then when they make a change in their lives, that propels

Fiona Dickson with one of the children she met while visiting Uganda with the Hunger Project

them forward,” she says. Similarly, that domino effect seems to work in other contexts too. Once people back in Australia found out about Dickson’s involvement with the Hunger Project, they were eager to find out more and see how they could do their part. “A lot of people really want to do something, but they don’t know how,” she says. “Everybody wants to be doing something where they get up in the morning and they go to work and they feel good about it.” Dickson already has an extensive résumé of life experiences, but she’s not someone who shies away from an opportunity to learn more, gain new skills and find deeper ways of connecting with people, something being part of the Hunger Project did for her. And it’s an experience that will likely serve her well in the business world too. “Business is connecting with people, and the point of connection isn’t just to take, it’s to be involved in a community,” Dickson says. “If you’re going to be involved in the community, have a positive impact where you can.” AB

Non-profit organisation the Hunger Project aims to end hunger and poverty through sustainable, grassroots, women-centred strategies

MILLIONS OF AUSTRALIANS VOLUNTEER, BUT NOT AS MANY AS BEFORE Source: Volunteering Australia, State of Volunteering in Australia report, 2016

5.8 million

Australians volunteered in 2014

Volunteering contributed an estimated

743 million hours

to the economy in 2014

People aged

35–44

are most likely to be volunteers, and there are more women volunteers than men

Over the last

5 years

there has been a reported decline in volunteering activities

For more photographs from Fiona Dickson’s trip to Uganda, flip to Caught on Camera on page 25 www.brokernews.com.au

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NE WS ANALYSIS

A MAJOR GAME CHANGER Two leading real estate listings companies, REA and Domain, have announced their entry into the third party channel, racing to be the first combined property finders and loan providers in the market

the eve of the new financial year, two digital real estate giants – REA Group and Domain Group – announced their respective forays into the mortgage broking market. REA Group, which operates realestate.com.au, announced it would be adding brokers to its ranks by acquiring a majority stake in Smartline and expanding on its strategic partnership with NAB. Not to be outdone, two days later Domain Group, which operates domain.com.au, announced it would also be moving into residential broking with the launch of Domain Loan Finder, in partnership with digital home loan platform Lendi. The home loan market in Australia is appealing for a lot of reasons: it’s worth approximately $400bn a year, according to ABS data, and brokers play a big part in that, servicing more than 50% of those loans. Andrew Russell, formerly general manager at Mortgage Choice, was hired by REA 18 months ago as its executive director to assist with its entry into the financial services market. “We believe that there is tremendous opportunity with marrying property search with property finance and we’re intending to leverage the capability of our audience of realestate.com.au to help guide those consumers into a finance product following their search,” Russell said. ON

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While Domain and REA touted their separate deals as major endorsements of the third party channel, not everyone in the industry sees it as a golden handshake. “Make no mistake, the acquisition of Smartline by realestate.com.au, combined with Domain’s partnership with Lendi, are game changers for the broker industry,” said Darren Moffatt, CEO of digital marketing firm Wealthify and founder of reverse mortgage broker Seniors First. “It will take a while to play out yet, but this has the potential to

Deal details In December 2016, NAB and realestate.com.au announced a five-year partnership to combine property searching and home lending via one online portal, something that had yet to be done nationally. At the time, the portal was explained as a platform that would assist buyers in navigating through their entire property journey, and provide consumers with access to NAB’s suite of home loans, a white label product branded through realestate.com.au and a panel of other lenders.

“Make no mistake, the acquisition of Smartline by realestate.com.au, combined with Domain’s partnership with Lendi, are game changers for the broker industry” Darren Moffatt, CEO, Wealthify smash the flow of referrals to the wider industry.” With these property portals able to take the borrower out of the market early on in the customer journey, this will crimp the volume of leads that would normally flow down to brokers from real estate agents, accountants and more, he said, especially since almost all property transactions start out on either Domain or realestate.com.au.

“We’re combining our respective expertise to deliver more to Australian property buyers and create a game-changing experience,” NAB COO Anthony Cahill said in December. Fast-forward to 27 June and the details of how this deal would affect brokers were finally revealed. REA and NAB explained that they were going to build a “mortgage broking solution” catering to the website’s

Stephen Moore, CEO, Choice

average monthly audience of 5.9 million users, and in doing so would absorb the Choice Home Loans brand, and hopefully its 175 brokers, if they decided to take part. “It is their choice and we will be working with each individual broker on what the best outcome is for them, whether it’s joining the new group or joining one of our other groups, or having their own brand. It’s really an individual decision that we’re working with brokers on,” said Choice CEO Stephen Moore. Given the “very compelling nature of the proposition”, including exclusive leads for at least two years, the property website’s digital footprint and strength of brand, Moore expects the majority will choose to be part of the new group. Brokers will continue to receive support through Choice Aggregation, including use of its software, licensing capabilities and local partnership managers, Moore said. The commission structure and lender panel will remain the same

Andrew Russell, executive director, financial services, REA Group

under the new brand. Moore sees it as the best of both worlds: the bringing together of the power of digital with high-quality face-to-face advice from brokers. “We think that provides a really unique opportunity in the marketplace and provides brokers with a fantastic source of new client opportunities, unprecedented based on the number of customers who choose to use realestate.com.au,” Moore said. The two companies are now working jointly to create this new broker business, which is expected to be rolled out later this year. REA will be the majority owner and NAB will retain a shareholding, including a significant presence and director spots on the board, Moore said. It has not been disclosed how the shareholding breaks down between the two groups. But REA said it was expected that its entire financial services segment would contribute revenue, net of broker commissions, of between $26m and $30m this financial year. For REA, the strategy of having

Chris Acret, executive director and co-founder, Smartline

both Choice Home Loans and Smartline brokers on board means the realestate.com.au home loans offering will be able to launch later this year with a clutch of brokers

management team. Smartline settles more than $6bn in loans annually and has a total loan book of approximately $25bn. “We’ve always seen the future of

“Whilst the digital world is evolving rapidly when it comes to financial services, this is the strongest recognition of the criticality of brokers as part of the future” Stephen Moore, CEO, Choice available on day one, and the capability of scaling up in the years to come through Smartline’s 300 advisers across Australia. In the meantime, Smartline’s advisers will continue to operate as usual under the same management and business structure. REA purchased an 80.3% stake in Smartline for $67m from cash reserves. The remaining 19.7% stake belongs to the existing

mortgage broking as a mix of people and technology and you’ve always got to be evolving your technology,” said Chris Acret, Smartline’s executive director and co-founder. “It’s not one or the other, people versus technology; it’s complementing people with technology – so longer-term we saw them [REA] bringing some benefits there. And then there are obviously the leads as well.”

The race to deliver Domain Loan Finder, launching in early July, promises to offer consumers a simple and stress-free online process to connect with more than 30 leading lenders, including major banks, coupled with access to a national community of home loan specialists. It will operate as a joint venture with Lendi’s parent entity, Auscred, and Domain will hold a 60% stake. Lendi started in 2013 as an online and phone-based broking business and is backed by major institutional investors and venture capital. “This is a very important strategic announcement for Domain, and means we are the first major real estate listings portal to move beyond helping our audience find a home to helping them secure a home. Domain will be Australia’s first end-to-end property search and finance platform,” said Domain CEO Antony Catalano in a news release. Catalano said Domain Loan Finder would not just be another rate comparison website but would help consumers secure a home loan. Through its popular consumer technology platforms, Domain will actively market its home loan solution to its audience of more than four million people per month. David Hyman, Lendi’s managing director, said the partnership would integrate the property buying experience with the home loan process. “With more and more consumers turning to online channels as part of their home loan research, there’s a huge opportunity to enhance that journey with contextual and relevant engagement as they progress through the property buying journey,” he said. There’s no doubt both partnerships are a major game changer for the industry – and everyone is watching to see how it will all play out. AB www.brokernews.com.au

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ANALYSIS

BANK LEVY OPENS PANDORA’S BOX The banks are pushing back against the proposed SA bank tax in an attempt to deter other states from doing the same, but the government and some economists argue the tax is justified

government and the banks are going head to head once again – this time over a proposed bank tax in South Australia. The SA bank tax is structured similarly to the federal bank levy and is expected to raise around $97m in 2017/18, and $370m in total over four years, through a quarterly levy of 1.5 basis points on bonds and deposits of more than $250,000. Most importantly for brokers is how the banks might respond and retaliate if the levy is approved. Following the introduction of the federal bank levy in May, it seemed Pandora’s box was officially opened, exposing the banks to further taxation from other levels of government, wrote UBS analysts Jonathan Mott and Rachel Bentvelzen in the 22 June Australian Banking Sector Update. “Although South Australia’s levy of $97m across the majors and Macquarie is insignificant, it is an outcome many investors had feared,” the analysts wrote. They expect the banks to push back against the SA levy in an attempt to warn other states and territories against following suit. This might be achieved in a number of ways, they said, such as by challenging the legality of the state-based levy, increasing interest rates on SA mortgages and corporate loans, repricing the loan book of BankSA (a Westpac subsidiary), threatening to move operations out of the state, and rationing credit within the state. In addition to the concern that other state-based levies could be introduced, Mott and Bentvelzen said there was also the possibility of further increases to the federal levy, especially if the national budget remained under THE

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pressure. This would be consistent with experiences overseas, such as in the UK where the bank levy was raised on nine occasions, they said. Weng Wong, director of Adelaide brokerage Equatorial Finance Solutions, says just as in the case of the

And we may see more refinances as consumers look to get away from lenders applying higher interest rates,” he says. Overall, Wong sees the move as an irrational decision by the government that could backfire, possibly by

Weng Wong, director, Equatorial Finance Solutions

“When it comes to rewarding their CEOs, the banks don’t appear to be feeling as hard done by, paying out $45m” Matt Grudnoff, economist, The Australia Institute

But this doesn’t mean it’s all bad news for brokers. Wong says it may work in brokers’ favour because they still have multiple non-major lenders to choose from and clients will see brokers as a valuable commodity to help them navigate an increasingly confusing market.

federal bank tax, if this one also passes the banks will claw back in one way or another. This will affect consumers, shareholders and businesses, whether through home loan repricing or dividend reductions. “It will certainly dampen the mortgage market in terms of lending growth, something SA does not need.

The spin campaign begins As well as making “super profits” from South Australian mortgage holders, the state’s Treasurer Tom Koutsantonis said the banks had benefited from the federal decision not to apply GST to the financial sector. “The Commonwealth’s major bank levy seeks to address this but ignores

attracting fewer businesses to put down roots in SA. “If the state government can do this to five successful businesses, what does that say to other successful businesses here in SA? Who would want to invest their money in this state when there is a political propensity to rip off our best businesses?”

WHAT DO SOUTH AUSTRALIANS THINK OF THE STATE-BASED BANK LEVY? Source: Poll conducted by ReachTEL for The Australia Institute

17.1% Don’t know/Not sure

40.9% Support the levy

42.1% Oppose the levy

Anna Bligh, CEO, ABA

the state’s share,” he said. “Major banks also capitalised on the global financial crisis, acquiring many smaller financial institutions and growing their market share to a combined 80%.” As the levy did not apply to mortgages or deposits under $250,000, there was no justification for the banks to pass this cost on to those customers, Koutsantonis said. Following the announcement, the ABA and the major banks launched their attack, criticising the move as an outrageous cash grab. ABA CEO Anna Bligh called it “triple dipping” on bank taxation. “The banks impacted by this proposal pay full corporate tax, the federal government has just passed a new bank tax, and now the South Australian Government is trying to impose a third state tax,” Bligh said. The state’s Opposition Liberals have promised to block the bill from passing, calling it “job destroying”. “If it is introduced, [Premier] Jay Weatherill’s toxic new tax will be paid by South Australians who are already struggling with the highest unemployment in the nation, crushing electricity bills and Labor’s massive ESL tax,” said Liberal leader Steven Marshall. Marshall said the move would “put a wrecking ball through the struggling SA economy by killing off jobs and investment”. SA currently has the highest unemployment rate

in the country, at 6.9%. A poll of 1,589 voters conducted on behalf of The Australia Institute, a progressive public-policy think tank, shows that South Australians are split on the issue: 42% oppose the levy, 41% support it and 17% are undecided. The IMF recommends a safe maximum for a bank levy of 20 basis points, and the combined federal and state levies only bring the Australian total to 6.36 basis points, The Australia Institute’s senior economist Matt Grudnoff points out. When the SA tax is put in perspective, it means $36 in every million dollars of defined liabilities. “With both federal and state governments suffering revenue problems stemming from tax cuts during boom years, politicians are left with a choice: raise taxes on workers, or tax the world’s most profitable banks,” Grudnoff said. “When it comes to rewarding their CEOs, the banks don’t appear to be feeling as hard done by, paying out $45m. That’s around half of what the SA levy proposes raising on just five individuals.” As for the big banks, well, they had some strong words for the government. “The role of the Australian banks is to support customers and communities and drive economic growth and activity. It is not to be a blank cheque so governments can cover their own budget shortfalls,” NAB said. AB www.brokernews.com.au

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OPINION

STOP THE STRESS CYCLE Business leaders are facing more stress than ever before, and it’s costing them personally and professionally. Executive business change strategist Millie Swann provides leaders and employees with practical insights on reducing workplace stress stress on employees is costing the Australian economy billions of dollars annually, and businesses are finally starting to see the importance of boosting employee health and wellbeing. In 2008, employee presenteeism and absenteeism cost the Australian economy $14.1bn, according to a report by health insurance company Medibank. Last year alone, $300bn was spent in the US on employee stress management. Low productivity and poor decision-making, faltering business performance, low profit and other challenges are all hallmarks of a failing business. Far too many people are battling stress and anxiety on a daily basis, with little reprieve. Long-term stress and anxiety are now commonplace for those working in fastpaced environments and senior positions. This can result in underperformance, which can have serious flow-on effects, including underperforming managers and staff. In turn, that can stimulate an inherent unhappiness that can impact normally positive relationships with friends and family. This cycle of stress is passed on, leaving many people unsatisfied. As much as they may try to ignore them, mental health issues, no matter how minor or serious, directly affect how business professionals and business leaders operate. Those CEOs and business leaders who get too caught up in their work and don’t take care of their own mental health and wellbeing can massively impact the positive culture of their organisations, and this poor culture leads to poor profits. Unwilling to admit vulnerability, many CEOs and business drivers are the last ones to reach out for help. When leaders and employees are under stress and are struggling with their emotions around money, making quality decisions becomes difficult. Furthermore, leaders often lack the guidance and mental support needed to keep

their businesses afloat, especially when they find themselves in deep water and facing dire consequences. This continual cycle of stress and poor decision-making comes down to an unconscious patterning, in which people’s brains resort to repeating the same solutions. It’s unnatural to try to reach new

WORKPLACE

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unsupported, so they leave to find new jobs. This creates another layer of stress as leaders need to fill gaps in their team and staff who feel they can’t leave feel even more burdened. Employees take this stress home with them, and it is often their families who bear the consequences. In my work with leaders I see the positive changes in staff when leaders regain control of their businesses, allowing teams to begin working productively again. The shift in the energy of an organisation can be felt physically, which allows the organisation to begin moving forward. Here are the key steps to take to turn stresses and anxieties into positive outcomes: 1. Acknowledge the stresses and anxieties burdening you and take positive steps to actively eliminate them from your life. 2. Use a process of reflection, rather than playing the blame game. Stand in the shoes of others, and acknowledge where everyone is at with their issues, as well as your own. 3. Ask yourself who, what, where, when, why and how an issue arose. Another good question to ask yourself is: What emotions would I prefer to be

When leaders and employees are under stress and are struggling with their emotions around money, making quality decisions becomes difficult

Millie Swann Executive business change strategist and leadership mentor based in Melbourne

strategies and solutions when dealing with an anxiety-inducing situation, and this is particularly common when people are emotional about money. Instead, people tend to stick to what they know, without experimenting with new strategies to break the cycle. I call this stress patterning the ‘Build, Boom, Bust and Blow Up’ cycle. Daily experiences, including exhaustion, procrastination and emotions, coupled with long-term and underlying experiences, such as personal tragedies and money and business struggles, can feel like an overwhelming burden. Any successes that are built end up in a bust. This never-ending cycle can take its toll, leaving leaders wanting to throw in the towel. For broking firms in particular, managing the ‘emotions cycle’ in the correct way is critical to achieving high-quality decision-making, which directly affects profit and productivity. When productivity is low, it becomes virtually impossible to maintain positive workplace morale, and employees can find it difficult to feel encouraged at work. There is no incentive for staff to remain loyal to a business when they feel undervalued and

experiencing? From this place, you can start making small steps in planning for the future. 4. Implement a short-term plan for creating a different outcome: 30 to 60 days only. Tackling the biggest issues first gives the strongest and quickest results. 5. Address the emotional experiences that lead to unconscious patterning, and identify parts of your past that are holding you back. 6. Seek help from an experienced professional to remove unconscious patterning, and accept advice only from people who have a different experience around money, stress, life and peak performance. Identifying and clearing unconscious blocks, and implementing practical solutions, creates exceptional results for both the personal and professional lives of business leaders, staff and clients. AB Millie Swann is an executive business change strategist who specialises in putting struggling CEOs, business leaders and brokers back on the path to success.

IN THE NE WS

RISING TO THE TASK If there is one unanticipated spin-off effect of the ASIC remuneration review, it is the banding together of industry associations that don’t always see eye to eye. The result is a level of cooperation and leadership that MFAA CEO Mike Felton says proves the industry’s coming of age models and commissions. Felton said the forum was a crucial step in determining how the industry would respond to ASIC’s proposals on broker remuneration. “This meeting demonstrates that our

Now that each association has made its own submissions to the Treasury, they will come together once again in mid-July to begin planning and defining their next steps, and creating a timeline around

“It’s very powerful to have the four associations in the room all working towards a common goal of getting a stronger, better industry”

Mike Felton, CEO, MFAA

not the norm to see banks, non-banks, aggregators, brokers and member associations take a seat around the same table to discuss industry issues, but in light of impending reforms facing the industry, cooperation is proving increasingly important. Thanks to the ASIC remuneration review and the Sedgwick report, these organisations are putting any differences aside to reach a “positive sum outcome”, as MFAA CEO Mike Felton put it recently, to self-regulate the industry without the need for government intervention. Self-regulating the industry is “not a right, it’s an opportunity”, Felton said. “It’s also not an invitation to do business as usual.” The industry is therefore rising to the task to make meaningful change. One of the ways it’s doing this is through the establishment of an industry forum, the inaugural meeting of which kicked off on 9 June. In attendance were the four IT’S

industry associations, 10 lenders, five aggregators and three brokers. Attendees discussed the potential impact of both reviews on brokers, aggregators and lenders, and gave each party a better understanding of their individual positions on the proposals. As required, the organisations followed strict ACCC anti-cartel guidelines preventing discussions on topics such as pricing

industry is serious about self-regulation and has the maturity to work together across different stakeholder groups to effect the required change and ensure customer outcomes continue to remain front of mind,” he said following the initial meeting. There was a clear commitment by all industry groups to strong consumer outcomes, transparency and accurate disclosure, he added. FBAA executive director Peter White said it was “a unique step forward for our industry”. “It was about having an open discussion with the ABA, various banks, aggregators and brokers that were there around how certain things can play out, how certain goals can be achieved, whether certain things are appropriate,” he said.

self-regulation. The four industry associations will assume joint leadership moving forward. One of the challenges will be finding a vehicle through which self-regulation can be implemented, Felton said. While this may come in the form of a code of practice, it is still early in the process and final details have yet to be decided, he said. Regardless of the challenges ahead, the collaboration and teamwork among the different groups in coming together to form the roundtable was a highlight of the last three months, Felton said. “I think it’s very powerful to have the four associations in the room all working towards a common goal of getting a stronger, better industry going forward.” AB

BROKER GROWTH RATES ARE MOSTLY INCREASING ACROSS AUSTRALIA Source: MFAA Industry Intelligence Service report

Note: Data from April-September 2016

30%

25.1%

25% 20% 15% 10% 5%

5.5%

7.5%

6.0%

3.5%

6.4%

5.1%

0% -5%

-4.0%

-10% Growth in NSW and ACT

Victoria

Queensland

Western Australia

South Australia

Tasmania

Northern Territory

Total nationally

www.brokernews.com.au

21

PEOPLE

Have an interesting deal? Had a particularly difficult or interesting deal? Why not share it with us? Email:

Otiena.Ellwand@keymedia.com.au

A BIG DEAL

Katrina Parrington, director of Elders Home Loans in the NT, pulled her client out of a subpar deal, saving them thousands of dollars on their LMI and giving them the best Christmas present they could have hoped for

THE FACTS

Loan size $670,000

Loan term 30 years

Client Couple

Goal Purchase new home

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Lender Bankwest

they would get a better deal. I asked the clients if they were unhappy with Bankwest and they said no, they’d never had a problem with them, so I suggested sticking with them for the

THE SCENARIO

Six weeks after signing a contract of sale on their dream home in Darwin, the broker this couple was working with had still not got their loan formally approved by the bank. As a result, they missed their finance and settlement dates and the vendor was losing patience fast. It was a week before Christmas 2015. Their real estate agent persuaded them to see me because they’d already paid for their inspections and everything else. I’d worked with this real estate agent before and had saved them a lot of deals. The female applicant rang me on 16 December and told me what they were trying to do. They wanted a loan for their new home and they wanted to turn an existing unit into an investment property. She was pretty disappointed with what had transpired with the previous broker and lender and didn’t think we’d pull it off. I told her to bring all the paperwork in and let me look at it the next morning. I told her I would tell her straight up if this was a deal or not because there’s no point in me wasting my time on deals that are not going to fly; I don’t get paid for it. When I was looking over everything I asked why they were refinancing from Bankwest to NAB. She said the previous broker told them to do that because

Location Darwin

the valuer at the unit. When the unit valuation came back, it was $40,000 higher than the previous valuation with NAB. Armed with the higher valuation, we were able to wipe out $36,000–$38,000 of lenders mortgage insurance. The previous broker had set both applications up as a refinance and purchase, with NAB crossing both securities, which made the LMI go through the roof. My clients ended up paying $11,000 to $12,000 in LMI because we uncrossed the securities, which was substantially less than if they’d proceeded and had the first deal approved with NAB. We took the money out of one property for the purchase of the other, and they stood alone so we were able to minimise the LMI on the way through. We got all that done in five business days. THE TAKEAWAY

On Christmas Eve, I had the loan documents in my office formally approved. The clients settled in their new home on 9 January. Was it memorable or was it the fact that I saved them so much money? It was the fact that I took the clients’ interests into account, not my own. I was actually appalled to see what the other broker had done. This is how people in

Sure, it meant a smaller commission for us, but, more importantly, we now have a satisfied new customer who trusts our work ethic and will refer us more business home loan. I said, “They’ve done your unit; why wouldn’t they do your house?” It was clear what the previous broker was trying to do: they were going to move the clients’ existing mortgage and the purchase of their home to a different lender, which would have led to a higher commission. THE SOLUTION

Katrina Parrington Director, Elders Home Loans in the NT

I assessed that their present lender was the best option and the clients were happy with their current loan, so there was no need to refinance. I advised them that Bankwest would not accept NAB’s valuation and arranged for the unit to be revalued by Bankwest. I got all the documents ready and asked the real estate agent to meet

our industry get a bad name, because instead of looking after their clients, people start to look after themselves. To Bankwest’s credit, they were fantastic, even having the loan documents in my office by Christmas Eve. It was a sensational effort on everyone’s parts. Sure, it meant a smaller commission for us, but, more importantly, we now have a satisfied new customer who trusts our work ethic and will refer us more business – way above what we could have earned from the refinance. They’ve turned into happy clients who are happy to support us and happy to refer us. I’ve done two more deals thanks to them. As brokers, I think that’s what we really do want at the end of the day, not one big deal but lots of deals, and we need to put our clients first. AB

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23

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Get involved in the discussion Share your thoughts at

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FROM THE FORUM

Top comments from trending stories on brokernews.com.au

MAJOR RAISES INTEREST-ONLY RATES BY 34 BASIS POINTS

ABA SLAMS SA BANK TAX AS ‘TRIPLE DIPPING’

Westpac announced on 20 June an 8 basis points reduction in variable interest rates for customers paying principal and interest on their owner-occupier home loans. This will take the standard variable rate for these owner-occupiers to 5.24% per annum. Westpac also adjusted interest-only rates for variable home loans as follows: the interest-only rate for owner-occupiers will increase by 34 basis points to 5.83% per annum, and the interest-only rate for investors will increase by 34 basis points to 6.30% per annum. These rate changes are all effective from 30 June 2017. George Frazis, CEO of Westpac Consumer Bank, said this was good news for owner-occupier customers making principal and interest repayments as they would benefit from lower interest rates, allowing them to pay off their loans faster. “APRA’s limit on new interest-only lending is 30% of new residential mortgage lending, so we have to continue to make changes to our interest-only rates and lending policies to meet this benchmark,” he said. “Today’s decision is not in response to the federal government’s recently announced bank levy.”

Following the South Australian Government’s surprise move to introduce its own banking levy on 22 June, the Australian Bankers Association and the major banks have come forward, criticising the move as an “outrageous cash grab” without policy substance. “States are not responsible for banking policy. There is absolutely no policy reason for this announcement, other than a need for the South Australian Government to raise revenue in a desperate political move,” said ABA CEO Anna Bligh in a statement. With an unemployment rate of 6.9% – the highest in the country – SA was a state that sorely needed economic confidence, she said. The proposed tax will affect the big four banks plus Macquarie and is expected to raise around $370m, according to the state government’s forward estimates. As well as making “super profits” from SA mortgage holders, the state’s Treasurer Tom Koutsantonis said the banks had benefited from the federal decision not to apply GST to the financial sector.

This behaviour on investment lending is criminal. How are consumers supposed to keep up with this type of behaviour if it is happening across the banks on a daily and weekly basis? Shame on you banks and APRA. Battlers Advocate on 20/06/17 at 4:40 PM

With all these extra gauged profits rolling in, the banks will be able to increase broker remuneration soon!

Which bank? on 26/06/17 at 9:27 AM

Broker on 20/06/17 at 5:03 PM

Another gouging. I fail to see how re-pricing the back book has anything to do with APRA limits on IO lending which is for new flow.

Triple Dipping? What about the banks? The way they target ASIC’s instructions to reduce investment loans is to “increase the interest rates”. It’s not just new lending that ASIC is measuring. But then all investment loan interest rates go up. Then ASIC creates instructions relating to interest only loans. What do the banks do? Increase everyone’s interest rates. They try to cover it all up by reducing owner occupied loans by a minuscule amount. Instead of using credit policies to answer ASIC’s concerns, the banks use revenue driven tactics to comply. Don’t accuse others of “triple dipping”. Power hungry banks should be concerned about reducing the Aussie deficit. I am sure their shareholders are. I am one of them.

Marty McDonald on 21/06/17 at 7:47 AM

Linda on 26/06/2017 at 12:18 PM

Typical bank behaviour. Levy will be paid for before it’s introduced.

Banks treat their customers and brokers like crap; it’s about time they were on the receiving end for a change.

No name on 21/06/17 at 9:24 AM

Broker on 26 Jun 2017 at 1:13 PM

Considering the APRA changes only affect new interest only lending, how do they justify penalising existing borrowers with IO? It is just another bank rate gouge, disguised as an APRA ‘made me do it’. Hitting owner occupied borrowers is just low and typical of the big four, especially Westpac. Blackdog on 20/06/17 at 5:26 PM

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Maybe if these banks shut all the branches or stopped operating in that state completely (commercial, institutional and consumer arms), let’s see how that benefits SA people. Whilst I have no issue with the federal position, the ‘me too’ of a state government is narrow-minded, laughable and counterproductive to the bigger issue. Banks are employers too.

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CAUGHT ON CAMERA In May, Moula BDM Fiona Dickson went to Uganda for 10 days after fundraising $10,000 for the Hunger Project, a non-profit organisation that aims to end hunger and poverty by assisting with the establishment of community-led sustainable strategies. The Hunger Project works in 20,000 communities throughout Africa, South Asia and Latin America. Dickson was one of 20 people who visited Uganda as part of the 2030 Leaders Program to see how three communities there were progressing towards a framework of self-reliance. The Hunger Project aims to empower and support people to become leaders in their communities, providing them with the tools to lift themselves out of poverty.

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25

DATA

SOUTH AUSTRALIA

VIC SPOTLIGHT

The SA property market is showing resilience, which could translate to positive long-term performance

RETHINKING APARTMENTS

“The latest NAB Residential Property Index saw sentiment increase by 42 points in South Australia, putting it behind only the burgeoning eastern states of Victoria and New South Wales. These results paint a picture of a very resilient market despite the noted headwinds,” says Gregg Harris, general manager of NAB Retail. In its Month in Review for May 2017, Herron Todd White agrees that sentiment is vital to the market, and inner-city suburbs are enjoying the benefits at present. As a whole, Adelaide is showing stability despite the coming storms, due to the commencement of infrastructure projects. “The Adelaide market continues to be consistently stable. Sub-markets with limited supply continue to be strong,” the Herron Todd White report states. Adelaide buyers tend to go for detached housing; therefore rising infill and high-density developments could affect the market, HTW says. Area

Type Median value

Melbourne’s apartment stock is being built with investors in mind, something that could have a detrimental impact on the market in the long term, when renters may outgrow their units’ compact size

Quarterly

12-month

growth

growth

Adelaide

H

$450,000

3.4%

3.5%

SA Country

H

$288,500

1.2%

1.8%

Adelaide

U

$363,000

3.7%

3.6%

SA Country

U

$200,000

9.3%

0.8%

NEW SOUTH WALES

Affordability is causing the housing market to stumble as high house prices begin to take a toll in Sydney Despite the strong performance of the Sydney market, rising values are making it increasingly difficult for buyers to afford property. Thus, apartments are coming to the fore. “For a lot of people, units have become the only option to enter into the market. They basically can’t afford a house,” says Cameron Kusher, research analyst at CoreLogic. “Changing demographics and prevalence of single-person households are certainly a contributing factor, and that’s probably another reason why you’re seeing a stronger performance in the unit market. “Also, Sydney’s been approving more units for construction than houses for the last two decades.” Apartment stock is increasing, especially in the metro areas – the inner city, Parramatta and Sydney Olympic Park. Sydneysiders have become accustomed to unit living, which makes the unit market stronger here than in other capital cities. Area

Type Median value

Quarterly

12-month

growth

growth

Sydney

H

$900,500

-8.7%

3.9%

NSW Country

H

$440,000

1.1%

6.2%

Sydney

U

$705,000

-0.7%

3.7%

NSW Country

U

$365,000

1.4%

3.1%

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contrast to the house market, apartments seem to be struggling to maintain long-term demand in Melbourne, with resale values rising particularly in inner-ring areas such as Southbank, Docklands and the CBD. “A lot of the stock being built has been targeted towards the investor segment. So the people that are living in these units are ultimately renters – they’re not committing to staying long-term,” says Cameron Kusher, research analyst at CoreLogic. “People are wanting to be close to work and to all those amenities, but I think a lot of the units being built are very small, and once you get married and have a child, you’d quickly find out that you don’t have that much space. So that’s one concern: the type of product that’s being delivered.” Kusher considers this situation to be the effect of high levels of unit construction in Melbourne, even while apartment living increases in popularity. Downsizers seem to be competing instead for rarer single-level homes. Moreover, demand is spreading to the western and northern suburbs, which are more affordable. In the auction market, these regions are among the top three most successful. Domain reports that auction clearance rates for the west and the north hit 81.6% and 86.5%, respectively. The northeast region was the top performer, with a clearance rate of 89%. While demand has continued to exceed supply, April 2017 findings show that the market slowed slightly following the remarkable March showing, with prices rising by only 0.5%. According to CoreLogic data, this softening of dwelling values came after a period of significant capital gain, which lasted from the second half to 2016 through March 2017. AB IN

BROKER PERSPECTIVE

Melbourne has experienced the perks of being the most liveable city for six consecutive years, with growing numbers of migrants and investors coming into the city Net migration has been a boon for Melbourne, contributing to greater population growth here than in any other Australian capital city in the last three years. This has been an understated driver of the current growth in the city’s established housing market. Now, not only are there large numbers of people needing somewhere to live, but potential vendors are holding on to good-quality stock so there is a shortage of established properties for sale. As a result, the pricing pressure is pushing buyers looking for good-quality dwellings further away from Melbourne’s CBD. On the other hand, some parts of the market are dealing with an oversupply of investor-grade product. This has caused a stagnation of apartment prices in some areas in and around the Melbourne CBD. This type of product has generally been purchased by investors and FIRB buyers. Tighter lending criteria for both investors and FIRB purchases, as well as the release of the Better Apartment Design Standard, should see new supply become better suited to the local market and appease some of the demand for quality housing in Melbourne.

Marshall Condon Founder and CEO, Neue Black Melbourne

SUBURB TO WATCH: MICKLEHAM Median price (houses) $410,658

12-month growth

5-year growth

Indicative gross rental yield

-1.0%

-44.6%

4.7%

AUSTRALIAN CAPITAL TERRITORY

The affordability issue affects not only sales but rentals as well OPPORTUNITIES AND KEY INFRASTRUCTURE

Urban Forest Fund

Pedestrian paradise

Innovative idea

Bendigo Airport

City of Melbourne promotes greening projects with $1.2m seed funding

Melbourne’s Elizabeth Street pedestrian area set to be improved

The Victorian Government is establishing a fintech hub in the Docklands

Redevelopment accommodates larger planes and new business ventures

HIGHEST-YIELD SUBURBS IN VICTORIA Suburb

Type

Median price

Weekly median advertised rent

Gross rental yield

Silverleaves

H

$440,000

$1550

18%

Inverloch

U

$325,000

$1050

17%

Terang

H

$155,000

$250

8%

Dimboola

H

$106,000

$170

8%

Warracknabeal

H

$115,000

$180

8%

“A rental increase in the ACT really indicates that we need an increased supply of property to meet the investor market,” says Nick Georgalis, managing director of major developer Geocon. “At the moment I think the supply is just OK, but when it’s just OK it means in six months’ or a year’s time we’re going to get into a shortfall. “It’s a very simple dynamic: if you increase demand it puts pressure on the supply, and the real solution is to increase the supply to meet the demand.” Even though there’s quite a bit of apartment construction underway, these developments have already been sold. With the population expected to increase in the next three years, demand should rise by the same level in a city that already has one of the tightest vacancy rates in the country. Area

Type Median value

Quarterly

12-month

growth

growth

Canberra

H

$640,000

-1.5%

5.0%

Canberra

U

$435,999

0.2%

2.4%

www.brokernews.com.au

27

DATA

Quarterly

12-month

growth

growth

Brisbane

H

$512,900

-2.3%

4.2%

QLD Country

H

$425,000

-1.2%

2.1%

Brisbane

U

$405,000

-2.4%

-2.4%

QLD Country

U

$373,000

-0.5%

4.0%

WESTERN AUSTRALIA

MEDIAN HOUSE AND UNIT PRICES

Sectors of the Perth property market are seeing some success

$1,000,000

Type Median value

Quarterly

12-month

growth

growth

Perth

H

$505,000

-3.1%

-2.8%

WA Country

H

$365,000

2.8%

-5.3%

Perth

U

$405,000

-3.3%

-3.5%

WA Country

U

$285,000

4.2%

-7.1%

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Total auctions

103

Sold

66

Not sold

29

Clearance rate

69.5%

PERTH Total auctions

64

Sold

10

Not sold

21

Clearance rate

32.3%

Sydney Melbourne Brisbane Adelaide

Perth

Hobart

$541,000

$285,500

$370,000

$0

$415,000

$100,000

$505,000

$200,000

$323,000

$300,000

$435,000

$500,000 $400,000

$537,200

$700,000 $600,000

$715,549

$800,000

$995,000

$900,000

Houses

$737,500

“Prestige areas continue to experience a heightened level of demand up to the $2m mark in comparison to 12 months ago,” states Herron Todd White in its May 2017 Month in Review report. “Sought after [homes] include improved properties reflecting land value, but with some rental income potential in the short term, and very well presented properties in traditional upgrade locations.” The southwestern region of the state is also reporting stable sales volumes. “The South West is a desirable place to live and as such naturally attracts continuous growth, mostly fuelled by young families, retirees and fly in, fly out workers,” HTW reports. “On a local level, the region would benefit from the expansion of the Busselton airport. The airport is looking at attracting more interstate and some international flights. This would fuel the tourism industry and have a positive effect on job creation.” Area

ADELAIDE

$1,100,000

$380,000

Type Median value

There were 2,444 auctions held across the capital cities in the week ending June 22. As usual, Melbourne and Sydney were the two busiest capital city auction markets that week, with 969 and 863 auctions scheduled – down from the previous week’s final result of 1,129 and 927 auctions held, respectively. Auction activity is expected to be lower week-on-week across each of the individual capital cities, with the exception of Tasmania, where volumes will remain relatively steady. The regional property market is also doing well as people seek more affordable housing options outside the major cities, especially around Sydney. In Victoria, of the 10 regions analysed two have recorded a fall in house values over the year and two also recorded declines in unit values. Greater Shepparton was the only council area of the state that recorded declines in both house and unit values. “After a long period of soft housing market conditions post the 2008 GFC, we’re seeing a pick-up in housing demand across these regions as buyers look outside the capitals for more affordable options,” says CoreLogic research analyst Cameron Kusher. “While a majority of the regions are showing an upward swing, areas linked to the mining and resources sector are continuing to see values fall.”

$515,250

Area

WEEK ENDING 22 JUNE 2017

Darwin

Units

$409,000

According to the Domain Group’s regional house price report, Ipswich’s house market recorded the most growth across Queensland in the March 2017 quarter. “Brisbane people are looking for better value, and they can see it here,” says Gillian Dargusch, agent at First National Karalee Prestige. She explains that buyers are looking for character homes that elude them in Brisbane. Ipswich’s affordability has been the main factor in its resurgence as first home buyers and investors rush to capitalise on the low prices in this area. Thus, confidence levels in the state’s overall property market are rising, which is a good sign for Queensland’s economic development. “Queensland’s property industry now has positive economic growth expectations, but debt finance availability remains a key concern,” says Chris Mountford, executive director of Property Council Queensland.

CAPITAL CITY AUCTION CLEARANCE RATES

$626,000

As the capital struggles, business looks to be picking up in the countryside

$472,500

QUEENSLAND

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

0.8%

2.6%

6.3%

12.6%

Melbourne

1.4%

3.0%

6.2%

14.1%

Brisbane

0.5%

0.0%

1.6%

3.4%

Adelaide

-0.2%

-2.0%

1.6%

2.5%

Perth

0.1%

0.6%

-1.3%

-1.8%

Combined 5 capitals

0.8%

2.0%

4.8%

10.0%

*Brisbane results are for the combined Brisbane and Gold Coast region. The monthly change is the change over the past 28 days.

BRISBANE CANBERRA Total auctions

65

Sold

31

Not sold

30

Clearance rate

Total auctions

151

Sold

58

Not sold

67

Clearance rate

46.4%

50.8%

SYDNEY Total auctions

927

Sold

561

Not sold

264

Clearance rate

TASMANIA

MELBOURNE Total auctions

68.0%

1,129

Total auctions

5

Sold

753

Sold

2

Not sold

307

Not sold

3

Clearance rate

Clearance rate

71.0%

TASMANIA

The Hobart property market is expected to perform strongly over the next 18–24 months The strengthening Hobart market is likely to attract an influx of investors over the next two years, and there is hope that this will spill over into the outer suburbs as vacancies continue to tighten. “Increased levels of activity appear to be finally spreading statewide, with all regions participating in the improved market conditions,” says Tony Collidge, president of REIT. He points to Launceston as a breakout star in terms of sales volume – the region outsold even Hobart during the March 2017 quarter. However, high sales levels are also draining the amount of stock on the market, he says. “The rapid improvement in our economic conditions has brought many benefits to this state, but it has also created unforeseen situations that are proving difficult to resolve; in particular, the market’s inability to meet buyer and renter demand.”

Area

40.0%

Type

Median value

Quarterly growth

12-month growth

Hobart

H

$383,500

-1.7%

4.7%

TAS Country

H

$265,000

0.8%

0.0%

Hobart

U

$304,300

6.8%

1.7%

TAS Country

U

$240,000

4.3%

0.4%

All data sourced from CoreLogic.com.au

www.brokernews.com.au

29

PEOPLE

IN THE HOT SEAT Vinay Gehi, founder of Copper Finance, explains why he took the plunge into mortgage broking after 18 years in the hospitality industry, and what he’s learned by being someone who is willing to ask for advice

Who or what made you want to become a broker? I was always interested in property and banking and was lucky A enough to speak to a mortgage broker who gave me some understanding of the industry. Coming from a customer service background and having an eye for detail, broking looked very appealing. I have always enjoyed researching good deals, and that’s exactly what I do to help my clients reach their goals.

Q

What made you leave the hospitality industry after 18 years to do something completely different? I was working around 45–50 hours a week in hospitality and A enjoyed every moment of it. But my wife and I were expecting our first baby, so I wanted a career where I would be able to spend more time with them, and I was looking for a new challenge. The career change was a big risk, but I had a lot of support and it has paid off.

Q

What have you learned from your first year in the industry? That my experienced peers are very willing to help new-toA industry brokers. I spoke to a few brokers before I took the plunge and they were very generous with their time and guidance. I’ve connected with more through LinkedIn and Facebook to learn as much as I can about the industry. They have all been very willing to share their experiences and advice. You just have to ask.

Q

Do you have any advice for new brokers? The most important thing is to do the right thing by your A customer. Treat every loan scenario as if it were your own. Second – network all the time. Meet as many people as you can and tell them how you can help them. Third – choose your mentor wisely. They will play a part in your success as a broker, so you need someone who will be available to support you in the first six to 12 months.

Q

When you’re not working, how do you like to spend your time? I like spending my time with my wife and my two-and-a-halfA year-old son. We like going to the zoo. I love food and cooking, so I’m always trying out new cuisines and different cafes and restaurants. I also like going to auctions. AB

Q

30

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