APRIL 2019 ISSUE 16.07
The sky is the limit Capify CEO David Goldin on doubling the lender’s business /16
Finding clients for life Top tips for boosting client retention and diversifying a business /18
MURRAY COWAN The founder and MD of Better Mortgage Management explains how the firm is driving a solution-based customer model /14
Big deal How one broker helped his client create the perfect Christmas card /22
ALSO IN THIS ISSUE… Movers and shakers The latest appointment news from across the industry /24 Housing market data The Sunshine State’s time to shine /26 In the hot seat Taylor Kelly talks investments, charity and career highlights /30
NEWS
IN THIS SECTION
Lenders Major bank prepares for double rate cut /04
Aggregators Connective broadens commercial lending /06
Technology Alternative lender launches trust /10
Associations Commercial diploma “very close” to becoming reality /12
Market SMEs “fed up” with lenders’ security policies /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
1 M AY
2 M AY
Loan Origination and Experience Conference
MFAA National Roadshow and State Excellence Awards
Organised by IQPC, this two-day event will cover case studies on the lending frameworks of major, neo and digital banks, and will 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.
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.
2 M AY FST Banking Summit The FST Banking Summit will bring together leaders and divisional heads from across Australia’s largest banks and financial services organisations to share thought leadership insights on industry trends and emerging technologies that will change the face of the industry in the short- to mid-term future.
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
1 5 M AY
2 8 M AY
Build Your Property Portfolio
AMA nominations open
This is one in a series of Bluewealth events to be held in May that will educate investors and their brokers on how, where and when to build wealth through property. This event at Sydney’s Olympic Park will focus on portfolio diversification, leveraging assets and securing future wealth.
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. The ceremony takes place on 19 October at The Star, Sydney. Further information is available at www.australianmortgageawards.com.au.
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.
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
6 JUNE
18 JUNE
1 J U LY
Future of Financial Services
Broker Commercial Masterclass
Implementation of open banking
Vow has teamed up with the FBAA to devise a commercial masterclass series for brokers looking to break into the non-resi and equipment finance space. Kicking off on 18 June in Adelaide, the five-hour workshop will be delivered in Perth (19 June), Brisbane (25 June), Melbourne (26 June) and Sydney (27 June).
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.
This event facilitates collaboration across technology, innovation, digital and strategy executives from Australia’s leading banks, insurance, and superannuation providers. The aim is to drive dynamic conversations around the opportunities and challenges shaping the space currently, with emphasis on disruptive technologies.
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This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss. Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008. The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.
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NEWS
LENDERS ME BANK CONFIRMS INTEREST RATE CUT
NON-BANK LENDING CONTINUES TO RISE Source: Reserve Bank, CommSec
Loans and advances – annual % change
has passed on the lower cost of fixed term funding to its customers by cutting home loan rates by as much as 50 basis points. For owner-occupiers paying principal and interest on their mortgages, ME cut its two- and three-year fixed home loans with a Member Package by 10 and 20 basis points to 3.74% per annum and 3.79% per annum respectively. The five-year fixed home loan with a Member Package was slashed by 50 basis points to 3.99% per annum. ME
30% Banks
Other lenders
25% 20% 15%
11-year high
10% 5% 0 -5% -10%
BANKWEST ROLLS OUT POLICY TOOL new valuation and policy tool A offered by Bankwest will provide brokers with instant access to the bank’s LVR limits and maximum loan amounts for the majority of postcodes throughout Australia, according to property type. It’s the latest in a series of new digital services for mortgage brokers. Head of third party banking Ian Rakhit said, “With the new LVR limits in place, this new tool will help brokers to find Bankwest home loans to as much as 90% LVR.”
“Alternative lenders capture a greater share of business lending from the banks, as customers place greater importance in the areas of trust, transparency, affordability and choice” Noah Breslow Global CEO, OnDeck
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-15% Feb 2008
Feb 2011
Feb 2014
MAJOR BANK PREDICTS DOUBLE CASH RATE CUT BY RBA Economists agree that an interest rate cut is imminent but have different ideas on how the details will play out for borrowers top economist at National Australia Bank is expecting two RBA cash rate cuts before the end of 2019. Speaking at the NAB Budget Breakfast on 3 April, NAB chief economist for markets Ivan Colhoun said the Reserve Bank had likely been stumped by the combination of decreasing unemployment and slackening GDP growth. “Lower unemployment says do nothing, but slower GDP growth says cut rates,” he explained. That said, Colhoun pointed out the significant change apparent in the final paragraph of the Reserve Bank’s announcement earlier in the week, which said that the RBA was “monitoring” monetary A
policies – a notable shift from the last several years. Colhoun said NAB expected the Reserve Bank to cut interest rates “twice in the second half of this year”. Jonathan Pain, an independent economist, author and publisher of ‘The Pain Report’, agreed. “If we didn’t have the election in May, I think the RBA would already have been cutting rates,” he said. “The final sentence of the Reserve Bank statement opened the door for a rate cut at their next meeting, in my view.” However, Pain and Colhoun failed to agree on the details of a potential cut, specifically, the size of the cut and what it
Feb 2017
would mean for borrowers. Pain said, “NAB is going for two rate cuts, from 1.5% to 1%. I’m going for four rate cuts by the end of this cycle.” The economist predicts the interest rate will settle at 0.5% in two years’ time. Colhoun expects rate cuts “to be passed on” to NAB customers as long as “funding pressures stay lower”. Pain disagreed, stating that “banks always want to protect their margins”. “One of the reasons I’m going for a 1% cut in rates in the next two years is because I don’t think the banks will fully pass it on. I think they’ll pass on about 60% to 65%,” he said. “Does it matter? Absolutely. The majority of mortgages in Australia are of a variable-rate nature, so the cash rate that the Reserve Bank sets is very important for us from a business perspective and from a mortgage prospective.”
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NEWS
A G G R E G AT O R S NMB WELCOMES VIRGIN MONEY ON BOARD has joined nMB’s 30-strong lending panel. Gerald Foley, nMB managing director, said: “Virgin Money brings us not only a well-known and respected brand but the strength of its products and service offering. It’s great that our broker network can now access these.” Virgin Money has recently expanded its BDM team and introduced digital acceptance of home loan documents. VIRGIN MONEY
AFG AND ISELECT EXPAND PARTNERSHIP
CONNECTIVE BROADENS PANEL OF COMMERCIAL LENDERS Aggregator welcomes new lender to panel in a move that reflects brokers’ growing interest in diversifying beyond mortgages has added specialist commercial lender Thinktank to its growing panel of lenders, effective this month. The independent commercial property lender provides a range of borrowing options and services to SME businesses and commercial property investors. Connective director Mark Haron said, “They have some very good measures to aid a number of specialist asset finance and cash flow funders and can help brokers through that process as well.” Connective is looking to remain agile and position itself in the market on a larger scale by “bolstering its white label program”. CONNECTIVE
“We’re talking to a number of different funders. We’re bringing on a [bank-backed] white label product, as well as a Pepper white label product,” Haron told Australian Broker. Haron was vocal in his defence of broker commissions in light of concerns that potential changes to remuneration next year will affect their income streams. “Trail is an accountability structure,” he said. “Brokers aren’t guaranteed all the trail; if the loan goes into arrears, the payment stops. If the loan gets refinanced because it wasn’t the right product, the trail payments stop. The brokers don’t burn off all the
value of the commission that they might’ve done if it had been an all-upfront payment.” While Haron wants fair compensation for brokers, he has reservations about industry members calling for a pay raise. Rather than push for an increase in compensation, Haron believes the focus should be on better communication and delegation between banks and brokers. “We’ve got a very inefficient process at the moment, where brokers are doing it and the banks are doing it. We need to get to the point where one does certain things and the other does other things and we’re not duplicating. “Then, there would be more value which could be shared. Brokers would have less expenses in terms of time and what they have to do with loans, so they could potentially write more business. “We have got to get rid of these redundancies,” Haron said.
and iSelect have entered into a joint operation agreement to enhance digital home loan services. iSelect will be responsible for qualifying and servicing digital leads through to settlement under the iSelect brand and “powered by AFG”. “This evolution comes from a long association between the two companies and will leverage [their] strengths to allow for further growth and customer care,” said AGF GM of broker and residential Mark Hewitt. AFG
“Some may argue that broker-originated loans are poorerperforming ... However, ours is an exceptionally performing loan book 100% originated by brokers” David Bailey CEO, AFG
Consolidation of ATO debts, business debts up to $500,000 and private loans. For more specialist niches visit broker.resimac.com.au/solutions
Specialist | Alt Doc | Prime
Resimac Group Ltd. ABN 55 095 034 003. Australian Credit Licence 247829.
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NEWS
MARKET PRE-EASTER AUCTION RATES TUMBLE busiest auction weekend of the year is likely to be far less busy in 2019, with predictions of a 50% drop-off in properties for sale. CoreLogic data predicted 2,098 auctions in the pre-Easter week, compared to 3,990 in the same week last year. “By contrast, the week before Easter last year, there were 2,071 auctions in Melbourne alone,” said Kevin Brogan, CoreLogic’s national auction market commentator. THE
HOME PRICES CORRECT Source: CoreLogic, CommSec
Australian capital city home prices – monthly % change 1.5% Banks
1% 0.5% 0% -0.5%
Smallest fall since October
-1%
CALLS FOR CHANGE TO HARDSHIP LEGISLATION many as 81% of divorcees experience financial stress, with more than 60% unsure of where to turn for help. These figures were compiled by Janine Leafe, WA state principal at Century 21, who tapped her social media following of more than 30,000 people. Early access to superannuation is often the only way out for people who have been “left with nothing”, and Leafe is pushing for legislative change. AS
“Ongoing falls in dwelling values have the potential to weigh down consumer attitudes towards spending and cause a sharper than anticipated fall in residential construction” Tim Lawless Executive research director, APAC, CoreLogic
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Other lenders
-1.5% Mar 2011
Mar 2012
Mar 2013
Mar 2014
Mar 2015
Mar 2016
SMES ‘FED UP’ WITH LENDERS’ SECURITY POLICIES As many as 80% of SME owners resent using property to secure a business loan, according to the latest research property as security against new loans is one of the most pervasive frustrations in the SME space, second only to loan conditions, according to the latest SME Growth Index. Scottish Pacific commissioned a survey of over 1,200 SMEs across all industries between November 2018 and January 2019. The results showed that 80% resent providing property as security to fund their SMEs. Two thirds also said they would “definitely” be prepared to pay more in interest to avoid using personal property as collateral. Scottish Pacific CEO Peter Langham said, “This [figure] has USING
more than doubled in the past few years, rising from 29.5% to 65%.” He added: “A not-too-distant future where there may be more entrepreneurs renting than buying means that business owners will increasingly have to consider business borrowing secured against assets other than property.” Speaking to Australian Broker, Langham stressed the importance of finance brokers in educating and guiding SME business owners to more ideally structured solutions. “Business owners need assistance in understanding what options are out there as opposed to being given more options. If there are more options, they might not even know
Mar 2017
Mar 2018
Mar 2019
about them,” Langham said. The data also revealed that, for the first time, SME owners are about as likely to turn to alternative lenders as they are to use a traditional bank, which “unshackles the family home from business growth and frees it to be used in other ways to secure their personal financial futures”. However, Langham reiterated that a majority of SME owners don’t know about many of the options available to them. “Too many business owners remain unaware they can use balance sheet assets as security instead of property – assets including equipment and invoices issued,” he said. “Business-owners are time-poor. They need support from brokers.” Meanwhile, the 27% of SME owners who want a company tax cut had their wish granted when the federal budget was announced on 2 April.
TECHNOLOGY UPDATE
NEXTGEN.NET FOCUS ON USER EXPERIENCE
Prince Antony (left) with the NextGen.Net UX team
creation of a dedicated user experience (UX) team at NextGen.Net underscores the key focus being assigned to enhance user experience in their ApplyOnline platform. The UX team and focus on the end-user experience ensure that all products built into the future will be optimised for usability, from conceptualisation through to development. UX Team Lead Prince Antony, an experienced UX architect whose 16-year background in user design spans time spent at CommSec, Optus, Vodafone and Fairfax, says users have increasingly high expectations, and technology has to meet those. “NextGen.Net consistently seeks user feedback, and our product managers build that feedback into all product design. “The ongoing growth of NextGen.Net has seen us develop a dedicated expert team focused on the user journey,” Antony says. THE
In 2017, NextGen.Net created a standalone UX team chartered with championing the user experience and designed to add expertise across all the product development teams within the business. Antony came on board to drive the UX strategy a year later. With detailed design principles established and engrained in the business, they guide all product development in new and meaningful ways. These design principles have revitalised existing customer-centric design, allowing NextGen.Net to uncover opportunities to reduce duplication, streamline processes and improve the experience for users at all touchpoints when new products and tools are being designed. Highlighting the spotlight that is being shone on UX, Antony references the new Supporting Documents service user interface (UI), which is about to be launched.
“I’m examining the process, taking into account user interaction as well as business requirements, and redesigning the experience accordingly. “Additional features are being built into the Supporting Documents service to deliver a user-friendly experience that flows and is coherent.” Since its inception in 2003, ApplyOnline is now utilised by 97% of Australian mortgage brokers, providing access to over 70 Australian lenders and facilitating nearly 700,000 loan applications per year. During the past 15 years many enhancements have been made to the platform, including new products, tools, integrations and new services. Antony and his UX team are now redefining its design language to bring efficiency and consistency in design. “Consistency is king to ensure users can easily understand how to interact with the platform and have ease of use
and a streamlined efficient experience,” he explains. Antony’s customer-first design charter relies on the valuable user feedback channelled through NextGen.Net training teams, along with data gleaned from analytics. All of this is integrated into an innovation roadmap delivering the continuous enhancement of the ApplyOnline platform that the market has come to expect. “We are committed to the continuous evolution of the ApplyOnline platform and approach innovation with purpose,” says Antony. “Our current ApplyOnline UI has a number of planned enhancements, and our aim is to create a state-ofthe-art user interface and continually improve usability. “We’re looking through a UX lens and streamlining the design and development process for NextGen.Net to deliver optimal solutions for all parties in the lending value chain.”
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NEWS
TECHNOLOGY
CORELOGIC BOOSTS MARKET TRANSPARENCY Property Hub 2.0, due to go live in Australia and New Zealand over the coming months, will digitise the mortgage approval process and provide lenders and brokers with access to property and market insight. The “intuitive online platform” will feature a comprehensive marketplace of lenders from which to order and track all valuations. A new suite of valuation fulfilment capabilities and further partnerships are already planned for later in 2019. CORELOGIC’S
ALTERNATIVE LENDER LAUNCHES PERSONAL LOANS UNIT TRUST SocietyOne is promoting a 6% pre-tax return from the trust after fees and costs, as well as access to the fund after 12 months (P2P) lender SocietyOne has launched a trust intended to provide “returns competitive with bank hybrids” to its wholesale investors. SocietyOne’s Personal Loans Unit Trust will invest in a diversified portfolio of the lender’s fixed rate unsecured personal loans and provide both a more fluid option and a consistent monthly income stream to investors with a minimum application of $100,000. CEO Mark Jones said, “We believe this new Unit Trust model will help to significantly simplify the experience of investing in our portfolio of personal loans and provide investors with greater PEER-TO-PEER
access to this asset class, consistent interest payments and enhanced liquidity options after 12 months.” A target has been set to achieve $25m to $50m in assets under management in the first year of operations, with a pre-tax return of 6% per annum after fees and costs. Additional proceeds above the targeted return are to be passed on to investors as well. “The Unit Trust was designed to provide investors with greater levels of simplicity, access, diversification and liquidity, while delivering solid and consistent returns,” said chief investment officer John Cummins. Investors can access their funds after 12 months, compared to the current fractionalised option,
which is fixed for the life of the loan, usually 36 to 60 months. “The market has evolved, with investors now wanting a more simplified structure and means to invest in this asset class, rather than having to make many smaller investments in individual loans. “This is an issue that the trust resolves, while simultaneously providing the same above-average returns,” Cummins said. The news followed APRA’s warning in March that it is to clamp down on P2P lending due to its high-risk profile. In response, SocietyOne said in a communication to stakeholders that its “historical credit performance is in line with or better than industry and continues to improve”. It added that “more than 80% of our customers are new-to-institution. When compared with new-to-institution borrowers, our delinquency and loss performance is significantly better than the average”.
30/06/2003
FINTECH MARKET HIGHLIGHTS, DEC 2018 Source: Techboard and KPMG Australia
$350M
Largest funding event: Judo Capital debt facility
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$1.6BN
Largest acquisition reported: PEXA (closed Jan ’19)
$508M
Most funded category: fintech
$454M
Most funded state: Victoria (42% of all funds invested)
NEW GATEWAY PLATFORM IMPROVES LOAN PROCESS is working to “transform” the home loan contract process by enabling customers to submit completed forms online. Two-factor authentication measures are built into the bank’s new platform to ensure security isn’t compromised by speed. Bank CEO Lexi Airey said, “Customer-centricity is at the core of our organisation. Service simplification will have a positive effect both for our valued members and our staff.” The platform is live in NSW, SA and Victoria. GATEWAY BANK
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NEWS
A S S O C I AT I O N S
BUDGET FAILED TO TACKLE HOUSING ISSUES executive director Peter White has voiced concerns that the federal budget announced on 2 April failed to address issues faced by struggling homebuyers in light of the market correction and “persistent global uncertainty” in the wider economic environment. “The government and all major political parties must examine what they can do to stimulate the housing market, not suppress it – and that includes any change to negative gearing and capital gains tax,” said White. FBAA
COMMERCIAL DIPLOMA ‘VERY CLOSE’ TO BECOMING REALITY CAFBA president reveals how the new qualification will address the application of different financial concepts within the commercial space Commercial and Asset Finance Brokers Association of Australia has announced it is “very close” to rolling out its new diploma, which will address how different financial concepts in the commercial space should be applied to customers. “The reason that CAFBA has very successfully kept itself out of the gaze of regulators is that we’ve maintained an education regime and we’ve only allowed membership of CAFBA to people who have specific industry experience and qualifications,” said CAFBA board member and president David Gandolfo. “CAFBA membership is a credential and a qualification in THE
74% DEMAND NEGATIVE GEARING REVIEW by the Housing RESEARCH Industry Association shows that 74% of Australians believe Labor’s proposed changes to capital gains tax and negative gearing should be reviewed. “Most people believe there should be a review of the policy before any changes are made,” said the association’s managing director, Graham Wolfe. Meanwhile, only 34% of Australians are aware of the changes suggested by Labor or have any idea at all how they would be personally impacted.
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and of itself. It doesn’t just mean that you hand over a cheque. There’s a very big difference.” In addition to prioritising education, CAFBA maintains a close relationship with regulators. “We have regular engagement with regulators. We know what they want. We know the standard that they expect, so we exceed those standards and they’re happy with that,” said Gandolfo. “CAFBA has always been happy to drop the bottom rung off the ladder. We’ve continually increased our minimum membership standards, and if you’re not happy to comply with that, we’ve been happy for you not to remain a member.” The approach seems to be
working, as brokers handle 68% of all the asset finance registers written in Australia through all banking channels. “Brokers are taking business away from the banks, because the banks are descaling while the broking community in our space is upscaling. We have a minimum education standard that the banks, in fact, do not,” Gandolfo said. He believes a thorough industry education is crucial to securing the best consumer outcomes, a message he hopes to communicate to mortgage brokers considering diversifying their services. “We’re always happy to have more members. Whether you’re in the resi space or in the commercial space, borrowers need an advocate. They need a broker who knows their way around and through the market,” he said. “But all I would say to them is do it properly. If you’re going to be successful at it, you’ve got to do it the right way.”
HOUSING CREDIT GROWTH TUMBLES Source: RBA, CommSec
Housing credit growth – annual % change Investor housing credit
Owner-occupier housing credit
12% 10% 8% 6% 4%
Record low
2% 0% Feb 2014
Feb 2015
Feb 2016
Feb 2017
Feb 2018
Feb 2019
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SPECIAL REPORT
LEARNING FROM HISTORY
Celebrating 20 years in business this November, Murray Cowan, founder and MD of Better Mortgage Management, explains how an appetite for innovation inspired a solution-driven customer proposition
KEY BUSINESS METRICS
1999 Better Mortgage Management founded
50+ products offered today
2 MPA awards for best non-bank lender
2017 Non-bank of the Year finalist at the Australian Mortgage Awards
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Better Mortgage Management opened its doors on 1 November 1999 the aim was to address gaps in the market that the banks couldn’t, providing innovative loan products for everyday Australians. In short, the proposition was better service, better loans and better rates, all delivered through the third party channel. The idea was spearheaded by Murray Cowan, who, fresh from a career in banking, was keen to apply the lessons he had learned at an international corporate to a new venture. “I was at Citibank for 10 years, and as an American bank that at the time was new to Australia, it was very innovative. They encouraged new ideas and new ways of thinking and they brought innovation to the Australian lending market during very conservative times,” says Cowan, the company’s founder and MD. “They brought new loans to market such as Mortgage Power and Home Credit, they were the first to promote fixed rates for home loans, they did investment loans at the same rate as home loans, and it was the first bank where depositors were paid interest based on daily balances as opposed to the then norm of the minimum monthly balance. “It was a great place to work and I learned a lot of things, as well as good ideas and that started a culture for innovation.” In its first eight years of operations, the Better Mortgage Management loan book grew strongly. Then the GFC hit. While the bigger banks dodged the worst of WHEN
the crisis due to federal government support, it took smaller and nonbank lenders back to square one. Not only were customers flocking to the major institutions for their perceived security, but those lenders that were not as major suffered as funding costs skyrocketed. For Better Mortgage Management – and the hundreds of other businesses playing in the same space – the effect was a hit to the loan book as well as margins, and unavoidably higher rates.
commission has demonstrated that the big banks were getting a little bit reckless and needed to be brought back in line. Now the big banks are moving away from market niches that may be considered not their speciality,” Cowan says. Among those areas are alt-doc lending, SMSF loans, investment and business lending, to name a few. Better Mortgage Management has made a pledge to not only meet the demand for these products but also to innovate on their delivery, and for Cowan there’s a simple formula: compete by providing solutions, not on rate. Across its product suite, Better Mortgage Management lends to homeowners, investors, expats and non-residents, among others, offering terms up to 30 years and interest-only periods of up to five years, with no ongoing reviews. Additionally, there is a wide range
“Brokers should be prepared to try some alternative lenders; we lost market share after the GFC but are now staging a comeback” Murray Cowan, founder and MD, Better Mortgage Management “The GFC years were very tough. We were a bigger business before the GFC, and we probably made more margin. Today, the book is now getting back to where it was, but margins remain tighter across our sector,” says Cowan. Non-banks were closely regulated post-GFC, but today, in a post-royal commission industry, the pendulum is swinging in the opposite direction. The reputations of many major financial institutions are diminished, and customers are turning their backs on scandal-hit brands and businesses while those same businesses retreat from entire sectors of the market. “In recent times the royal
of alt-doc options with rates starting from 4.69%. As is the nature of the sector, there is no credit scoring, meaning decisions are flexible as a result. Changing times From day one, Better Mortgage Management was built exclusively on a broker distribution model. Twenty years on and third party remains the only channel utilised by the firm, but the channel itself has evolved significantly. The MFAA calculates that there are currently more than 16,000 residential mortgage brokers alone, up from around 9,500 in 2008. While good news for the sector, this
In partnership with
Murray Cowan, founder and MD, Better Mortgage Management
influx of new-to-industry brokers means many haven’t lived through the same challenges as their more experienced peers. Another priority is diversification – not just of skills but of the types of lenders brokers partner with; in the modern finance system, minimising risk is imperative. The ability to identify alt-doc customers is also high on the list, and Better Mortgage Management runs workshops to support brokers when dealing with non-vanilla borrowers. “Brokers should be prepared to try some alternative lenders; we lost market share after the GFC but are now staging a comeback. “What banks could do, say, three
years ago was quite broad, but that has become narrowed, so keep non-banks in mind for opportunities for those customers who now fall
products on offer, BMM’s book is back to its pre-GFC values and gaining strength, due to diversified funding sources and a more robust
“Technology can play a big part in changing things, but exactly how far that goes and how far it reaches time will tell” Murray Cowan, founder and MD, Better Mortgage Management outside the bank guidelines, such as alt-doc, investment lending, customers with credit issues and SMSF,” Cowan advises. Today, with more than 50
marketplace. However, the size and shape of the Australian finance industry has changed forever. Customers are now losing faith in the major financial
brands, turning instead to challenger, neo and digital banks as well as other non-major lenders. Keen to protect their market share, the established institutions are quietly snapping up their smaller competitors, creating a consolidated market in which competition isn’t as strong as it appears. “There have been a lot of mergers in our sector, as well as buyouts. Companies like RAMS and Wizard were bought out by Westpac and CBA. Then firms like Aussie Home Loans adapted from a mortgage manager to a broker group while retaining the mortgage management business. Recently other mortgage managers have been bought out and some changed business models,” Cowan recalls. Cowan says the next big trend could be a continuation of recent merger and acquisition activity but with a modern-day twist. “Some of the banks may cherrypick some of the best business models amongst the fintechs and purchase or invest in them. They have the substantial cash reserves and balance sheets to enable them to do that,” he says. “There is probably scope for fintechs and perhaps digital banks to grow, and probably a lot of the incumbents may have seen opportunities. Technology can play a big part in changing things, but exactly how far that goes and how far it reaches time will tell.” With the majors continuing to lose market share, the role of the non-bank lenders is expanding in a fluid and ever-changing industry, and the opportunities for brokers are multiplying as a result. Far from the last year being a negative for the third party channel, Cowan maintains that now is the time to shine. “If brokers promote lesser known brands to their customer base, they might just discover that customers are happy to give them a try particularly now that some of the larger banks have had negative findings from the royal commission,” Cowan says. AB www.brokernews.com.au
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IN THE NE WS
THE SKY IS THE LIMIT A decade after its Australian debut, Capify’s founder and CEO, David Goldin, says the fintech is poised to double the size of its business over the coming 12 months through products, profit and potential acquisitions David Goldin, founder and CEO, Capify
finance has undergone rapid development in the last 24 months, with new codes of practice, new levels of transparency and new players driving momentum. As the first alternative SME lender to enter the Australian market, Capify has been waiting for this moment for more than a decade. “We were the first lender here, so in a way there was no competition, but we actually had one really big competitor – awareness,” says founder and CEO David Goldin. “Back then it was a long education process just to explain to SMEs that there is an alternative to the established lenders at the $20,000 ALTERNATIVE
2020, Goldin aims to “double the company in all aspects”, including broker originations, which he wants to grow to 40–50%. New capacity will be met with the same head count – 125 staff across Australia and the UK – meaning more automation and digital solutions to keep the cost of lending down. Despite recent improvements, profitability is an issue that plagues the fintech sector. According to the EY Fintech Australia Census 2018, one in five Australian fintechs are now profitable, up from one in seven the previous year. “I think there is a huge shift coming. Many of our competitors
“I think there is a huge shift coming. Many of our competitors were focused on market share over profitability” David Goldin, founder and CEO, Capify to $50,000 mark where there is no real estate involved and it’s not a credit card.” Following its US debut in 2002, Capify launched in Australia six years later and has since shed its American business to concentrate on other markets. While awareness among SMEs was a priority in the early days, the focus has now shifted to targeting brokers, who currently drive 20% of all loans. Between now and March 16
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were focused on market share over profitability, and at some point any company will have their day of reckoning where they have to show their investors and the public that they have made a profit,” says Goldin. “Anyone can lend money. The hard part is getting is back.” New money Supporting its growth targets, in January Capify secured a $135m credit facility from Goldman Sachs
Private Capital. It’s a development that Goldin attributes not only to the strength of the brand and business model but to the increased legitimacy online lenders have generated through such self-regulation as the Code of Lending Practice. “We have pretty much outgrown every one of our previous credit facility providers. Now, with this facility, the sky is the limit,” he says. The next step is to onboard more brokers by offering education, new products and new tech-based marketing solutions. On the product front, facilities combining the benefits of traditional and alternative lending will be announced soon, as well as the ability for brokers to offer multiple products as part of Capify’s vision to become a one-stop shop for SMEs. Revenues will be reinvested in third party activities, but quality over quantity will remain key. “There are plenty of capital providers who like to say they have thousands of brokers across the country. From our perspective, it doesn’t matter how big an organisation you are; you won’t have 500 BDMs to manage all those brokers. “We like to be a lot more selective so we can offer a white-glove service.” That service will be delivered to brokers who Goldin says are “committed and want to work with us”. He adds that brokers will also benefit from access to a suite of new marketing tools.
“Technology moves very quickly and there may be certain pieces of marketing software that certain brokerages can’t afford on their own, that we can either co-invest with them or show them how effectively to get out there,” he says. Acquisitions also feature in Capify’s plans. Goldin predicts a US-style correction is on the horizon, driven by lenders favouring underwriting over speed, and profit over market share, meaning that the “slightest uptick in default rates” will leave them highly exposed. “They will either lose their credit facilities or they will look for ways to monetise their company because it won’t be a sustainable business model,” he says. Suggesting the timeline could be as short as six months, Goldin says Capify is ready to “offer a lifeline” to those likely to fall. “In the past it had always been organic growth. Because we are profitable and we now have the backing of Goldman Sachs, we are actively looking for strategic acquisitions and distressed assets,” Goldin says. The official outlook for Australia’s fintech sector is distinctly brighter. Across digital payments, personal and business finance, FinTech Australia says the industry could drive $10bn in revenue away from existing financial institutions and create a further $3bn in revenue over the coming years. Whatever happens, Goldin and the Capify team are poised to lead the pack. AB
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. Contact Finsure today.
1300 346 787 (1300 FINSURE) www.finsure.com.au Australian Credit License Number 384704
Proud to feature on the AFR Fast 100 list for the 3rd year in a row. www.brokernews.com.au
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FE AT URES
BUSINESS PROFILE
FINDING CLIENTS FOR LIFE Cory Bannister, vice president and chief lending officer at La Trobe Financial, explains how brokers can develop lifelong customer relationships and diversify their product suite by expanding the range of products they offer they are looking for commercial, residential or personal loans, there is no shortage of borrowers in Australia, and often, once a borrower has enjoyed the services of a broker, they rarely go back to doing things for themselves. Onboarding a new client and becoming their broker for life requires extensive product knowledge, experience and a commitment to presenting new solutions. That said, many brokers are already successfully embracing multiple business streams as a way to insulate their companies from negative market trends. For example, in the six months before royal commission hearings started, the MFAA’s Industry Intelligence (IIS) Survey confirmed the average value of a broker’s loan book had increased 6% when compared to the last period, to reach $38.1m, predominantly off the back of diversification. “We have found over time that our purpose has driven us to cater for all areas of a customer’s life cycle,” says La Trobe Financial VP and chief lending officer Cory Bannister. “Our objective is to continually solve customers’ unmet financial needs through product innovation, and deliver one of Australia’s broadest loan and investment products in the market.” Taking a cradle-to-grave approach, La Trobe Financial’s product suite caters to the needs of first home buyers, upgraders, business owners, those looking to build a home, mum-and-dad investors, and borrowers looking to finance their aged-care transition (see box). “Our customer life cycle approach suits the finance broker’s core value WHETHER
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proposition. You see, consumers don’t want a residential broker, a commercial broker and an SMSF broker; they want to build a relationship with someone that they can go back to throughout their life for all their financial needs. Someone that knows their situation, knows where they’ve been and understands where they are going,” says Bannister. “That is how brokers build clients for life.” Real people, practical products Each product in the range is founded on its own set of unique demand drivers, which themselves are closely tied to economic and social trends, such as employment, property and retirement.
For example, nationwide property values declined 2.4% in 2018, driving affordability up by 1.5%, according to the HIA Affordability Index. In many areas this has prompted people to snap up properties while the buyers’ market is strong. A credit fund is a capital-stable investment that can be leveraged over a fixed term to help a client achieve such financial goals. For example, an individual investor who wants to save for a first home deposit, or even purchase a car, can use a product such as the 12-month Term Account to achieve the desired return on their savings. However, while affordability is improving many first home buyers still require support from the bank of mum and dad. This has driven
interest in P2C loans, which effectively allow first home buyers to borrow 100% of the purchase price without paying LMI premiums. Prior to the P2C loan, parents had only three ways to help their children secure a home, and few options were attractive: they could choose to act as a guarantor, gift a deposit, or buy the house with their children as co-purchasers. “P2C is a much better alternative as it does not require parents to enter into any guarantee or place their property at risk. We can take care of all the paperwork. and parents determine the loan term and interest rate charged,” says Bannister. Further, the P2C loan addresses the issue of intergenerational wealth protection by safeguarding the parent’s investment. Research published by the Australian Financial Review estimates that the baby boomer generation holds $3trn in transferable wealth, which will be passed down over the coming two decades. This means there is additional opportunity to guide a client on how to best protect wealth held in property for the benefit of younger family members. “The P2C loan is specifically designed to protect the parents’ investment without exposing their assets or credit profile to any risks associated with their child running into difficulty with repayments,” Bannister explains.
A CRADLE-TO-GRAVE APPROACH TO MEETING CUSTOMERS’ NEEDS
Parent-to-child loan P2C
Bridging loan
Lite Doc®; Commercial
LA TROBE FINANCIAL PRODUCT SUITE
Construction and development finance
SMSF
Aged-care loan
“Mum and dad’s house is not used as security for your P2C home loan, and the children still qualify for the First Home Owner Grant and applicable stamp duty concessions, if eligible.” Life events also shape demand for finance, and retirement is just one of them. In 2016, 15% of the total population was aged 65 or older, and by 2056 the Australian Institute of Health and Welfare predicts the figure will reach 22%. That means that over the coming years more retirees will need more ways to fund their retirement and, eventually, aged care. Loans and reverse mortgages are often the most suitable solution. “Most people will know someone who has or is going into an aged-care home. A broker adding this product into their portfolio adds value to their clients indirectly and in times of emotional stress,” says Bannister. Meanwhile, other factors are driving a surge in interest in lite-doc loans, including the rise in gig economy workers – people who tap their entrepreneurial spirit to draw an income from a variety of sources. Figures released in January by the ABS confirm that sole-proprietor businesses showed the largest annual increase in the number of active enterprises in 2018, up 7.3% over the year. Today, 62.1% of registered businesses in Australia don’t employ staff. Despite the strength of the sector, the mainstream financial market is not geared up to accept low and lite-doc loan applications, and these borrowers can often find themselves with limited options, despite their seemingly strong financial position. “Brokers today more than ever should maintain regular ongoing contact with their clients to ensure they are not missing opportunities and are acting in the best interests of their clients,” says Bannister. “Not only are an individual’s circumstances likely to change over time; we are seeing regular changes in the finance, economic and regulatory environments that could mean that the plans and pathways you discussed with your clients 12 months ago are likely to have changed and may not even be viable any more.” Tapping the CRM In almost all circumstances, these opportunities can be found in the
Cory Bannister, VP and chief lending officer, La Trobe Financial
broker’s CRM, which is one of the most valuable resources at their fingertips. But every interaction counts, and often the clients with the most comprehensive requirements can be identified
check-in along with automated touchpoints might be an appropriate strategy,” says Bannister. During this stage, he advises that it is essential to gather a summary of the client’s borrowing history, as
“Consumers don’t want a residential broker, a commercial broker and an SMSF broker; they want to build a relationship” Cory Bannister, VP and chief lending officer, La Trobe Financial during their first broker meeting. “Identify and map out as many future requirements as you can, record them in the CRM and set reminders and alerts to follow up. In addition to these specific checkpoints, a biannual personal
this often reveals who they are, what they do and what their likely objectives are in the future. “Listen intently and take plenty of notes,” says Bannister. “Once a broker has the full history and roadmap, they should explain how
they can help the customer reach their financial goals, undertaking to put a written proposal in place that demonstrates how they can help them over time.” Partnerships can also bring new opportunities. Thousands of brokers collaborate with real estate agents, accountants and other referral partners, and such relationships are particularly useful when dealing with the more complex products, such as commercial or SMSF lending, from the perspective of both generating new business and sourcing support. “We would suggest brokers align themselves with complementary partners, such as financial planners or accountants, who can be a good source of referral for these types of transactions. In addition, they should make themselves known to their aggregator BDM or state manager,” says Bannister. www.brokernews.com.au
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FE AT URES
The last piece of the puzzle is language: Bannister advises that brokers should take the valueadding approach, rather than referring to meeting the client’s lifetime needs as ‘cross-selling’. With all these factors in place, it is then possible to measure the customer lifetime value (CLV) by refining the approach and analysing its effectiveness. “CLV is the prediction of total value that a customer brings to your business over the entire life cycle of the relationship. This not only helps with budgeting but can increase the value of your business, which is obviously important as you move through your own life journey into retirement,” says Bannister. Specialist or generalist? At various points throughout their career, many business leaders are forced to decide whether they will be a specialist or generalist – a person who can answer almost any query, or a niche operator with an expert skill set. There are pros and cons on both sides of the debate. Client retention is essential to support a thriving and diversified broker business, and the latest IIS figures indicate that many brokers are already moving in this direction. Regulatory and market changes also place downward pressure on profit margins, again increasing the need to protect and grow income streams through diversification. In the new lending environment – in which banks, non-banks, fintechs and neobanks compete to offer ever more comprehensive products – the ability of the broker
BROKER PERSPECTIVE Sean Murphy, associate director, My Mortgage Freedom
specialist and generalist takes on a different meaning. Ultimately the broker becomes both – offering a wide range of services while specialising in the client’s best
“Our purpose has driven us to cater for all areas of a customer’s life cycle [and] solve customers’ unmet financial needs through product innovation” Cory Bannister, VP chief lending officer, La Trobe Financial to provide new solutions that support a client at every stage of their life is only heightened. However, in broking – a space in which the trends of the business world and lending environment converge – the choice between 20
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interests and lifetime needs. For Bannister, the bottom line is clear: “In order to build ongoing and lasting relationships with customers, you need to be able to provide a solution when they need it, he says.” AB
At My Mortgage Freedom we measure our repeat clients closely. It is the richest source of business for myself and my colleagues, followed by word of mouth and our referral partners. We spend a lot of time speaking with existing clients, and those conversations generate a lot of new business, forge stronger relationships and produce more referrals from their friends, colleagues and family members. One of my long-term clients was first referred to me through an accountant. He had multiple businesses – a car wash, telecommunications business and his development entities – and was initially looking for help in purchasing a development site. Then, while finalising that deal, he found another opportunity that was too good to pass up. Because of his multiple interests he didn’t have up-to-date books but could show great profitability in one of his entities. We used a Lite Doc facility for this transaction, and since then we have completed a couple of developments and he has been a very strong referrer. Sean Murphy Associate director, My Mortgage Freedom
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PEOPLE
Have an interesting deal? Had a particularly difficult or interesting deal? Why not share it with us? Email:
Melanie.Mingas@keymedia.com
A BIG DEAL
Derwent Finance director Emmanuel Marios recalls how he helped a couple of first home buyers to transform their financial position, secure their dream home and create the ultimate family Christmas card
THE FACTS
Loan size and term $350,000 for 37 years
Client Couple with a young family
Goal To buy their first home
Location Glenorchy, Hobart, Tasmania
Lender MyState Bank
Aggregator Outsource Financial
all our suggestions, changing their financial position as well as their attitude towards money. To say their new approach was transformational was an understatement – it was like meeting with completely different people. They were on top of everything. Once again, they had found – and fallen in love with – their ‘dream home’, but this time, from their stronger financial position, it was possible to find a loan that matched their circumstances. This particular loan product was a non-specialist loan from MyState Bank at 90% LVR. They managed to obtain pre-approval, and the rest is history. For me, the icing on the cake was receiving a personalised Christmas card from them. The picture featured the whole family in their new home, wearing their Christmas pyjamas. After all the hard work and challenges, it really was the best Christmas gift for them and a scenario I will never forget. THE TAKEAWAY
THE SCENARIO
Managing expectations is part and parcel of being a broker. It’s well documented that buying property is one of the most stressful life events, meaning expectations are high, emotions are fraught, and often the broker takes the brunt. This happens to all types of buyers, but I have found that first home buyers in particular present their own set of considerations; they fall for the property before exploring their loan options, or they go it alone and get declined. Both of these factors impact on their ability to secure a loan. Sometimes the clients will give up on the idea of buying a home at all, or at least delay for an extended amount of time. Sometimes they come to a broker for solutions. This means that on a monthly, and sometimes even weekly, basis I have the job of explaining that a dream property isn’t financially viable for them at that time. As one can imagine, the clients are often less than pleased to hear this news. The outcome? The broker cops the blame. But last year I met a couple of first home buyers who had been declined for a mortgage by their bank. They had two young children, both worked full-time, and they were angry and devastated that their property ambitions were slipping away. Given their personal circumstances and willingness to work on their goals, I was happy to take on their cause. 22
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THE SOLUTION
With a scenario like this, the best approach is often to take a step back, calculate what the client can afford and look at pre-approval options.
Often as a broker you have to take time to work with clients, educate and assist them and also keep their spirits up during what can be a challenging process, while dealing with the emotional fallout when there are bumps in the road. It’s just a part of what we do. This work involved in this process isn’t always paid, but when it’s done properly
“The best approach is often to take a step back, calculate what the client can afford, and look at pre-approval options” Emmanuel Marios, director, Derwent Finance
Emmanuel Marios Director, Derwent Finance
As their broker, my first objective was to prepare them for another application. Step one in this process was to explain why the previous loan was declined and then help them to improve their financial situation. Often this includes either myself or my support staff giving them what is effectively a household balance sheet, taking them through their spending and highlighting any problem areas that may exist. We then suggest changes and explain how these will improve their application. As all brokers know, this process can take as long as two years, but these particular clients returned just three months into the exercise ready to go. They had fully taken on board
it can transform a client’s life and then the rewards really come in the form of ongoing business and referrals. Therefore, the main takeaway for me in this situation is that preparation is key, and often that preparation work means the most to the client. Secondly, cases like this demonstrate how vital brokers are to everyday Australians. First home buyers are often the most challenging client profile, but they are also the most rewarding. If this family hadn’t had a broker assisting them through the mortgage process, they would most likely still be renting their home, and their financial situation and future would be far less secure. Imagine the impact of a fee-for-service for a client like this. AB
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PEOPLE
MOVERS AND SHAKERS
PEPPER MONEY CEMENTS CRE EXPANSION
Commercial specialist Malcolm Withers to head up new CRE offering, which is currently in the pilot phase
Malcolm Withers, head of commercial, Pepper Money
PEPPER MONEY has welcomed the
new executive that will head up its commercial real estate (CRE) offering. Malcolm Withers, who joined the non-bank lender in March, takes on the role of head of
commercial in advance of the formal launch of Pepper’s new CRE product suite, which is currently in the pilot phase. Widely respected within the broking industry, Withers has held a number of senior roles at St. George
SIMON KEAST JOINS SPOTCAP has confirmed the appointment of Simon Keast as MD of Australia and New Zealand. With over 20 years’ experience, Keast has previously held the roles of head of small business designs and solutions at Macquarie Group, and customer operations and improvement senior Simon Keast, MD, Spotcap manager at IAG. Most recently, he’s worked as an independent consultant for major financial services companies. “I’m excited to join a growing company which is empowering small businesses with simple, swift unsecured finance,” he said. SPOTCAP
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Bank over the past decade, including as head of commercial broking. Between 2009 and 2010, he worked as business development manager in Bankwest’s commercial business banking division, and prior to that he gained extensive industry experience at Suncorp, RAMS Home Loans and Preferred Financial Solutions. Aaron Milburn, Pepper’s director of sales, said, “Mal’s experience in commercial loan acquisition via the broker market is unmatched. He’s the right person to lead our new commercial lending offering with his strong working relationship with leading brokers around Australia.” The commercial market segment Pepper is targeting is estimated to be worth in excess of $11bn per annum and shows strong growth potential, despite being underserved by existing lenders. In his role, Withers will be responsible for developing and driving the strategic direction of Pepper’s new business segment. “I am very excited about joining
Pepper Money and further developing its offering to customers,” Withers said. “Pepper has always provided great solutions to help customers across their lending needs, whether it be personal loans, home loans or asset finance, and to be able to join the team to bring to market some amazing solutions to support customers and businesses with their commercial lending requirements is truly a great opportunity. “I look forward to being able to continue to support brokers and their SME clients to grow and thrive in an increasingly evolving marketplace.” Pepper, which already offers commercial real estate products in some of its overseas markets, officially announced its move into CRE in February. The lender’s core business currently includes residential mortgages, auto and equipment finance, point-of-sale finance and personal loans. It operates in Australia, New Zealand, Ireland, the UK, Spain, South Korea, Hong Kong and China. AB
BNK NAMES NON-EXEC DIRECTOR Banking Corporation has appointed Don Koch to its board of directors, effective mid-June. With 30 years’ experience, Koch is described as an “accomplished senior executive”. He was CEO of ING Bank in Australia from 2009 to 2012, then CEO of ING Bank Italy until 2016. Non-executive Don Koch, non-exec director, BNK chairman Peter Wallace said, “Don has a wealth of expertise in business strategy, along with demonstrated achievements in digitisation, customer journey, governance models and marketing, specifically related to digital banking.” BNK
Wednesday 5 June • The Westin Sydney
FUTURE-PROOF YOUR BUSINESS Hear from award-winning brokers:
Karen Bashford General Manager South Coast Business and Financial Solutions MPA Top 100 Brokers 2018
8
Hannah Nguyen Director HAH Finance Solutions MPA Top 100 Brokers 2018
Andrew Mirams Managing Director Intuitive Finance MPA Top 100 Brokers 2018
Register now – and be part of this great event in the broking community calendar.
8
8
Navjeet Singh Matta CEO Gain Home Loans MPA Top 100 Brokers 2018
8
2 2018
Alycia Inglis Director Stoneturn MPA Top 100 Brokers 2018
We don’t want you to miss this unique event focused on futureproofing your business in a postRoyal Commission world and featuring tips and advice from award-winning brokers and brokerage directors recognised in MPA’s annual industry rankings.
8
Shawn Allen Principal Owner Matrix Mortgage Global Canada’s Top Mortgage Broker
MPA has been a proud supporter of the broker channel since 2001… which is why we’ve waived the registration fee completely for this year’s event.
Digital partner
Registration partner
Workshop sponsors
Coffee sponsor
Exhibitors
Supporting publications
Organised by
Register today at www.brokerbusinessexchange.com.auwww.brokernews.com.au
25
DATA
WESTERN AUSTRALIA
QLD SPOTLIGHT
Population and employment growth boost Perth and suburbs The reinvigoration of the mining sector has injected new life not just into Perth but some regional pockets of the state as well. “The local resurgence in mining projects has had a positive impact on sales in these regions, especially in Kalgoorlie-Boulder and Port Hedland, where renewed support in mining has created more local jobs and helped to boost population growth,” says Damian Collins, president of the Real Estate Institute of WA. “With mining projects in these regions expected to continue to grow, this should have a positive impact on the regions’ property markets and aid in their recovery.” As 2018 closed, the most-improved regional centres were Busselton, Port Hedland and Bunbury, where the median house prices rose by 11.2%, 5% and 1.5%, respectively. “Price increases in three of the larger regional centres in the state was a big driver behind why regional WA’s overall median house price improved during the quarter,” Collins says. Area
Type Median value
Quarterly
12-month
growth
growth
Perth
H
$490,000
-1.0%
-1.2%
WA Country
H
$325,000
-0.3%
-3.2%
Perth
U
$373,700
-2.2%
-4.5%
WA Country
U
$200,000
-2.7%
-12.4%
NORTHERN TERRITORY
Difficulties faced by Darwin as negative trends persist CoreLogic data indicates that, from 2014 to January 2019, Darwin reported the greatest decrease in growth of all the capitals at 24.4%. Nonetheless, the capital’s annual growth rate improved from -9.7% to -3.5% over the last year, while regional pockets reported a rise in their annual growth rate from -1% to 1.1%. CoreLogic suggests this is because the regional markets are in better condition overall compared to the metropolitan markets. “We have some great figures this quarter, with Palmerston sales volumes increasing by 37% – that’s 111 houses sold over the quarter. Overall, the sales volumes for the Darwin region rose by 14% for the quarter, with a total of 226 house sales,” reported Quentin Kilian, CEO of the Real Estate Institute of NT. “The good news on the sales volumes continued into the unit market, where, for the first time in quite a while, we have seen a sea of black ink.”
Area
Type Median value
Quarterly
12-month
growth
growth
Darwin
H
$490,000
0.0%
-2.0%
NT Country
H
$439,000
0.2%
0.0%
Darwin
U
$320,000
-2.2%
-11.7%
NT Country
U
$276,500
1.3%
8.5%
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TIME TO SHINE
The Sunshine State is enjoying a strong quarter, and Brisbane is on track to become one of the most promising recovery stories in the national market
few years ago, Brisbane was in a difficult position as a result of the mining downturn. However, the city could now be set to become one of the most promising recovery stories in the national property market. According to CoreLogic’s Hedonic Home Value Index for February 2019, where Sydney has fallen, Brisbane has picked up, reporting the best performance of a subregion next to Hobart and Canberra. Another strong indicator of Brisbane’s rise is that the number of premium suburbs in this city has increased – in fact, the list of million-dollar suburbs in Queensland overall has grown each year since 2013. In the 12 months to January 2019, the figure increased from 34 suburbs to 38, and Brisbane alone claimed 26 of those premium suburbs. Even though concerns about oversupply have not abated fully, it seems safe to say the Sunshine State is poised to have a good 2019. “Queensland is relatively affordable; population growth is strengthening and regions are benefiting from rising tourism,” says Geof Snell, principal property economist at BIS Oxford Economics. “Queensland’s economy is accelerating in line with increasing levels of migration, growth in non-mining industries and rising exports. The state will become a driver of the national economy from this year.” However, oversupply means investors do still have to be careful when they buy in Queensland, as there continues to be a strong influx of new apartments in some areas. Snell says: “Queensland does have a less pronounced oversupply and may rebound a little earlier, perhaps sometime in 2021. Nonetheless, it is likely that the unit markets in Sydney, Melbourne and Brisbane will see a continued slide in the year ahead, with those markets facing downward price pressure. AB A
HIGHEST-YIELD SUBURBS IN QUEENSLAND Suburb
Type
Median price
Quarterly growth
12-month growth
Charters Towers City
H
$124,500
-4%
0%
North Mackay
U
$130,000
-2%
-18%
Nelly Bay
U
$186,500
-11%
-11%
Edmonton
U
$146,500
-4%
4%
East Innisfail
H
$167,500
-4%
6%
Bungalow
U
$152,500
2%
-2%
Manoora
U
$159,000
-3%
1%
Edge Hill
U
$165,000
-3%
-3%
Mundubbera
H
$165,000
10%
14%
Craiglie
U
$260,000
-5%
-39%
Home Hill
H
$149,000
11%
2%
Moranbah
H
$203,500
2%
16%
OPPORTUNITIES AND KEY INFRASTRUCTURE
SUBURB TO WATCH: ALGESTER Median price (houses) $489,712
Median price (units) $326,164
Infrastructure
Roads and transport
Part two of the State Infrastructure Plan will generate 38,000 jobs
The Roads and Investment Program will drive $21.7bn in projects
Source: CoreLogic
12-month growth
3-year growth
5-year growth
Indicative gross rental yield
Rail development
Highway upgrade
-2.3%
-2.0%
16.2%
4.3%
12-month growth
3-year growth
5-year growth
Indicative gross rental yield
-1.7%
5.4%
5.2%
5.5%
The $5.4bn Cross River Rail line is the biggest state-funded project in over a decade
The state government has pledged $200m a year to upgrade the Bruce Highway
AUSTRALIAN CAPITAL TERRITORY
Area
Type
Median value
Quarterly growth
12-month growth
Canberra
H
$680,000
1.5%
3.1%
Canberra
U
$425,000
0.0%
1.7%
Canberra sees price growth, but supply concerns remain Canberra has been quietly turning in a strong performance as one of only two capital cities to report positive price growth in the December 2018 quarter. According to CoreLogic, the city also had the highest rental growth of all the capitals in 2018, with rents increasing by 5.6%. CoreLogic’s Quarterly Rental Review for January 2019 indicates that Canberra’s rental market has become the second most expensive nationwide, with an average rent of $539 per week. The capital is buoyed by the strength of its local economy, which in turn is supported by a good job market. Nonetheless, this positive streak could slow down soon. According to Geof Snell, principal property economist at BIS Oxford Economics, Canberra could face problems once new housing stock comes in. “There’s potential for oversupply due to high levels of construction – the moderate levels of undersupply are easing,” Snell says.
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DATA
VICTORIA
12-month
growth
growth
Melbourne
H
$710,000
-2.0%
1.4%
VIC Country
H
$365,000
0.7%
5.0%
Melbourne
U
$535,000
0.0%
1.9%
VIC Country
U
$270,000
-1.9%
-1.9%
MEDIAN HOUSE AND UNIT PRICES
Construction projects could do wonders for state’s regional hubs
$1,000,000
Quarterly
12-month
growth
growth
Sydney
H
$925,000
-2.6%
-3.1%
NSW Country
H
$460,000
0.0%
2.6%
Sydney
U
$707,000
-0.2%
-1.4%
NSW Country
U
$398,000
0.4%
0.8%
28
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113
Sold
40
Not sold
38
Clearance rate
51.3%
PERTH Total auctions
42
Sold
7
Not sold
8 46.7%
Houses
Sydney Melbourne Brisbane Adelaide
Perth
Hobart
$491,000
$465,400
$400,000
$0
$352,500
$100,000
$494,000
$200,000
$330,500
$300,000
$455,000
$500,000 $400,000
$520,000
$600,000
$685,000
$700,000
$670,000
$800,000
$840,000
$900,000
In the Dubbo area, a plan is in place to construct a new rail fleet and maintenance facility through the efforts of the CIMIC Group. The construction of the Western Sydney Airport is also expected to generate significant revenue for the Western Sydney district and could do wonders for the local economy there. Similar initiatives are underway in Goulburn, where the local council is looking to improve the suburb’s economic standing and job market. “From 2016/17 to 2017/18, the region experienced strong growth in the manufacturing, construction, agriculture and healthcare and social assistance industries; 590 jobs were created in these areas over this period,” says Goulburn mayor Bob Kirk. “We can look forward in 2019 to another year where Goulburn continues to grow and prosper to make us a more liveable city.” Job availability improved by 3.9% in this pocket over the 2017/18 fiscal year, as a result of increased commercial investment in the Goulburn CBD. Type Median value
Total auctions
Clearance rate
NEW SOUTH WALES
Area
ADELAIDE
Darwin
Units
$430,000
Quarterly
$359,500
Type Median value
There were 1,669 homes taken to auction across the combined capital cities this week, down from 1,875 over the previous week and 3,990 homes in 2018, when this date fell on the pre-Easter weekend. Preliminary results show a clearance rate of 56% across the combined capital cities this week, increasing from last week’s final clearance rate of 51.4%, although this will revise lower as the remaining results are collected. The finalised clearance rates have sat above 49% for five of the last six weeks, and it’s likely that this week will be no different. Over the same week last year the final clearance rate was recorded at 62.7%. In Melbourne, a preliminary auction clearance rate of 57% was recorded across 820 auctions this week, while last week there were 920 auctions returning a final clearance rate of 52%. This time last year, 2,071 auctions were held across the city, returning a clearance rate of 65.8%. Looking at the smaller auction markets, Canberra and Tasmania saw fewer homes taken to auction week-on-week.
$525,000
Area
WEEK ENDING 24 MARCH 2019
$650,000
Even though Melbourne’s rental yields are among the lowest in the country, demand continues to power the market due to recent population growth driven by both overseas and interstate migration. As a result, competition remains heated and it’s likely rental returns may improve as sales go down. Infrastructure projects underway in the Melbourne metro could help sustain interest by creating jobs, which in turn could boost the population further. These projects include road and rail works, which should improve accessibility. In addition, Herron Todd White’s February 2019 Month in Review has a rosy view of what’s in store for pockets of Melbourne. For instance, Port Melbourne and South Yarra are expected to steady slightly in the second half of 2019. However, a decline is anticipated in the innercity unit market due to the completion of new, off-the-plan apartments, which could put supply above demand. The credit environment also means market activity will be dampened for a while.
CAPITAL CITY AUCTION CLEARANCE RATES
$305,000
Growing population breeds demand for rentals
Canberra
CAPITAL CITY HOME VALUE CHANGES Capital city
Weekly change
Monthly change
Year-to-date change
12-month change
Sydney
-0.2%
-1.0%
-3.1%
-10.9%
Melbourne
-0.1%
-0.6%
-3.2%
-9.7%
Brisbane
-0.3%
-0.6%
-1.0%
-1.2%
Adelaide
0.0%
-0.2%
-0.5%
0.9%
Perth
-0.4%
-0.8%
-2.9%
-7.7%
-0.2%
-0.8%
-2.7%
-8.6%
Combined 5 capitals
*The monthly change is the change over the past 28 days
BRISBANE CANBERRA Total auctions
62
Sold
28
Not sold
25
Clearance rate
Total auctions
121
Sold
27
Not sold
52
Clearance rate
34.2%
52.8%
SYDNEY Total auctions
506
Sold
189
Not sold
115
Clearance rate
62.2%
TASMANIA
MELBOURNE Total auctions
820
Total auctions
5
Sold
358
Sold
1
Not sold
270
Not sold
2
Clearance rate
57%
Clearance rate
TASMANIA
Area
Tasmania’s first million-dollar suburb keeps market hot Hobart continues to ride the wave of growth by welcoming its first premium suburb, Battery Point, where the median house value passed the $1m mark in January 2019. Hand in hand, rental rates are also climbing, and rents in Hobart are now higher than in Brisbane, Adelaide and Perth. Adrian Kelly, president of the Real Estate Institute of Australia, believes Tasmania will begin to ease up in terms of growth soon. “The next year will be a more settled year in Tasmania – when we first encountered this rising market 18 months ago, it was just ferocious,” he says. This, Kelly says, is different from saying that the market will cool completely. “Experts are saying that the market might come off the boil, but I’m not seeing that at this point in time. It’s certainly not slowing down, but it’s settling.”
N/A
Type
Median value
Quarterly growth
12-month growth
Hobart
H
$463,000
2.5%
13.3%
TAS Country
H
$305,000
2.6%
9.1%
Hobart
U
$360,500
1.4%
11.1%
TAS Country
U
$241,500
-1.6%
-0.4%
All data sourced from CoreLogic.com.au
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29
PEOPLE
Aggregator AFG
IN THE HOT SEAT Taylor Kelly, mortgage broker at Home Loan Connexion, talks about her first years in the industry and how she would use a windfall to develop a micro-finance program for disadvantaged women
Who or what inspired you to become a broker? There are a few things that inspired me to become a A broker. Firstly, my mother has been a broker for over 20 years, so from a very young age I have been exposed to the career opportunities the finance industry offers. She was an excellent role model and instilled in me the values and professionalism required to be a broker of excellence. However, like so many school leavers I decided to pursue the university route. After obtaining a double degree in psychology and criminology – and working in an unrelated industry for a year or two – I took a break to reflect and plan before making my next career move. I had always admired how successful my mother was in business due to her hard work and dedication in the finance industry. This, along with the ability to be my own boss, inspired and excited me. Working at Home Loan Connexion further fuelled my desire to become a broker. After all, nothing feels quite as satisfying as helping a client get into their own home or assisting them to navigate a tricky finance situation.
Q
If you won $1m what would you do with it? Develop a micro-finance program for disadvantaged A women, bootstrap my broking business, and secure my own future financial independence by developing a diversified investment portfolio across property, shares and cash.
Q
What are your top survival tips for working in finance? Firstly, ensure you create a healthy work-life balance. For A me personally, whilst aiming to be a highly successful and well-educated broker I sometimes overwork to achieve the desired outcomes. I’ve learnt that it is not how busy I am but rather how productive. My other tip is to ensure you make time to nurture your network and give back to the people who are actively advocating for you and your business. Yes, it all takes time and effort, but I understand that my network and connections hold the key to more business flowing in the door. My last tip would be to always ask for help when needed. I find it helps to have a close circle of industry veterans with whom I can discuss any challenges I am having, bounce ideas off and, more importantly, celebrate my wins. AB
Q
30
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SYDNEY 2 MAY | ADELAIDE 9 MAY | PERTH 16 MAY | BRISBANE 30 MAY | MELBOURNE 6 JUNE
Our industry is in a new phase... whatever the outcome of the next few years, we will be faced with: – New governance and regulatory frameworks – New lending conditions – New customer expectations – Potential changes to remuneration structures At the same time, customers in record numbers will be seeking the services of value-adding finance brokers. In this new era, you will be required to think differently to continue to grow a sustainable business. The MFAA National Roadshow will arm you with the personal and professional skills and tactics to grow your business, push through and rise above the noise during this challenging time.
Sessions include:
Speakers include: Jess Gallagher
Summer and Winter Games Paralympian
Mike Felton CEO, MFAA
Amanda Stevens
Customer experience expert, marketing consultant and author
Are you ready?
Our industry is continually changing, and as brokers, when faced with this change, we may not see the opportunities that can come from it. At a young age our keynote speaker, Jess Gallagher, had to adapt to an incredible change. Jess will share how she develops, builds and sustains trust whilst adapting to the variables around her.
Chris Helder
Business communications expert and author
How to build a future-proof brand and win big in changing times
In times of change and uncertainty, the natural response is to retreat and cut back on marketing. In this session we’ll convince you to do anything but. You’ll discover why the new era provides a unique opportunity to grab market share. You’ll be inspired to get customer-obsessed and create an epic business.
Anthony Laye
Business and behaviour expert
Cutting the noise and the future of thinking
There is so much noise around our industry today. Is it distracting you from the main game? Is it affecting your productivity? This session will enable you to create a new mindset in order to take on the challenges that lie ahead and be more productive.
Are you connecting consciously?
In order to convert more prospects into customers, and customers and businesses into referrers, we need the ability to connect in a real way. In this session we demonstrate the skills needed to create more meaningful human-to-human connections that will increase your ability to win and retain new business.
PLUS! Professional headshot studio
GET YOUR TICKETS NOW! Roadshow Conference: $175 (MFAA member’s early bird) $275 (MFAA member’s full rate)
State Excellence Awards: $249 (MFAA member’s early bird) $329 (MFAA member’s full rate)
Non-member rates also available.
Visit roadshow.mfaa.com.au
Check your state’s National Roadshow website for early-bird expiry dates.
Major event sponsor and principal industry partner:
Earn 7 CPD | Exhibitor expo area Sponsor prize draws
Visit roadshow.mfaa.com.au for tickets or to find out more.
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