Australian Broker 16.06

APRIL 2019 ISSUE 16.06

Putting customers first Tony MacRae explains how small companies can generate big results /16

The future of broking Better Choice debates how broking will develop to 2025 /18

TONY CARN The director of sales for NextGen.Net tells Australian Broker how compliance can be leveraged to empower the third party channel /14

In the hot seat Prospa’s Matt Bauld on revolutionising the market /30

ALSO IN THIS ISSUE‌ From the forum The latest reader comments from brokernews.com /22 Caught on camera Pivotal Financial celebrates its top performers /24 Housing market data The latest analysis from South Australia /26

NEWS

IN THIS SECTION

Lenders NAB scraps Introducer program /04

Aggregators Aussie branches out into affordable lending /06

Associations COBA highlights capital rules discrepancy /10

Regulators Push for enforceable codes of conduct /12

Market Borrowers feel property market pressure /08

www.brokernews.com.au APRIL 2O19 EDITORIAL Editor Melanie Mingas News Editor Madison Utley Production Editor Roslyn Meredith

DATES TO WATCH

Upcoming can’t-miss events

13 APRIL

15 APRIL

1 M AY

National Property and Economic Update

AltFi Australasia Summit 2019

Loan Origination and Experience Conference

The third and final instalment in this series will cover property market updates, historic trends, how to capitalise on real estate cycles, and structuring assets to maximise returns. The event runs for a full day at Melbourne’s Exhibition Centre.

Tracking the growth of the alternative finance space, the fourth annual AltFi summit features speakers from Volt Bank, OnDeck, KPMG, illion, AfterPay and RateSetter. Their presentations will cover the latest developments in P2P and marketplace lending, robo-advice, challenger banks, and crypto and blockchain technology.

Organised by IQPC, this two-day event will cover case studies on the lending frameworks of major, neo and digital banks, and feature speakers from MoneyPlace, Wisr, CBA, Elder Home Loans and Suncorp.

Providing a chance to cover the banking industry in the Netherlands, ABN Amro will also deliver a session.

SALES & MARKETING Sales Manager Simon Kerslake Marketing Manager Danica Mendoza

CORPORATE

ART & PRODUCTION

Chief Executive Officer Mike Shipley

Designer Martin Cosme

Chief Operating Officer George Walmsley

Production Manager Alicia Chin Traffic Coordinator Freya Demegilio

Managing Director Justin Kennedy Publisher Simon Kerslake Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

EDITORIAL ENQUIRIES

Melanie Mingas +61 2 8437 4720 Melanie.Mingas@keymedia.com

SUBSCRIPTION ENQUIRIES

2 M AY

2 7 – 2 8 M AY

2 8 M AY

MFAA National Roadshow and State Excellence Awards

Customer Experience Management Summit

Australian Mortgage Awards nominations open

The association’s annual roadshow and awards kicks off in Sydney before taking in Adelaide, Perth, Brisbane and Melbourne, concluding with the national awards in Melbourne on 25 July. The roadshow will feature workshop and conference sessions and networking opportunities. Nominations for the awards are now open.

For finance professionals chasing the holy grail of customer experience, the 12th Customer Experience Management Summit returns to the Sofitel Wentworth in Sydney in May. This year’s event will feature speakers from Kiwibank, Sunsuper, Latitude Financial, Credit Union SA and CBRE.

The Australian Mortgage Awards recognise brokers, BDMs, lenders and aggregators across more than 30 categories. Nominations for the 2019 awards are open from 28 May to 29 June. Further information is available at www.australianmortgageawards.com.au.

The ceremony takes place on 19 October at The Star, Sydney.

tel: +61 2 8311 5831 fax: +61 2 9439 4599 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES

Simon Kerslake +61 2 8437 4786 simon.kerslake@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, Seoul

5 J U N E Broker Business Exchange BBX returns to The Westin Sydney this June, and in light of Commissioner Hayne’s recommendations Key Media has waived the registration fee for brokers at the day-long education and networking event.

The exchange will comprise conference and workshop sessions and an exhibition of leading industry names.

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1 J U LY

27 – 30 AUGUST

Open banking

National Housing Conference 2019

Phased implementation of open banking begins on 1 July for the majors, with mortgage data available from 1 February 2020 and data for remaining products, including personal loans, business loans, consumer leases and overdrafts, available by 1 July 2020. Non-major banks are required to participate 12 months after the majors.

Held at the Darwin Convention Centre, this event is the largest gathering for members of the social and affordable housing sectors in Australasia. Speakers at the 2019 event come from Domain, MyRent.co.nz, AHURI and Griffith University. State housing and affordability departments will also be represented.

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.

www.brokernews.com.au

3

NEWS

LENDERS WESTPAC’S $250M REMEDIATION BILL

BUSINESS SPENDING CONTINUES TO LIFT Source: CommSec

Commonwealth Bank business spending indicator 220

financial results for the first half of FY2019 show a reduction in cash earnings of $250m due to customer remediation programs. It is the third consecutive year the figure has increased. CEO Brian Hartzer said, “As part of our ‘get it right, put it right’ initiative we are determined to fix these issues. We will continue to review our products and services to ensure they deliver the right outcomes for customers.”

WESTPAC’S

January 2004 = 100, trend terms

200 180 160 140 120 100 80 Jan 2004

SUNCORP ANNOUNCES RATE CUTS has reduced the cost of a SUNCORP number of its three- and five-year fixed rate products, effective 21 March. The owner-occupier P&I five-year fixed rate loan decreased by 0.20% and the investment five-year loan decreased by 0.70%. For new owner-occupiers paying P&I, Suncorp’s five-year fixed rate home loan decreased from 4.34% to 4.14%.

For interest only, the investment three-year fixed rate loan decreased by 0.20% and the five-year by 0.70%.

“The role that brokers play in helping customers has been heightened to a level that we’ve never seen before” Tony MacRae GM of banking, MyState Bank

Jan 2006

Jan 2008

Jan 2010

Jan 2012

Jan 2014

NAB SCRAPS INTRODUCER PAYMENTS PROGRAM Highly criticised scheme, which saw non-finance professionals being paid to refer loans, will be suspended from 1 October is to end its ‘Introducer’ payments program as part of its renewed focus on becoming a “better bank”, effective from 1 October 2019.

“Through the royal commission we heard clearly that our actions need to meet the expectations of our customers and the community.

We need to be simpler and more transparent to earn trust. We have to put customers first, to be a better bank,” said CEO Philip Chronican.

“We want customers to have the confidence to come to NAB because of the products and services we provide, not because a third party received a payment to recommend us.”

Chronican said he was certain that ending the program was the NAB

“right thing to do to deliver better outcomes for our customers”.

“Like other businesses, we will still welcome referrals and will continue to build strong relationships with business and community partners. However, there will be no introducer payments made,” he said.

During royal commission hearings, it was revealed that NAB had as many as 8,000 introducers – a head count that was revised down to 1,000 following widespread scrutiny. The hearings also revealed that a gym owner and a tailor had not only referred loans but faked documents for loans that customers could not afford.

While the bank’s then chief executive Andrew Thorburn

Jan 2016

Jan 2018

maintained the Introducer program was “fit for purpose”, the commission highlighted the potential for it to “corrupt the professional relationship between an adviser and their client”.

ASIC estimated the introducer segment of Australia’s mortgage market stood at $14.6bn in 2015.

At NAB, the Introducer scheme generated one out of every 20 mortgages for the bank, and similar schemes were operated by other banks.

Anthony Waldron, NAB’s executive general manager of broker partnerships, said, “This announcement only impacts our Introducer payment program.

We are proud to be the bank behind brokers and remain committed to supporting brokers and their customers.”

NAB has confirmed it supports 72 of Commissioner Hayne’s 76 recommendations, with 26 of these “either completed or in the process of being implemented”, according to a press statement from the bank.

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5

NEWS

A G G R E G AT O R S CONNECTIVE NAMES CASH FLOW PARTNER has joined up with Connective as an equipment and business cash flow finance lender. Connective head of asset finance Brent Starrenburg said, “Our mission is to empower brokers through partnerships by making sure that they deliver real value for long-term business growth, together with the provision of lender choice.”

The aggregator has more than 3,600 members and provides services to mortgage, commercial and asset finance brokers.

CLASSIC FUNDING GROUP

‘RESPECTED’ ADVISERS BACKING BROKERS CEO David Bailey has applauded the “respected advisers” that have backed the broker channel in its calls to protect competition. Both the head of the RBA and the head of Treasury are among the roll call of supporters praised by Bailey, who said, “It’s important that our industry not be a political football heading into an election so that the 26,000 small businesses, their families and, importantly, their customers have certainty.”

AFG

AUSSIE BRANCHES OUT INTO AFFORDABLE LENDING Brokerage adds specialist regional lender to panel as part of its commitment to secure “a better deal” for customers has welcomed South Australia-based HomeStart Finance onto its panel of lenders.

HomeStart, which launched 30 years ago, describes itself as a state government organisation that is “100% focused on providing home loans for South Australians”.

It champions social responsibility and provides low deposit loan options as well as other lending products intended to boost borrowing power and make homeownership attainable for a wider cross section of consumers.

In June last year the group reached $2bn in total lending, and it has also been recognised as “a global leader in affordable housing” by the World Bank.

AUSSIE HOME LOANS

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Aussie CEO James Symond said, “HomeStart is a welcome addition to our panel as it provides greater choice and affordability for our South Australian customers who are seeking a genuine alternative lender outside of the major and mid-tier banks.”

The new lender’s mission is on-brand for the mortgage broker.

“When Aussie opened its doors 27 years ago, we fought for a better deal for all Australians and won,” Symond explained. “Today, we want to ensure that we continue to offer our customers a good deal.

“We have multiple partnerships with specialist lenders, and HomeStart is a natural addition.

The diversity of our panel means

if the customer doesn’t qualify for a traditional loan, the broker may still be able to find them a suitable home loan from one of our other lender partners.”

CEO of HomeStart John Oliver said, “We are delighted to be joining the panel of lenders with Australia’s largest retail mortgage brokerage in Aussie, which will expand our brand presence and reach across the state.

“Aussie is the logical partner for us as the group provides an excellent distribution channel for our loan products, with the ability to reach many homebuyers and assist our mission to help more South Australians into their own home sooner.”

HomeStart has made homeownership a reality for more than 70,000 South Australians.

“We are proud to be a partner of such a loved brand in South Australia and believe that HomeStart is a model that can be followed by other state governments,” Symond concluded.

“Rather than recommending sweeping changes, we believe the existing laws and CIF’s reforms should be given a chance to have an impact” Mark Haron Director, Connective

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To view our ratings and awards please visit our Awards and Ratings page on our website. This publication is for accredited broker use only and is not for distribution to consumers. www.brokernews.com.au

7

NEWS

MARKET ALARM SOUNDS ABOUT NEGATIVE GEARING negative gearing policy is likely to hit mum-and-dad investors, homeowners, renters and the wider economy, according to a report by the Real Estate Institute of Australia. REIA president Adrian Kelly said, “[Our] analysis provides evidence of the impacts of the policy, identifies the losers and the extent of their losses.”

Kelly expects rents to increase by between 8% and 15% across the capital cities in the period 2020 to 2022.

LABOR’S

DECLINES ACROSS ALL LOAN TYPES mortgage approvals in the final quarter of 2018 were down 11.9% on the year before, according to APRA’s quarterly ADI exposures report. Of the new approvals, 69.6% were for owner-occupied loans – down 2.9% year-on-year – and the remaining 30.4% were for investment loans – down 14.0%.

There was an 8.4% decrease in loans with a loan-to-value ratio of between 80% and 90%, and a 13.7% decrease in loans with an LVR greater than 90%.

NEW

“Changes to existing capital gains tax and negative gearing arrangements will dampen first home buyer capacity to save for their first home” Graham Wolfe Managing director, Housing Institute of Australia

8

www.brokernews.com.au

BORROWERS FEEL PROPERTY MARKET PRESSURE Of more than 1,000 borrowers sharing their worries in a survey, one in three said they were concerned they would be declined by their bank for a loan survey of more than 1,000 borrowers conducted by Pepper Money and RFi Group has found that the most common anxiety among consumers relates to securing a home loan rate best suited to their circumstances.

The survey also revealed that borrowers are well aware of the struggling property market, as 40% of respondents said they were worried about receiving a low valuation for their property, and 37% named rising prices and an inability to afford the property they wanted as cause for alarm.

Additionally, around one in three borrowers indicated their concern about being declined by their bank for a loan facility.

The data was collected in A

January, when lending commitments to households fell 2.4% in seasonally adjusted terms.

According to ABS data, the downward trend was driven by falls in new lending for both investment dwellings (-4.1%) and owneroccupier dwellings (-1.3%).

In seasonally adjusted terms, the value of new lending commitments for owner-occupier dwellings declined 17.1% in January 2019 compared to January 2018.

Further, the value of new lending commitments for investment dwellings declined 28.6% over the same period.

Lending for personal finance was the only household lending category to record a rise in January (2.1%). However, new lending

declined 16% compared to January 2018, seasonally adjusted. The value of lending to households for refinancing fell 3.4%.

Pepper’s director of sales and distribution, Aaron Milburn, said, “With a volatile property market and pullback from the big banks in certain parts of the lending market, consumers will be looking to trusted experts more than ever to help them determine the best solution for their individual situation.

“Consumers look to brokers and to lenders to help them navigate the complexities of the lending process.

Their minds are on bigger issues, like how to get the best rate possible and whether their property will get a decent valuation.”

Milburn reaffirmed that brokers were the “most widely preferred channel” for securing a mortgage, and urged those in the industry to use their platform to ensure that customers “know that there are quality alternatives beyond the big banks”.

WITHOUT A MORTGAGE BROKER, Y O U C O U L D H A V E N O A LT E R N AT I V E , B U T T O PAY T H E P R I C E .

DO YOU WANT FEWER LENDERS TO CHOOSE FROM? Each year more than half a million Australians take out a mortgage with the help of a mortgage broker. Possible legislation change threatens the mortgage broking industry, which could see all Australians having less access to smaller lenders and even less access to credit.

As competition and choice declines, bank power and the risk of higher interest rates increases.

Without mortgage brokers, finding a home loan will be harder and could become more expensive for home buyers.

PROTECT COMPETITION, SIGN OUR PETITION AT brokerbehindyou.com.au

www.brokernews.com.au

9

NEWS

A S S O C I AT I O N S

FBAA LAUNCHES CONSUMER CAMPAIGN FBAA has launched an online campaign called ‘Don’t Burn Borrowers’. The campaign website details the effects that proposed industry changes would have on borrowers and brokers, encouraging both groups to take action and sign a petition to preserve the mortgage broking industry. Managing director Peter White said, “We launched this campaign to call for everyone to work together so we can stop misguided recommendations from burning borrowers and brokers and hurting the economy.”

THE

Michael Lawrence, CEO, Customer Owned Banking Association

COBA HIGHLIGHTS CAPITAL RULES DISCREPANCY According to the association, capital rules require reform to make them fairer and to promote competition in the mortgage market Customer Owned Banking Association has called on APRA to implement fairer capital rules to promote competition in the mortgage market.

In a submission on APRA’s revised capital framework, COBA has called on APRA to narrow the capital gap between the ‘standardised’ approach used by smaller banking institutions and the internal ratings-based approach that is used by major banks.

APRA currently allows the major banks to hold much less regulatory capital against home loans than their smaller competitors, such as mutual banks and credit unions, potentially leading to an unfair advantage.

COBA CEO Michael Lawrence THE

said the difference had helped cement the major banks’ dominance of the home loan market.

“Customer-owned banking institutions and other challenger banks want a fair go and a level playing field. The big four have been using the capital rules to gain a significant funding cost advantage on COBA’s members, making it harder for our sector to deliver competitive pressure,” he said.

According to COBA, the Productivity Commission last year estimated that the advantage to major banks was a reduction of approximately 0.14 percentage points in the cost of funding a loan portfolio. The association calculates that this difference translates to an annual funding cost advantage of

almost $750 on a residential mortgage of $500,000, or about $15,000 over the 30-year life of a residential mortgage.

“The major banks’ sheer size gives them enough advantages. They should not be getting extra help from the regulatory framework,” Lawrence said. “We acknowledge that APRA took an interim step back in 2016 to tackle this problem, but further action is needed. APRA’s peer regulator in New Zealand is proposing strong action to narrow the gap in the NZ market.”

A number of reviews, such as the 2014 Financial System Inquiry and 2018’s Productivity Commission banking competition inquiry and ACCC residential mortgage price inquiry have all raised the issue.

“The FSI found that competitive distortions in this area could have a large effect on the relative competitiveness of all ADIs, and that restricting the relative competitiveness of smaller ADIs will harm competition in the long run,” Lawrence said.

30/06/2003

PROPERTY OUT OF FAVOUR Source: CommSec

Proportion of people who believe real estate is wisest place to put savings 60 50 40 30 20 10

Record low 0 Mar 1973

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Mar 1979

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Mar 1985

Mar 1991

Mar 1997

Mar 2003

Mar 2009

Mar 2015

YOUNG PROFESSIONALS EVENT HELD first Young Professionals of Finance PD and networking event was held on 21 March. It was organised by the MFAA, Certified Practising Accountants Australia and the Association of Financial Advisers.

The event welcomed members aged 35 and under and provided support and education in the face of anticipated regulatory changes, weak property markets, an underperforming economy, and the royal commission. Guest speaker Roh Singh spoke on how to lead with assurance and “master your mindset”.

THE

We’re with you every step of the way.

Does your aggregator give you the support you deserve? Let’s be honest for a moment... every single one of us offer various commission models, CRM software access and marketing support services. We all provide professional development days, regular newsletters and annual conferences.

Make no mistake - these are important. But it’s not enough.

A truly supportive aggregator knows you, and knows your business. It offers continuous guidance from your BDM, not just when you’re first onboarded, but at all stages of your career.

It openly and honestly communicates with you, arming you with the knowledge to enhance your business. It helps you expand your horizons and gives you access to the strongest product offerings available in the market. It provides ongoing training, to keep you ahead of the competition, and proactive compliance support, so that you don’t overstep regulatory boundaries.

A truly supportive aggregator is defined by how much it cares for its brokers, and how much its brokers care for it.

Join the aggregator that’s with you every step of the way.

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Proud to feature on the AFR Fast 100 list for the 3rd year in a row. www.brokernews.com.au

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NEWS

R E G U L AT O R S

APRA TACKLES CREDIT RISK CONCERNS has released a discussion paper proposing changes to its prudential standard quality, which requires ADIs to control credit risk by adopting management policies and procedures. The discussion paper outlines APRA’s proposals concerning credit risk management; credit standards; and asset classification and provisioning. The proposed reforms are due to be implemented from 1 July, while an accompanying prudential practice guide and revised reporting standards will be released for consultation later this year.

APRA

PUSH FOR ENFORCEABLE CODES OF CONDUCT The government is to give ASIC the ability to approve codes for a wider range of entities and to treat a breach of code as a breach of the law Coalition Government has detailed how it plans to tackle the issue of regulation in a post royal commission finance landscape.

In a statement released on 18 March, the government outlined the efforts being made towards creating enforceable codes of conduct in financial services, as well as in equipping regulators and consumers with more power to hold relevant institutions accountable for misconduct.

The government has agreed to implement Recommendation 1.15, which will enable ASIC to approve codes for a wider range of entities and will treat a breach of code as a breach of the law.

THE

BANKS ON TRACK TO MEET SEDGWICK TARGET are on or ahead of BANKS schedule to meet the 2020 deadline to implement payment methods for staff who are service focused rather than sales driven. The issue arose during royal commission hearings following an independent report in 2017 commissioned by the ABA and former public service commissioner Stephen Sedgwick. Sedgwick made 21 recommendations in his final report, intended to better align the priorities of banks and their staff with the best interests of customers.

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The changes are in direct response to Commissioner Hayne stating, “There must be adequate means to identify, correct and prevent systemic failures in applying the code … in order to do that, some provisions of the codes should be picked up and applied as law.”

Additionally, mandatory codes can be imposed by the government should the financial services industry fail to propose updated enforceable code provisions “in a timely manner”.

According to a statement from the Australian Banking Association, the move “is welcomed by Australia’s banks, who look forward to working with regulators and the Treasury to

identify what more can be done to further enforce its new Banking Code of Practice”.

The Banking Code of Practice, slated to take effect on 1 July 2019, will introduce new measures intended to make banking products more customer focused, for example by making them easier for the average consumer to understand.

The code of practice is currently enforceable through the courts as well as the Australian Financial Complaints Authority. However, in light of recent events, it has been announced that the code will be amended further.

“While the new code is already enforceable as relevant clauses form part of a customer’s contract, the industry will work with the government to identify what more can be done regarding enforceability following the recommendation of the royal commission,” said CEO of the ABA Anna Bligh.

PROPERTY UPTURN AHEAD? Source: CommSec; Westpac/Melbourne Institute

Changing conditions signal upturn Time to buy a dwelling index

CoreLogic national income price index

150 140 130 120

4-year high

110 100 90 80 Jan 2010

Jan 2012

Jan 2014

Jan 2016

Jan 2018

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FE AT URES

SPECIAL REPORT

EMPOWERMENT THROUGH COMPLIANCE Still driving innovation after 25 years, NextGen.Net director of sales Tony Carn tells Australian Broker how the firm’s new suite of tools will enhance compliance, improve lending standards and empower brokers

KEY BUSINESS METRICS

25 YEARS

since NextGen.Net launched

15 YEARS

since ApplyOnline debuted

650,000

loan applications a year use ApplyOnline

97%

of Australian mortgage brokers use ApplyOnline

2017

phased introduction of ApplyOnline Compliance tab began

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far as million-dollar questions go, the broker channel has been forced to address a few over recent months. From questions about living expenses to those around responsible lending and best interest, some have been easier to answer than others.

One that has proven to be particularly tricky is how to standardise and regulate the brokerclient relationship, particularly when it comes to proving best interest. Until recently the approach demanded manual data input and close liaison with multiple parties, repeating tasks and driving down efficiency. But all that changed in 2017 when NextGen.Net embarked on the phased introduction of the Compliance tab within ApplyOnline.

The upgrade was rolled out with a simple premise: to reduce the risk of data input errors and maximise efficiency by eliminating the need to re-enter information.

“There has always been a requirement for lenders to ensure that the needs of the customer are taken into consideration, and what we have now is a much more formalised process, and we have put a robust structure around that,” says NextGen.Net director of sales Tony Carn.

“It’s really about going beyond the unsuitability test of saying that this loan doesn’t appear unsuitable; it’s more around identifying what is in the customer’s best interests. That’s a very important aspect of the tool.”

Inspired by requirements identified by the Combined Industry Forum, the tab emerged from a working group established by the major banks and NextGen.Net. The group was AS

tasked with exploring the best way to deliver a new set of standards around the client interview process, and the results are also closely aligned with APRA’s reviews around best practice – something that in itself has become a point of debate since 4 February.

For brokers, additional responsibilities on the compliance front are part and parcel of the job.

However, this time the mechanism to achieve that compliance is technologically sophisticated enough to eliminate the associated workload burdens.

“Driving a standardised solution

written a loan with one of these banks, the tab is nothing new.

What is new is that in a post royal commission finance industry the idea of compliance takes on a whole other meaning – one that begs further questions around suitability, retention and, ultimately, how the broker channel can be empowered to fulfil its role.

“I think there is a real elephant in the room in the industry at the moment around managing the customer’s best interest not just for new loans but for the significant change events that happen throughout the life of the loan,” says Carn.

As Carn observes, transactions are managed from the point of onboarding a new customer, but there are limited processes to empower the management of any variations that customer will require; for example, switching from P&I to interest only, or moving to a fixed rate.

“I think there is a real elephant in the room in the industry at the moment around managing the customer’s best interest” Tony Carn, director of sales, NextGen.Net is always a big thing for us at NextGen.Net. Standards make it easier to do things; they make things cost-effective, and the integration point of difference is easier to manage, but collaboration with the community is really important,” says Carn.

Westpac, St. George, Bank of Melbourne and Bank SA were the first to implement the Compliance tab in November 2017, and the rest of the majors followed suit in 2018.

Since then a cohort of other lenders have also adopted the tab, including ING, HSBC, Bankwest, AMP, CUA and three Teachers Mutual Ltd brands, among others.

For any broker who has recently

“I expect broker management of customer transactions on an ongoing basis to be front and centre of everyone’s mind, and I think it not only addresses compliance but also addresses retention risk for lenders going forward, and it requires lenders to actually empower brokers,” Carn says.

Work in progress The Compliance tab isn’t the first ApplyOnline upgrade, and it’s far from the last. Currently, ApplyOnline provides electronic lodgement solutions for 97% of Australian mortgage brokers and more than 50 lenders, facilitating in excess of 650,000 loan applications per year.

In partnership with

Tony Carn, director of sales, NextGen.Net

In 2017, NextGen.Net’s ongoing digitisation of lending reached commercial loans, with early adopters including Suncorp, NAB and Pepper Money. Then, in 2018, eSign debuted as part of the ApplyOnline Supporting Documents service, and the ApplyOnline Serviceability Calculator underwent enhancements to streamline information flows and create labour-saving efficiencies.

“We are doing a lot of great things, whether it’s new products, the integration of ordering valuations and other services, the implementation of basic features or enhanced variations.

That is what empowers brokers, and lenders have frameworks to maintain their customer base,’’ says Carn.

‘‘Driving efficiencies drives cost reductions and also helps ensure compliance – they are all big ticks for all players in the market going forward.”

For lenders, the next frontier is benchmarking. By analysing ApplyOnline’s previously gathered transactional data in new ways, NextGen.Net will be able to provide lenders with the data required to compare their performance with that of their competitors, across such metrics as borrower profiles, loan types, approval times and rework.

Carn says, “We are doing some really cool stuff at the moment using data, and we are at the very early stages of looking at things such as

where does a lender’s credit policy sit compared to the market? What does their inflow of lending look like as a segment of the industry?”

The idea is that every lender will be able to identify their best and target their weakest performance areas, driving higher standards across all elements of lending for all involved.

“The really big one is for a lender to know their ‘time to approval’ and their ‘time to yes’. It might happen within so many business hours, but when compared to the market it’s actually terrible. So it’s about how do you actually get deeper integration to create that better, seamless communication with the customer,” Carn says.

“The better we make the lender processes the better the touchpoint is for the broker, and the customer too is having a better experience.”

From the broker and borrower perspective, the data quantifies the point of difference offered by each different lender throughout the application process. It also supports the attainment of Straight Through Processing (STP), the idea of automating and streamlining manual processes in the finance industry to enhance efficiency.

For Carn, STP is identified at the point of sale (POS) – not, as commonly believed, through a platform – meaning that the broker can accurately obtain real-time conditional approval on an application.

“The broker and customer experience is dramatically improved if a complete and verified package of data and documents is provided from POS. This leads to a high level of confidence for all parties that the deal will be approved,” Carn explains.

Benchmarking aside, Carn says a “significant workload” lies ahead for NextGen.Net, which will focus on user experience and interaction, hand in hand with ongoing work around digitising commercial loan lodgements and growth within NextGen.Net itself.

However, enhancing compliance and driving efficiencies remain top of the agenda.

“It all comes back to compliance – there is a lot of work to do, but it will future-proof the industry.

Using technology to implement better compliance, particularly from a lender perspective, should be a no-brainer,” Carn says.

“The question for lenders now is how do I empower a broker to manage a customer on an ongoing basis? That has been quite a topical question for all the wrong reasons lately. I think there is an enormous opportunity, and quite frankly if it had been addressed earlier it would have prevented quite a few headaches.” AB www.brokernews.com.au

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IN THE NE WS

PUTTING CUSTOMERS FIRST In his new position as general manager of banking at MyState Bank, Tony MacRae is poised to build on his role in the Combined Industry Forum by spearheading better customer outcomes and solid growth. Australian Broker finds out more been a busy 12 months for Tony MacRae. This time last year he held the position of group general manager of third party distribution at Westpac, in which he managed the performance of the bank’s 17,500-strong network of accredited brokers. In June he took on the role of national general manager for retail homeownership distribution, with Warren Shaw succeeding him as head of third party.

Then, after 10 years at the big four institution, MacRae was named GM of banking at MyState Bank, a move that would see him take responsibility for the non-major’s retail division, call centres, business and agribusiness, as well as the mortgage broker channel.

“I was at Westpac for 10 years.

I had a wonderful time and great opportunities, and I still have a whole heap of friends there. In that sense it wasn’t an easy decision,” he says.

“But the reality was, with the opportunity at MyState, in a smaller organisation it’s a chance to make a IT’S

serious commitment to the cause, and it has paid off handsomely.

The bank has invested heavily in putting a sharper focus on digital banking solutions – from the recent launch of two digitally enhanced accounts, the Glide current account and the Bonus Saver, to the addition of Garmin Pay, Apple Pay, Samsung Pay and Google Pay. It is one of the first banks to confirm it will be ready to comply with new comprehensive credit reporting requirements from 1 July, and CEO Melos Sulicich predicts a 200% increase in customer use of digital wallets by 2020.

In the last financial year, MyState posted a net profit after tax of $31.5m, up 4.6% on the year before.

“Growth is important for us.

We need to grow our customer base, whether that be customers who come in through our retail branches or broker network, or who increasingly come through our digital channels,’’ says MacRae. Once we get them in it’s about building good, strong relationships with them.”

However, MacRae is equally focused on the role the broker

“We have some of the best-kept secrets in the industry, and now we have to get those out there” Tony MacRae, general manager of banking, MyState Bank real difference, work in an organisation that can be nimble and deliver on those customer outcomes.

That was a great opportunity and too good to pass up,” he says.

Customer outcomes have been close to MacRae’s heart for some time – incidentally, he helped create the first official definition with Gerald Foley as part of the Combined Industry Forum. With an NPS score that consistently sits in the 30s, MyState has also made a 16

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channel – which generates 75% of all new loans – can play in enhancing MyState’s service proposition.

“We see that brokers are critically important in helping customers and guiding them through the most important financial decisions most people will make. They deliver a great service and, critically, choice,” he says.

“It’s about giving customers choice on how they want to deal in the mortgage space, whether

Tony MacRae, general manager of banking, MyState Bank

that’s dealing directly with us through branches, dealing with brokers, or using digital channels moving forward.”

While many expect the broker channel to grow off the back of royal commission exposure, MacRae sees the future bringing a different set of opportunities, such as the chance for brokers to own the ongoing debate around remuneration.

“The reality, whether perceived or real, is that there are conflicts within our model, and so we need to work together to determine how to mitigate or eliminate those conflicts.

I think we have a great window of opportunity to own our own destiny,” he says.

For MacRae, the revenue-share model in place currently makes “absolute sense”. However, it

requires restructuring in order to address some of the issues raised over the last 12 months, including conflicts of interest.

“With some of the announcements that have been made we could still find ourselves debating this in a number of years’ time, and you don’t want to be caught in that circumstance,” he adds.

For MyState the future is certainly promising. Digital will remain a top priority in response to customer demands. The pressure to maintain its NPS score will also add to the mix, but the real focus is footprint, and there brokers have an undeniable role to play.

“MyState is a place with a real passion for customers and service.

We have some of the best-kept secrets in the industry, and now we have to get those out there.” AB

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ROUNDTABLE

THE FUTURE OF BROKING Following the royal commission’s final report, non-bank lender Better Choice met with a cohort of its leading brokers to discuss how regulation, technology and customer demand for the broker channel could shape the industry to 2025

TAKING A GENERAL VIEW OF THE INDUSTRY, WHERE DO YOU BELIEVE BROKING WILL BE IN 2025?

Allan Savins: I think that in terms of market share we will see it hit 60% of all new home loans originated through the broker channel over the coming two quarters, and by 2025 we will see the channel reach 75% to 80% market share.

Regardless of the royal commission, there is still a need for brokers to find the best outcomes for their clients. Borrowers still need access to finance, and it’s going to be a very complex environment as we move forward to navigate the process of getting a home loan.

Stephen Michaels: I also think brokerages themselves will change.

A lot of business will come from online platforms, with the broker popping in and out on structuring, policy and advice.

There will be fewer sole traders, more larger broker groups, and more introductions through online platforms.

I predict that technology will increase, but the missing piece is that a machine can’t take over the policy aspect. That means that until someone can really make a dynamic piece of software that can put every scenario into a tick box, the broker is still relevant.

Peter Valentino: We are going to see a huge advancement in technology.

Currently, I input or email a customer a questionnaire, which is a quasiapplication. They give us their details but it requires manual formatting.

I think the tech developers will create a platform where you email to the client and they will furnish all of that information electronically.

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Allan: There needs to be an upskilling of knowledge. Brokers will have to become the absolute product experts and improve standards across the industry. You will still get clients who chase rate, but it’s about understanding the policies and the lenders’ assessment techniques. The

Allan Savins Executive director, Better Choice

Jaison Singh General manager, Financial Elements

Darren Liu Managing partner, My Home Loan

customer the more we feel like we need to be a bank. We can’t just do one loan any more; we have to comprehensively service many requirements. At each stage in the journey, we give our clients options so they feel they are being taken care of, and that is why we get repeat business.

“The changes in credit reporting will bring a lot more data into play, which will determine what is prime and what is no longer prime” Lili Barron, relationship manager NSW/ACT, Better Choice rate component is still there but probably second or third on the list compared to what it used to be.

HOW MIGHT BROKER BUSINESS MODELS EVOLVE OVER THE COMING YEARS?

Jaison Singh: I think it will become a more customer-centred business in which services and solutions become a lot more diversified. Probably things like budgeting advice will become key, as well as creating that value proposition and point of difference for our clients as well.

Stephen: Policy and education are going to be paramount. The solo operators who aren’t seeing enough deal flow and don’t have a team to workshop solutions with will probably either amalgamate or join larger firms. Policy is so dynamic, one day a bank is lending for studio apartments; the next it just isn’t in their appetite. The larger groups will benefit from having more deal flows, more scenarios and resources.

Allan: The broker needs to create deeper relationships with the client, and there are ancillary-style products and services to help the customer fulfil their objectives that I see as perfect low-hanging fruit integration.

For example, you have valuation, insurance, utility connections, so if you can partner up with groups who can provide a seamless and fluid delivery – and automate that delivery – it will build a deeper relationship. Brokers need to evolve in that way, and quickly.

Darren Liu: That’s one thing we see in our business: the more we deal with the

Jaison: As a solo operator, you become a generalist, whereas in a team environment you have niches and specialists, and that’s more profitable. For example, I don’t touch superfund loans, but one of my consultants is really good at them. It’s important to identify the skill set of each person.

Lili Barron: Diversification will be massive over the coming years. For the

In partnership with

commercial space and from a policy perspective, it will mean that brokers will have additional interests in real estate or insurance to add more value to their business. I think there will be amalgamation and growth across broker businesses, which means we will become very specialised in our industry.

Jaison: And you have to make sure these partners aren’t doing it opportunistically; some people will take advantage of some brokers. Diversification should have been a big part of business in the last 10 years anyway – financial planning, insurance, property, all those different avenues should have been done already. It’s only because there has been a bit of a shake-up in the industry that people are looking at it now.

people. We will get the clients to recognise the value of the broker by thinking “this is what I’m paying for”. And the broker can explain how they do more in return for that fee. Because there is no regulation of this, there is also no idea of what to charge.

Lili Barron Relationship manager NSW/ ACT, Better Choice

Allan: If a fee-for-service model was introduced, banks would have a competitive advantage over brokers as banks have the infrastructure and cost base to subsidise any fee that is introduced.

Peter: Personally, I think the fee for service would put a lot of brokers out of work.

Peter: The problem, I believe, is that the larger aggregators have done little to assist their brokers to diversify.

Jaison: The more experienced brokers use their aggregator as a portal, just to leverage. It’s about a business transaction with them, whereas 15 years ago it was more relationship driven; you weren’t looking at the commission splits, for example.

It’s the aggregation model that has driven it that way, and that’s the key thing I think moving forward.

Peter Valentino General manager, Bower Finance

COULD A FEE FOR SERVICE EVENTUALLY BECOME PART OF THE INDUSTRY? Darren: I would prefer to work in that way if possible. It will push us to a higher level of service, and we would also be able to get more stable systems and more

Jaison: Fee for service is great, don’t get me wrong, but are you going to see the institutions passing on those reductions?

All they will do is ramp up the mobile lending space.

Stephen Michaels Director, Catalyst Advisers

BETTER CHOICE IN NUMBERS

6

home loan products

4

types of commercial loan products

HOW COULD REGULATION BE TIGHTENED TO BETTER SUPPORT THE BROKER CHANNEL? Peter: One thing I would like to see is a more black-and-white approach rather than the interpretation of regulations that we have at the moment. Even when NCCP came in everybody did it the way they saw fit. Everybody, I believe, even today, does compliance in a different way and a different format because no regulator has made it clear. Then there’s best interest – a real live case that comes back to the honesty of the broker.

Allan: Where compliance is heading is quite scary. Recent reports claim there are certain data uploads ASIC now wants to receive moving forward. That means there is no question about the level of scrutiny

28 YEARS

since the first loan was written

80%

predicted broker market share to 2025

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every lender has their own agenda and risk department, so it didn’t happen. I feel it would help us get to that point.

IN TERMS OF TECHNOLOGY, HOW DO YOU PREDICT THIS WILL EVOLVE?

improvement. When it comes to customer engagement, brokers will be looking to personalise themselves and control their front of house and design it whatever way they want, to level the playing field for lead generation and capture the client.

That’s how brokers will compete with the fintechs.

Darren: That’s an opportunity for brokers and aggregators alike. By 2025, I think the industry will be flatter because of the technology that will be available. For example,

Darren: I don’t think AI or technology will replace us, because we still give advice and assistance.

That’s something that the technology can’t give, but we need more

“There will be fewer sole traders, more larger broker groups, and more introductions through online platforms” Stephen Michaels, director, Catalyst Advisers and data that the regulators will want from aggregators and brokers.

They will be looking at more and more borrower files at a granular level, and that is where compliance is headed. Then there’s clawback.

Where does that sit? Because on one side I’m hearing all this noise about best interest duties, and on the other hand we have clawbacks of two years; they are not mutually aligned.

We are regulating for that 2% cohort at the end of the day. They recommend drastic changes based on a minority of people who were doing the wrong thing.

Jaison: Channel conflict is another massive issue, and it has been for the last couple of years. The problem is the majors are trying to realign their business models, but all of a sudden they are on a different playing field. Clients are given different expectations in a branch.

Stephen: From my perspective you have the associations for accreditation and then an aggregator for compliance and regulation. But there is no written guidance on how you are supposed to look after a file from start to finish. If there was one body that intervened across all aggregators and all brokers to create a black-andwhite checklist, it would help.

Lili: There is a lot of tidying up that needs to be done. For example, living expenses are another area that 20

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requires clarity, and that’s probably the first step I would say in terms of what ASIC might look at next.

We need to know what is ASIC looking for, what is the client data they are looking for? What are we, in the brokering world, doing to work in a client’s best interest? And what is best interest in your terms? Those are the trends that we are starting to see with the new compliance reporting and heavier regulation.

But the living expenses is a big thing.

Allan: In New Zealand their lender application form is essentially the same across all lenders. When I was on the MFAA National Lenders Forum the topic of a unified single application form was brought up every quarter, year after year, but

Finsure is investing a lot in its new CRM, Infynity, but if other aggregators don’t continue to invest, brokers will build their own technology. Today when I came to this discussion I could see on my phone how many customers I have in the area, and I know they are good clients that I have to visit today. So, by 2025, if aggregators aren’t ahead people will take their business.

Allan: Today you have all this technology you can potentially leverage on, and it’s up to the aggregator to open that window for you to transfer data and information, or you partner with third parties that can connect the value chain. I think open APIs are what aggregators need to be doing to assist in process

education to be able to continue to provide that.

Peter: We have got to learn that we are all in the financial industry, and at some point most of us were in banks or credit unions. In those environments, it’s instilled in you to get as many tentacles as you can into that one client.

Allan: The more products you give a client, the more sticky they become.

But the more you open up an opportunity for your client to have a conversation with someone else, the more you’re at risk.

IN TERMS OF THE SUPPORT YOU RECEIVE FROM LENDERS IN DIVERSIFYING, HOW

BROKER MARKET SHARE Source: Comparator, a CoreLogic business

Broker channel market share of settled home loans

September 2018 quarter

59.1%

September 2017 quarter September 2016 quarter

55.7% 53.6%

In partnership with

RELEVANT IS A BROAD PRODUCT SUITE TO YOUR BUSINESS? Peter: The best approach I find is one application, one solution, with a number of lenders behind that…

How can you ask for anything more?

Stephen: Diversity in products for our businesses is of the utmost importance. With Better Choice, you have credit-impaired, low-doc, construction lending, sharp prime lending for bankable clients. The way we all run our businesses, it’s official, professional; it needs to be seamless. Having a product suite that is behind one brand or lender adds to our service and customer experience.

Jaison: Things like your car finance and equipment, general insurances, but with a number of different funders and providers for each. It creates a point of difference.

HOW DO YOU BELIEVE THE BROKER’S CUSTOMER MIX WILL CHANGE OVER THE COMING YEARS? Allan: What was a loan six months ago may not be today, given the constant shifting sands. It isn’t as clear-cut as to what a traditional prime borrower is these days.

Lili: The changes in credit reporting will bring a lot more data into play, which will determine what is prime and what is no longer prime. There will be a lot of things that come out of the woodwork in the two-year reporting, and the clients will claim they don’t remember. I think we will come to see a lot more of that in the nonbank space compared to the majors.

Stephen: Catalyst deals with SMEs and high net worth [HNW] clients, and we also get referrals from that. They are all prime clients running several businesses with good income, and taking their custom to a major bank may not be the right move because the majors don’t do applications in the name of a trust, or an entity structure is too complex or there is something quirky about their income. So, going to one bank with a diverse product suite – like a Better Choice

or a brokerage with a 40-lender panel – is absolutely paramount.

I don’t think the customer mix will change just from our business; more so our service becomes even more relevant because you are fitting a square peg into a round hole. It just doesn’t work.

going to see far more sophisticated client profiles.

The credit scoring for an HNW client might not be as high because they are a lot more active. So how do you judge and put HNWs in the same category as a non-performing client? In reality they are a more

“If you can partner up with groups who can provide a seamless and fluid delivery – and automate that delivery – it will build a deeper relationship” Allan Savins, executive director, Better Choice Jaison: I don’t think there will be much of a change. We deal with a lot of people with portfolios, and I think you are going to have to have that niche lending experience moving forward to be able to accommodate those types of borrowers. And I also think we are

sophisticated borrower and they know exactly what their risks are, and as long as you mitigate those risks, that’s the main thing.

Allan: For Better Choice moving forward, we have always been a price and policy taker. In other

words, our funders tell us the wholesale price and underlying policy. But now we have become a price and policymaker in the context of the Goldfields Money deal. We are now able to manufacture, price and control our destiny, and that is the big development that will set Better Choice apart from the other mortgage managers, because they will always be a price and policy taker.

So it goes back to how we align with our own bank and manufacture products. We are going through a migration phase at the moment, and that’s what 2019 will be, but you will find that by the third quarter of this year we will become much more aggressive in terms of the products we will have to offer, because we will have the balance sheet firepower to do so.

We will have the infrastructure and ability to offer unique products and services just for certain cohorts of clients, and that is quite exciting.

It isn’t going to be dull! AB www.brokernews.com.au

21

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FROM THE FORUM

Top comments from trending stories on brokernews.com.au

‘INDEFINITE’ HOLD ON CBA’S PLANS FOR DEMERGER

SAVINS: BROKER MARKET SHARE COULD REACH 80%

CBA has suspended the demerger of its wealth management and mortgage broking businesses that was slated to occur this calendar year, in order to better address the recommendations of the royal commission.

A spokesperson from the bank said the deal was “very much on hold” and that whether it would be back on the table in 2020 or 2021 would be “very difficult” to predict.

Apparently CBA remains “committed” to the demerger but has acknowledged that “it could be revised.”

However, a statement from Aussie Home Loans said the suspension of preparations for the demerger was “indefinite”. The CBA-owned brokerage currently operates 225 franchise stores and counts more than 1,000 brokers in its network. According to CEO James Symond, CBA’s announcement “doesn’t impact [Aussie’s] focus on [its] customers, brokers and team members”.

“We remain fiercely independent in our operations and approach to providing outstanding customer outcomes, and it is worth noting that 66% of the loans provided by Aussie in 2018 were with lenders outside of the big four banks,” he said.

Better Choice Home Loans executive director Allan Savins expects the broker channel to reach a market share as high as 80% within the coming years. Speaking to Australian Broker, Savins said complexities in the lending market, access to finance, and the value proposition of a fee-free service would all support the growth of the third party channel. “I think that in terms of market share we will see it hit 60% of all new home loans originated through the broker channel over the coming two quarters, and by 2025 we will see the channel reach 75–80% market share,” Savins said.

Data released in January confirmed that brokers currently enjoy their highest market share, settling 59.1% of all home loans over the September quarter, despite an overall reduction in lending of $8.46bn compared to the same period in 2017.

“Regardless of the royal commission, there is still a need for brokers to find the best outcomes. I honestly believe the value proposition remains for brokers, and the environment will only become more complex in terms of products, compliance and regulation,” Savins said.

CBA will need to hold on to Aussie to get some sort of market share into the future, as surely the vast majority of brokers have finally woken up and deserted this ungrateful, broker-hating rabble for good.

Earth calling Comyn, Earth calling Comyn ... Where art thou, Comyn.

Broker | 15 March 2019, 08:08 AM

You are dreaming if you think Shorten and Co. are going to just let that happen. Your biggest problem is not the banks.

Yes, Comyn-Hayne is waiting until Labor get in and ruin broker business and competition. Then he will dump his brokers. Hayne should have had enough common sense and done more research [before] making these horrible recommendations that have caused much anxiety and upheaval.

SocialismIsComing | 19 Mar 2019, 10:49 AM

Lost in Comyn’s world | 19 Mar 2019, 06:50 AM

If Labor get in with their policy, we’ll be back to an 18% share – where we were a decade or so ago – in no time flat... those that stay that is.

Rubbish | 19 Mar 2019, 10:54 AM

Leaving | 15 Mar 2019, 09:57 AM

What’s Plan B, CBA? Perhaps you should try the current RC into elderly care and blame brokers for issues being raised. Mind you, we never charged the dead account fees, did we? So maybe not a good idea. No doubt you have your thinking cap on. Good luck with that.

Digital futurist Brett King states that banks need to get over the concept that a customer comes to the bank branch.

A bank is a platform that extends to other parts of your life if it is embedded when and where you need it. Hence reaching the target of 80% for mortgages being written by mortgage brokers is not just a dream but a reality. It’s a solid reason why finance and mortgage brokers need to upskill now whilst they have the time to do so and focus on building a strong, sustainable business model. It’s not time to shrink your vision or thinking.

Andrew Holmes | 19 Mar 2019, 10:37 AM

Jeff Mazzini | 19 Mar 2019, 11:43 AM

Brokers have not woken up, and Aussie will be sold off shortly.

Oli | 17 Mar 2019, 12:14 AM

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$

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CAUGHT ON CAMERA Pivotal Financial held its annual awards at The Star, Gold Coast, on 14 February, with a French twist. The gala evening, themed “A night in Paris”, included Moulin Rouge-style performances to entertain the hundreds of finance and property specialists present. GM Matthew Andrews said, “The night celebrated finance specialists who have achieved outstanding results and recognised those owners and agents in the RE/MAX network who have worked most effectively with Pivotal Financial.”

Finance specialist Anish Prasad once again won the Pivotal Financial broker of the year award and Danielle Wilson was announced as the Pivotal Financial rising star. Meanwhile, Paul Habib scooped his second consecutive top performer title and Tim Denton received the top market share broker award.

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FUTURE-PROOF YOUR BUSINESS

There’s never been a more important time for a national forum to address the issues impacting the industry.

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Navjeet Singh Matta CEO Gain Home Loans MPA Top 100 Brokers 2018

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25

DATA

WESTERN AUSTRALIA

SA SPOTLIGHT

Infrastructure development on Perth’s northern coast boosts dwelling values The infrastructure investment along Perth’s northern coastal strip has been pushing dwelling values up since mid-2018. For example, the suburb of Two Rocks had the fourth-best housing market in Perth in the second half of last year, with prices up 6.4%. Meanwhile, Yanchep saw the third-largest increase in land prices, at 5.5%.

According to Jarrod Rendell, project director for the Atlantis Beach and Capricorn Beach estates in these suburbs, significant infrastructure initiatives have been a major drawcard for buyers, along with low prices. Projects include both transport developments and new educational institutions, such as the Atlantis Beach Baptist College in Two Rocks and the Yanchep Secondary College.

“As a result of this new infrastructure, combined with its attractive coastal lifestyle, more families are moving into the area, which is now beginning to result in a lift in property values that over time will increase further as the area becomes even more popular,” Rendell says.

Area

Type Median value

Quarterly

12-month

growth

growth

Perth

H

$490,000

-1.0%

-1.0%

WA Country

H

$320,000

-1.2%

-4.1%

Perth

U

$375,000

-2.5%

-4.9%

WA Country

U

$200,000

-2.2%

-13.7%

QUEENSLAND

Brisbane’s apartment lifestyle attracts first home buyers More buyers – particularly first home buyers – are favouring the apartment lifestyle because of its affordability and convenience. “They can live in a part of a capital city at a relatively affordable price if they buy an apartment, but if they want to buy a house they’ll have to be quite far from town,” says Nerida Conisbee, chief economist at REA Group.

Although the Commonwealth Games have ended, the impressive runs of the Gold Coast and Sunshine Coast have continued. A recent Queensland Market Monitor released by the Real Estate Institute of Queensland (REIQ) highlights that both areas remain highly positive.

“While other markets around the country are struggling in the face of tightened lending criteria and cooling investor appetite, the southeast corner of Queensland continues to deliver steady, sustainable growth,” says Antonia Mercorella, CEO of REIQ. The annual median house price in the Gold Coast rose by 2.3% to $675,000, while the Sunshine Coast saw strong growth of 6.3% to $595,000.

Area

Type Median value

Quarterly

12-month

growth

growth

HEALTHY HORIZONS

Adelaide’s dwelling value growth is likely to remain muted this year, but economic conditions and interstate migration underpin a positive outlook for the long term

to the closure of major manufacturing plants in recent years, Adelaide has been through a rough patch of late.

“With the pace of capital gains slowing, we may see a slightly lower rate of dwelling value growth in 2019; however, we expect the trend in housing values to remain positive, driven by improving economic conditions and interstate migration rates as well as healthy levels of housing affordability,” says CoreLogic head of research Tim Lawless in his outlook for 2019.

The housing market as a whole has been fairly steady over the five years to 2018, and while the regional areas of SA have not done as well as the capital, they are catching up quickly.

“The last five years have seen dwelling values trend 0.1% lower each year, although the past 12 months have seen this mild downwards trajectory flatten out, and we could see some mild growth return to the regional areas of the state in 2019,” Lawless says.

The southeast region of SA enjoys the strongest conditions, but this trend is expected to spread to other pockets, like the BarossaYorke-Mid North. This comes as a result of rising commodity prices and investments in the private sector.

Some of the top-performing suburbs in the state are in the inner and middle rings of Adelaide, such as Parkside, Kilburn, Newton and West Beach. The boost to the residential sector has been supported in part by the improvements to the industrial sector, for example defence spending increased in the 12 months to December 2018.

This, along with initiatives for infrastructure improvements, has helped support the industrial sector, according to Herron Todd White’s Month in Review report for December 2018. AB

H

$535,000

0.0%

2.3%

Median price (houses)

QLD Country

H

$437,000

-0.4%

-0.1%

$329,566

Brisbane

U

$387,500

-0.6%

-2.5%

QLD Country

U

$370,000

-0.4%

0.7%

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Economic conditions inspiring upgraders and first home buyers First home buyers are still active in the marketplace, but the headlines highlighting sliding prices in Sydney and Melbourne have prompted some caution among younger purchasers. This caution exists despite Adelaide – which has seen steady growth of 3.4% for houses and 5.5% for units over the last 12 months – being at a different point in the price cycle to the Victorian and NSW capital cities.

It's not the media hype that's influencing investors; it's tightened lending. Adelaide's rental yields are healthy compared to Sydney's and Melbourne's, and this has been driving enquiries from locals and interstate investors – but access to finance has been challenging.

The prolonged period of low interest rates is also encouraging clients to upgrade to something that better suits their current lifestyle. The upgraders are motivated by low interest rates rather than price movements.

Deven Patel Mortgage broker, Loan Market

SUBURB TO WATCH: NURIOOTPA

Brisbane

26

BROKER PERSPECTIVE

DUE

Median price (units) $245,110

Source: CoreLogic

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

6.4%

4.9%

16.5%

5.5%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

3.0%

9.4%

30.7%

4.7%

HIGHEST-YIELD SUBURBS IN SOUTH AUSTRALIA Suburb

OPPORTUNITIES AND KEY INFRASTRUCTURE

Type

Median price

Quarterly growth

12-month growth

Coober Pedy

H

$66,000

-8%

-37%

Solomontown

H

$86,250

-25%

-30%

Peterborough

H

$72,000

-5%

-10%

Robe

H

$380,000

-3%

19%

Wirrina Cove

U

$74,750

-12%

-30%

Wirrabara

H

$97,500

-19%

-34%

Port Pirie West

H

$106,000

-4%

-4%

Quorn

H

$120,000

0%

-14%

Port Augusta

H

$135,000

-2%

-9%

Goolwa South

H

$310,000

0%

-2%

Bordertown

H

$144,000

7%

-6%

Blyth

H

$159,000

-7%

-23%

AUSTRALIAN CAPITAL TERRITORY

Area

Science

Transport

The Australian Space Agency will be located in Adelaide following a $41m investment

Last year, work on 24 road safety black spots received a $5.5m funding boost

Affordability

New builds

In the SA suburb of Andamooka, home prices start at a record national low of $20,000

Building approvals declined 1.5% in January, compared to 3.8% average national growth

Type

Median value

Quarterly growth

12-month growth

Canberra

H

$680,000

1.0%

3.8%

Canberra

U

$430,000

0.0%

0.2%

Federal election unlikely to impact property market Canberra is not expected to suffer any specific impacts from the upcoming election.

“The federal election affects everybody, and I don’t think any of the capital cities will come out of this unscathed. But I don’t think anything different will happen with Canberra [compared to] anywhere else,” says Adrian Kelly, president of the Real Estate Institute of Australia.

“The Canberra market is doing some interesting things at the moment, particularly apartments, which now have the highest median rent in the country.”

Indeed, those seeking to rent in the ACT and its surrounds will have a difficult time finding an affordable space. According to Domain Group’s rental report for December, house rents are now the highest in Australia, eclipsing even Sydney's.

The median asking rent per week stands at $560 following a 3.7% boost in 2018.

www.brokernews.com.au

27

DATA

NORTHERN TERRITORY

12-month

growth

growth

Darwin

H

$490,000

-0.8%

-3.0%

NT Country

H

$430,000

-0.6%

-2.0%

Darwin

U

$320,000

-1.4%

-11.5%

NT Country

U

$300,000

-1.3%

5.3%

MEDIAN HOUSE AND UNIT PRICES

Strong economic outlook strengthens Sydney despite correction

$1,000,000

Quarterly

12-month

growth

growth

Sydney

H

$940,000

-3.1%

-3.1%

NSW Country

H

$462,000

0.0%

3.3%

Sydney

U

$715,000

-0.7%

-1.4%

NSW Country

U

$400,000

0.0%

0.0%

28

www.brokernews.com.au

67

Sold

26

Not sold

21

Clearance rate

55.3%

PERTH Total auctions

49

Sold

9

Not sold

24 27.3%

Houses

Sydney Melbourne Brisbane Adelaide

Perth

Hobart

$490,000

$470,444

$370,000

$0

$368,250

$100,000

$480,000

$200,000

$332,500

$300,000

$465,000

$500,000 $400,000

$510,000

$600,000

$692,250

$700,000

$665,000

$800,000

$837,000

$900,000

It has been a tough few months for Sydney; however, the city is expected to come out on top in the long term.

“In the medium to long term, capital growth is expected to remain robust in Sydney due to strong employment, population growth and a host of major infrastructure projects,” says Rich Harvey, CEO and founder of Propertybuyer.

“NSW has the strongest economy in Australia and is responsible for approximately one third of GDP. It also has the lowest unemployment rate at 4.5% and the strongest job growth at 3.4% per annum.” As a result, properties should continue to see reasonable demand.

While some of the population has shifted to other states due to high property prices, NSW still has the best net overseas migration figures in the country. The 2018–19 budget for NSW has also set aside $87.2bn to roll out infrastructure projects over the next few years.

Type Median value

Total auctions

Clearance rate

NEW SOUTH WALES

Area

ADELAIDE

Darwin

Units

$432,500

Quarterly

$365,750

Type Median value

There were 1,196 auctions held across the combined capital cities this week, significantly lower than the 2,201 held in the week prior and the 1,764 one year ago. However, four of the eight states and territories had a public holiday.

The preliminary auction clearance rate across the combined capital cities rose to 52.2% this week, up from the final 50.4% last week.

Over the same week last year, the clearance rate was recorded as 63.3%. The two largest auction markets, Melbourne and Sydney, saw their preliminary clearance rates rise; however, volumes were lower week-on-week. Across the smaller auction markets, the highest clearance rate was in Adelaide.

Looking at results by property type, units outperformed houses again this week, with 55.4% of units selling at auction, while 50.8% of houses sold across the combined capital cities.

$525,000

Area

WEEK ENDING 10 MARCH 2019

$649,750

Prices are still on a downward track in Darwin after several years. However, more and more small signs of positivity are putting a spark back into the market.

“We started seeing a recovery in demand in 2017, but it fluctuates from quarter to quarter,” says REA chief economist Nerida Conisbee.

This volatility is in part driven by the general weakening across the country, according to CoreLogic’s head of research, Tim Lawless. In the company’s January Hedonic Home Value Index he noted that although Australia’s two largest cities were the primary drivers of the weaker national reading, “most regions around the country have reacted to tighter credit conditions by recording weaker housing market results relative to 2017”.

Nonetheless, Lawless points to a bright spot in the report’s findings: Darwin was one of two exceptions to the trend, as the annual rate of decline fell from 8.9% to just 1.5% over 2017–18, suggesting the freefall could be easing up.

CAPITAL CITY AUCTION CLEARANCE RATES

$320,000

Downwards trajectory continues for Darwin property

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

-0.1%

-0.9%

-2.6%

-10.5%

Melbourne

-0.1%

-0.8%

-2.8%

-9.4%

Brisbane

0.1%

-0.1%

-0.5%

-0.5%

Adelaide

-0.1%

0.0%

-0.4%

0.8%

Perth

0.0%

-1.0%

-2.6%

-7.1%

Combined 5 capitals

-0.1%

-0.8%

-2.3%

-8.2%

*The monthly change is the change over the past 28 days

BRISBANE CANBERRA Total auctions

44

Sold

10

Not sold

26

Clearance rate

Total auctions

116

Sold

25

Not sold

55

Clearance rate

31.3%

27.8%

SYDNEY Total auctions

702

Sold

297

Not sold

213

Clearance rate

58.2%

TASMANIA

MELBOURNE Total auctions

215

Total auctions

3

Sold

91

Sold

1

Not sold

79

Not sold

1

Clearance rate

Clearance rate

53.5%

TASMANIA

Area

Tasmania still recording top performance Hobart is likely to sustain its growth well into 2019, supported by the steady economic developments in this city. “The Tasmanian economy has traditionally relied on government and agricultural employment. But that’s now changed, and there’s a really strong tourism and education element to Hobart that’s really growing the economy,” says Nerida Conisbee, chief economist at REA Group.

While Hobart will continue to be the centre of activity in the Apple Isle, things are steadily picking up in other corners of the state. “Everywhere in Tasmania seems to be seeing growth at the moment. We know places like Bellerive are seeing lots of demand, and Launceston has been doing pretty well. Beyond Hobart, you can get a lot of stunning properties with water views for quite affordable rates,” Conisbee reports. However, the rental market has slowed down due to a shortage of long-term rentals, and falling vacancy rates.

N/A

Type

Median value

Quarterly growth

12-month growth

Hobart

H

$450,000

2.3%

12.6%

TAS Country

H

$300,000

1.7%

7.3%

Hobart

U

$355,000

1.5%

10.0%

TAS Country

U

$242,000

0.0%

-2.0%

All data sourced from CoreLogic.com.au

www.brokernews.com.au

29

PEOPLE

IN THE HOT SEAT Matt Bauld, GM of sales and business development at Prospa, reflects on the lender’s clean sweep of industry awards in 2018, and the clarity he gains from spending time with his son What’s one of your recent career highlights?

Prospa achieving a clean sweep of the MFAA Excellence A Awards for Fintech Lender of the Year in 2018, winning the award in all five states. We also had three Prospa team members scoop best BDM in the State Awards and another win for the National BDM/Lender Excellence Award. It was great validation that we have built the best team in the market. We’re passionate about making a difference to both our partners and small business owners, which in so many cases are the same.

Q

What’s the greatest challenge for brokers at this time?

Future-proofing their business. It is vital brokers see the A opportunity in changing legislation and regulation to build a more sustainable and robust business for the future, and this means supporting their customers across a range of financial needs.

What’s your favourite way to relax after a stressful time Q at work?

Spending time with my son. Seeing the world through the eyes A of a seven-year-old provides great clarity on what is important in life. The innocence of their thinking keeps me grounded and positive about what is possible.

Q

What do you wish you’d known when you started out in the finance industry?

That major change is possible. The industry may be mature and A grounded in strong practices that are tried and tested, but a customer-focused mentality can revolutionise a market. We need to dream big and ask ‘why not?’ rather than accepting the status quo.

Q

What was your first job?

My first role in financial services was working in the Avco A branch network, which was a fantastic induction into finance.

Branch management was like running a small business but with a large business mentality. I had the opportunity to learn all the disciplines, from credit and lending, sales and marketing and collections, to branch and staff management.

Q

What are your top survival tips for working in finance?

Tenacity. Working in the finance sector is challenging, but the A rewards are massive if you challenge yourself to make a genuine difference each day. You need to be tenacious to create, launch and facilitate lending that puts customers at the heart of everything you do. AB

Q

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