Australian Broker 16.09

MAY 2019 ISSUE 16.09

BROKER BUSINESS EXCHANGE Speakers from this year’s BBX share their tips for success in a changing market /14 ALSO IN THIS ISSUE… News Latest happenings from the last two weeks /4 Caught on camera FAST unveils the newest version of Podium /24 Luck favours the prepared Jean-Pierre Gortan on why commercial brokers need education /18

Equipped for success The official launch of OnDeck’s equipment finance loan /20

In the hot seat BDM-turned-broker Alissa Childs on new opportunities /30

Housing data Australia’s strongest property market revealed /26

NEWS

IN THIS SECTION

Lenders Financial results highlight new era of challenges /04

Aggregators Connective launches CHL Select /06

Technology Property group launches digital tool /10

Associations Broker market share sets quarterly record /12

Market Millennial demands reshaping borrowing landscape /08

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

DATES TO WATCH

Upcoming can’t-miss events

ART & PRODUCTION Designer Martin Cosme

2 1 M AY

2 8 M A Y

Credit Assessor’s ‘First-touch’ Approval Masterclass

Australian Banking Innovation Summit

Presented by ING and NextGen.Net, this event will be held in the Finsure Acacia Boardroom at Sydney’s Martin Place and is worth 1.5 CPD points. As well as updates and tutorials, the masterclass will cover application quality and scenarios.

Taking a global view, this inaugural event looks at trends both at home and overseas over two days of interviews and panel sessions. Taking place at Doltone House in Sydney, the summit will tackle regulation, AI and consumer behaviour, among other topics, and will feature speakers from Xinja, SocietyOne and NAB.

2 8 M AY AMA nominations open 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 will take place on 19 October at The Star Sydney.

Production Manager Alicia Chin Traffic Coordinator Freya Demegilio

SALES & MARKETING Sales Manager Simon Kerslake Global Head of Communications Lisa Narroway

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

EDITORIAL ENQUIRIES

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

SUBSCRIPTION ENQUIRIES

5 JUNE

6 JUNE

18 JUNE

Broker Business Exchange

Future of Financial Services

Rentvesting

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.

This event facilitates collaboration between 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.

Addressing how the Australian dream has changed, this session by Blue Wealth will present the pros and cons of ‘rentvesting’, along with the research necessary to make informed decisions. It will be held at Sydney Olympic Park from 6.30pm and places can be booked through the Blue Wealth website.

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, Seoul

1 A U G U S T

4 – 6 SEPTEMBER

6 SEPTEMBER

Women in Financial Services

Credit Law Conference

Taking place at Sydney’s Four Seasons, this day-long event covers negotiating skills and tips for overcoming imposter syndrome.

The agenda will also deliver practical case studies designed to address stereotypes, and explain how diverse management teams can create benefits.

Now in its 29th year, Informa’s annual Credit Law Conference will be held at Sheraton Mirage, Gold Coast, and will this year focus on the practical implementation of Commissioner Hayne’s recommendations.

Representatives from ASIC, the ABA and Deloitte are confirmed to speak.

Next Generation Banking Technology

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Uniting thought leaders, front-line professionals and developers from across the finance industry, this event will explore AI, open banking API, fintech, cybersecurity and regtech – dubbed banking’s next big thing. Taking place in Melbourne, the event will run from 9am to 6pm.

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 DEMAND FOR FIXED RATES FALLS

Sep-06GROWTH REACHES HISTORIC LOWS CREDIT Source: APRA, March 2019

approval data from Mortgage Choice shows that fixed rate loans accounted for only 21% of its home loans in March, down 1.35% from the month prior. Demand from the lender’s customers for fixed rates was highest in NSW (26%) and lowest in Victoria (14%). “There is a great deal of uncertainty surrounding the housing market at present, which could be weighing against borrowers’ decisions to commit to a fixed term,” said Mortgage Choice CEO Susan Mitchell.

LOAN

+0.4%

+0.2%

5.7% higher over the year, but the weakest annual growth for 3.5 years

Equal slowest growth rate in 34.5 years. Annual growth down 0.2% – the slowest growth on record

Investor housing

Personal credit

Business credit

Flat

-0.3%

+0.5%

0.7% annual growth – slowest on record

EQUIPMENT LOANS AT NEW HIGH has seen a year-on-year increase in equipment spending of 24.1%, a near-seven-year high, according to CommSec’s latest State of the States report. In second place, Queensland was up 11.3%, a near-four-year high. However, at 27.8% Tasmania showed the greatest rise compared to decade averages.

The figures compare equipment investment in the December quarter to decade averages to determine what the report deemed to be “normal performance.”

Owner-occupier housing

Housing credit

Now 2.8% lower over the year – slowest annual growth rate in more than nine years

10th consecutive monthly gain, but annual growth rate fell from 5.1% to 4.9%

SOUTH AUSTRALIA

“With the significant fall in wholesale funding costs, lenders have had the opportunity to invest the fattening margin in acquiring new business” Steve Mickenbecker Group executive financial services, Canstar

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FINANCIAL RESULTS HIGHLIGHT NEW ERA OF CHALLENGES NAB laments “challenging period” while Westpac CEO says its results are “disappointing” largest banks have posted mixed results in their H1 financial reports, and CEOs have highlighted the challenges and disappointments they have faced.

NAB recorded a $2.7m statutory net profit but, excluding customer remediation costs, its first-half cash earnings were relatively flat year-on-year.

Compared to September 2018, NAB housing loans increased by $6.8bn (2%) due to growth in the broker channel and strong results in New Zeal and. Non-housing lending increased by $9bn (3.6%), strengthened by a 2.3% rise in business and private banking, a 4.5% hike in corporate and institutional banking, and a 6.4% AUSTRALIA’S

increase in New Zealand operations.

NAB’s NPS declined one point to -17 compared to September 2018.

“This has been a challenging period for NAB, with the royal commission highlighting the need for us to take greater action to earn back the trust of our customers and the community,” said CEO Philip Chronican.

Westpac saw 24% wiped off its statutory net profit and a 22% fall in cash earnings. It is now focused on boosting productivity by $400m, primarily by reducing full-time equivalent staff by 788 this half.

Group CEO Brian Hartzer said, “This is a disappointing result, reflecting weaker business conditions and the bank dealing decisively with outstanding issues,

including remediation and resetting our wealth strategy.

“The past six months has been a turning point. We are proactively addressing legacy issues while improving our products and services to ensure they deliver the right customer outcomes. We’re exiting personal financial advice to focus on the parts of our wealth business where we have a competitive advantage, and we are delivering significant cost savings by simplifying our business.”

AMP’s total loan book increased by $127m to $20.1bn, attributed to continued growth from the broker channel. Its deposit book increased by $218m from the end of 2018, now resting at $13.5bn.

CEO Francesco De Ferrari said, “Our focus during the first quarter has been on accelerating change within AMP, including establishing a new leadership team, progressing the remediation program and separating our life insurance businesses, and sharpening our offers to clients.”

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NEWS

A G G R E G AT O R S LOAN MARKET ROLLS OUT ‘STAY-IN-TOUCH’ has launched an automated postsettlement tool called Stay-in-Touch.

The new e-marketing tool aims to combat the challenge of investing in existing customers while also pursuing new leads. CMO Lisa Phillips said, “[Relationship management] is a major reason why 20–22% of the typical broker’s book turns over every year. If a broker settles 50 loans a year and has a book of 175 active clients, they could lose close to 40 every year.”

LOAN MARKET

CONNECTIVE LAUNCHES CHL SELECT PRIME HOME LOAN New white label solution funded by Adelaide Bank brings number of white label products in aggregator’s portfolio to three has boosted the white label loan it offers under the Connective Home Loans brand, bringing a wider portfolio of solutions to its network of 4,000 brokers.

Funded by Adelaide Bank, CHL Select is a new prime home loan described as a “cornerstone” of the aggregator’s growing white label offering, which now includes CHL Select, CHL Solutions and CHL Essentials.

CHL Select is suitable for a range of customers, from first home buyers to those building new homes, looking for bridging finance, or planning to refinance existing debts.

It is designed to reduce debt faster through a 100% offset facility, alongside a CHL Select low-rate CONNECTIVE

Visa card to manage loan repayments. By using the monthly balance sweep feature, customers can manage their funds in an efficient way to minimise interest, which can help them pay off their loans sooner.

“In an environment where the major banks are tightening the provision of credit and ceaselessly shifting lending policies, brokers are calling for simple, easy-tounderstand loans at highly competitive rates,” said head of Connective Home Loans Michael Goerner.

“CHL Select delivers to this demand, and having the strength of Adelaide Bank behind our new suite of white label mortgage solutions provides our brokers and their

customers with further confidence that their needs will be met.”

The product’s official launch will take place at Connective’s Lender Splendour roadshows this month.

Cosi Lanzoni, senior manager strategic partners at Bendigo and Adelaide Bank, said, “This announcement highlights the productive and ongoing partnership we have had with Connective Home Loans over many years, and CHL Select takes this partnership to the next level.

“The Connective Home Loans team is focused on providing the best customer service possible, and Adelaide Bank is equally committed to helping Connective maintain its high standards of professional service. In a highly competitive lending market, Adelaide Bank’s service offering ... will make Connective Select Home Loans a standout choice for busy brokers.”

The partnership follows the recent launch of CHL Solutions, a range of near prime products funded by Pepper.

VOW ADDS P2P LENDER TO PANEL has partnered with RateSetter to distribute unsecured personal loans via its network of more than 1,000 brokers. “RateSetter’s innovative model and competitive rates for personal loans aligns with our strategy to deliver a strong panel of personal loan lenders,” said Clive Kirkpatrick, GM of Vow Financial parent company YBR Group.

The addition of a P2P lender to Vow’s panel reflects the growing acceptance of alternative finance in the market.

VOW FINANCIAL

“This is a time for policy formulation that considers the full potential impact on the lending market” David Bailey CEO, AFG

Only 1 form of income verification required Resimac Prime & Specialist Alt Doc For more, visit broker.resimac.com.au Specialist | Alt Doc | Prime

Resimac Ltd. ABN 67 002 997 935. Australian Credit Licence 247283.

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NEWS

MARKET AUCTION BIDDING INSIGHTS REVEALED study by economists at the University of Sydney and the University of Technology Sydney has shown that, despite the law of supply and demand, the more bidders involved in an auction, the weaker and less enthusiastic bidding is likely to be. Professor Agnieszka Tymula said, “It turns out that there is also a downside to having more bidders – most people bid less.” CoreLogic’s market report for Easter showed the lowest auction activity since 2012.

A

HOME SALES ADJUST TO NEW NORMAL home sales may be NEW stabilising, according to the Housing Industry Association. In February to March, sales increased 4.8% in NSW, 8.6% in SA and 2.3% in WA. Conversely, they fell by 4.7% in Queensland and 2.9% in Victoria.

Senior economist Geordan Murray said, “This moderation in the fall in new home sales suggests the credit squeeze is easing as the market adjusts to new lending norms.”

“Private sector dwelling approvals declined 1.4% in trend terms. However, private dwellings excluding houses rose by 0.8%” Justin Lokhorst Director of construction statistics, ABS

MILLENNIAL DEMANDS RESHAPING BORROWING LANDSCAPE Young borrowers want lenders to utilise digital channels and support their financial goals, in stark contrast to the previous generation chief executive of a credit reporting agency has highlighted how “credit active and digital millennials” are reshaping the future of the borrowing landscape.

Simon Bligh, CEO of illion, explained that recent data has shown that “people are going for safety” when it comes to prioritising the payment of certain debts on time over other financial responsibilities.

“In the last 10 years, the importance of paying the mortgage, which is sensible in all sorts of dimensions, has gone up the ladder of priorities,” he said.

However, Bligh pointed out that bills that are made difficult to pay are pushed to the back of the THE

queue as millennials are more likely to pay first for the products that they feel are better suited to their needs.

That said, the data from illion revealed that millennials would welcome additional reminders and avenues for paying their dues.

“Just as you take the friction out of lending, take the friction out of paying. That’s what customers want, but many aren’t getting it.

Remarkably, 40% of people who are overdue are never contacted. Ten years ago, that was 10%,” Bligh said.

“If they are late, they want to be contacted using low-cost digital channels and encouraged to pay.”

Bligh explained that the mentality that millennials bring

to the borrowing table is: “I understand I may not necessarily have a good credit score. That’s OK. Find a product that’s right for me. Let me understand where I sit and how to improve my creditworthiness.

“Let me give you my data, let me understand the value of my data, and let me monetise my data with offers.”

The CEO reiterated that millennials wanted to feel valued, whether through award mechanisms, better pricing, or direct rewards for strong credit scores.

Additionally, Bligh spoke to a more hands-on approach seen in the younger demographic.

He said millennials were possessive of their data and generally more eager to be involved in their finances than past generations.

“They absolutely want to control their money, want to know where it’s gone, what they can do with it,” he concluded.

Debt-Free Finance Rules

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DIVERSIFICATION UPDATE

A DIVERSIFIED EXPERIENCE It may have been a testing year so far for the mortgage broking industry, but Aaron Milburn, Pepper Money’s Director of Sales and Distribution, believes this is an opportunity for a new era of broking to emerge

recent events in the financial services industry and the threat of potential policy changes, a sense of trepidation lingers within the Australian mortgage broking industry. However, in this evolving environment there is also an increased demand from customers seeking brokers’ guidance.

As the finance industry becomes increasingly complex and customers are finding it more difficult to get help, they are seeking assistance from brokers to help them achieve their dreams.

To prosper in today’s lending environment a broker business needs to remain customer-centric and solution orientated. Gone are the days when brokers were programmed to only deliver the lowest rate possible.

By evolving their mindset and providing a flexible and holistic service, there is an enormous payoff and opportunity to grow.

Brokers looking for new opportunities with revenue growth or who want to remain front of mind to their client base need to deliver a diversified offering with alternative funding solutions and retention processes.

Opening the door to additional markets like specialist lending, personal loans or commercial loans will create a business with a point of difference that can service the ever-changing needs of clients. Not only will they create clients for life, but by expanding their scope of work and cross-selling products they will have more opportunities to engage with different types of clients.

Likewise, with continuous growth and change in the industry, brokers need to play the long game. Providing a FOLLOWING

holistic service to a customer is a broker’s best defence against ongoing market changes, especially in a highly competitive industry such as ours. Products or services that enhance their own business’s service, efficiency or product range can add value to the customer experience and customer retention.

Brokers can provide a wide variety of finance options to borrowers from all walks of life, something the banks frequently do not do. By taking time to understand a customer’s individual borrowing needs and sourcing appropriate loans, experienced and customer-centred brokers are part of the process of creating wealth for first home buyers, young families and professionals. Here at Pepper Money we are well aware of the crucial role that brokers play in the industry, and we are passionate about supporting brokers with education to better support their customers.

That’s why Pepper Money’s 5th annual national Insights Roadshow will focus on Giving brokers the X factor.

We know brokers’ success lies in their ability to deliver customers the right solutions to fit their situation. The 2019 Pepper Money Insights Roadshow will help them understand and develop best-in-class experiences for their business, including • Rx| Regulatory Experience • Dx| Digital Experience • Cx| Customer Experience • Bx| Business Experience The Insights Roadshow will be visiting 5 major cities and will give brokers the insights, tools and panel expertise that will provide their business with a winning edge.

Aaron Milburn

DATES AND VENUES Adelaide

Wednesday 12 June 2019

9:00AM – 12:00PM

Adelaide Convention Centre

Perth

Thursday 13 June 2019

9:00AM – 12:00PM

Crown Perth

Sydney

Tuesday 18 June 2019

9:00AM – 12:00PM

Rosehill Gardens

Melbourne

Wednesday 19 June 2019

9:00AM – 12:00PM

Glasshouse Melbourne

Brisbane

Thursday 20 June 2019

10:00AM – 1:00PM

Howard Smith Wharves

SEATS ARE LIMITED – REGISTER TODAY: WWW.PEPPER.COM.AU/BROKER/INSIGHTS

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NEWS

TECHNOLOGY

FINNIE AWARDS FINALISTS REVEALED for the Finnie Awards have been named by FinTech Australia (see boxout below) ahead of the 2019 ceremony, which will take place in Melbourne on 6 June. This year, 30% more submissions were received, with the FinTech Organisation of the Year category receiving the most entries. “From the brief chats I’ve had with them, I know the judges have had a tough time creating the shortlists,” said FinTech Australia general manager Rebecca Schot-Guppy.

FINALISTS

PROPERTY GROUP LAUNCHES DIGITAL TOOL Aiding “smart investors”, the online calculator allows buyers to ensure cash flow and returns meet their budget

property investment and education company has developed an online tool intended to arm investors with the knowledge needed to make informed decisions.

Sound Property’s online cash flow calculator can be used to estimate the net income of an investment property during the first year of ownership.

“Smart investors who understand their position and plan for long-term gains will be the ones who do better in any market,” said director of Sound Property Group Andrew Cull.

“We want to promote investing in property in a safe manner, and for this reason we are making this free online resource available to any investor thinking of A

purchasing property.”

The calculator includes all the key considerations, such as stamp duty, interest repayments, lender’s mortgage insurance estimates, equity growth and depreciation.

Currently, investors also have the benefit of claiming depreciation, which can positively impact their yearly cash flow. For instance, a new property can depreciate by over $10,000 in the first year of ownership, which can be applied as a loss in their tax return. Estimating depreciation – as well as interest paid – is a significant part of an investment strategy, Cull points out.

The comprehensive nature of the calculator is crucial, as Cull said investors had a tendency to either overestimate or underestimate

property maintenance expenses.

These can include council rates, interest repayments, strata fees and building insurance.

He added, “We are currently seeing many opportunities for solid long-term growth in capital cities other than Melbourne and Sydney; however, we highly recommend investors estimate their cash flow before investing in property.”

For the last 25 years, investments in houses across Australia have achieved an average of 6.8% growth per annum.

According to Cull, whether an investor is newly entering the market or holding on to an existing investment, having a clear and comprehensive grasp of their cash flow is vital to avoid household stress and minimise risk.

“Estimating the investor’s cash flow and liaising with their accountant or financial planner is the first exercise we do with those who seek our assistance to either expand their portfolios or enter the market for the first time,” he said.

FINNIE FINALISTS 2019 Source: FinTech Australia

Excellence in Business Lending

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Excellence in Consumer Lending

86 400 PURSUES CAPITAL GROWTH 86 400 has appointed Morgan Stanley to support capital raising through the next phase of its growth. The “aspiring” bank requires more than $250m in capital over the first three years of operation to fund its growing balance sheet. Chairman Anthony Tomson said, “We look forward to introducing new, like-minded shareholders to the business towards the end of this year as we deliver the easiest version of banking to Australian customers.”

NEOBANK

www.brokernews.com.au

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NEWS

A S S O C I AT I O N S

Michael Lawrence

COBA WELCOMES LABOR PLEDGE Customer Owned Banking Association has welcomed Labor’s support for a Competition and Growth Taskforce to guide reform for mutuals. CEO Michael Lawrence said, “COBA released its framework for a more competitive banking sector in April. We’re pleased to see that Labor has considered our input and reflected it in this announcement. This taskforce could deliver much-needed energy and ensure the customer-owned model is accommodated in the marketplace.”

THE

BROKER MARKET SHARE SETS QUARTERLY RECORD December quarter figures show a new year-on-year record for the third party channel, in the face of difficult market conditions market share reached a new five-year high in the December quarter, according to the latest MFAA Industry Insight Survey.

The gains occurred in the face of what association CEO Mike Felton described as “one of the most challenging periods for the industry in recent memory”.

The research was conducted by comparator, a CoreLogic business, and commissioned by the MFAA. It confirmed that mortgage brokers settled 56.8% of all residential home loans between October and December 2018, the highest-ever residential home loan market share evidenced in that quarter.

During the same October to December period, the overall BROKER

Glenn Mitchell

COMMERCIAL LENDING MASTERCLASS ANNOUNCED is now open for REGISTRATION the FBAA’s second annual commercial and equipment finance masterclass series, supported

by Vow Financial. Glenn Mitchell, head of commercial and leasing at Vow/Yellow Brick Road Group, said, “Rather than reinvent the wheel, I went to lenders that already had good training content to deliver, an approach we found to be quite successful.” Speakers from Thinktank, Suncorp and ING are all confirmed, with events taking place from 18 to 27 June.

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size of the market declined by 11.8%, meaning that mortgage brokers have continued to take market share from the proprietary channel.

Additionally, the figure shows a 3.2% gain as compared to the December quarter of the year before and is the largest percentage point gain for the December quarter in the last five years.

“This is an outstanding result in the context of an overall decline in market size, ongoing credit tightening, and the unfounded criticism and uncertainty that came with the royal commission.

It demonstrates that despite the noise, brokers remained focused and continued to work hard to meet their

customers’ needs,” Felton said.

“This quarterly market share outcome is further evidence that the competition, choice, and access to credit that mortgage brokers provide continues to shine through and tell the true story of an industry that is a force for good.”

The survey data also showed that the leading aggregators settled $48.77bn worth of new home loans during the December 2018 quarter, which represented a 6.6% decline in the overall value of new lending compared year-on-year to the $52.24bn settled in December 2017.

“This result is a very strong outcome for the mortgage broker channel. Not only have mortgage brokers grown market share but the result coincided with November’s extremely high-profile public hearings as part of the royal commission, which was one of the most challenging periods for our industry in recent memory,” Felton said.

MFAA’S QUARTERLY SURVEY OF LEADING MORTGAGE BROKERS AND AGGREGATORS Sources: MFAA’s quarterly market survey; comparator analysis

Market share of new residential home loans settled by mortgage brokers 60% 55% 50% 45% 40% 35%

44%

47.3%

50.4%

51.8%

51.9%

53.6%

Q4 2012

Q4 2013

Q4 2014

Q4 2015

Q4 2016

Q4 2017

56.8%

30% 25% 20% Q4 2018

TECHNOLOGY UPDATE

UPCOMING ENHANCEMENT APPLAUDED

BY OUTSOURCE FINANCIAL

Heather Gallagher

Financial’s State Manager – Strategy and Solutions NSW/ACT, Heather Gallagher, is expanding the aggregator’s education program. She notes that technology features even more prominently than previously.

“Technology is now a vital piece of a broker’s road map to success. Therefore it needs to occupy an equivalent place in our education program,” she says.

Keen to learn about the planned enhancements to the ApplyOnline Supporting Documents service, Gallagher attended a live demonstration of the upcoming version, which is on the launch pad for the end of May. “ApplyOnline is a tool that’s critical for the success of our members, and I was very impressed to see that NextGen.Net took their time to talk to brokers upfront to see what was needed. That got a big green tick from me,” Gallagher says.

“The thing I really like about the changes to the Supporting Documents service is that it’s now so much more intuitive and in keeping with where things are at, especially the new user interface, which has given the service a whole new feel and will really please brokers.

OUTSOURCE

Tony Carn

“If I was asked to nominate one standout enhancement it would be the fact that you can now upload all your individual documents at the one time and then pick the ones you need for each lender requirement. One of the barriers to brokers using the document upload in the past was the perception that they had to drag one document at a time for each requirement and then wait.

“This new document system enables you to drag in all the required files, plonk them down, and then tick the respective boxes that apply to specific requirements.”

Although all the changes will simplify the system and make it more intuitive and easier to use, Gallagher has already made plans for a NextGen.Net Customer Success Manager to attend an upcoming education session to answer questions and ensure Outsource Financial members are across all the details.

“I particularly want brokers to know that they have a choice – they will have the option of trying the new version of Supporting Docs to take advantage of the enhancements, or continue using the version they are currently on. That gets another big tick,” she says.

NextGen.Net Sales Director

Tony Carn says the feedback following the live demonstrations of the new version of the ApplyOnline Supporting Documents service has been invaluable.

Pointing out that the ApplyOnline Supporting Documents service was the first of its kind in the Australian marketplace, Carn says reassessing and enhancing the core design principles of its highly complex capabilities has been done off the back of user feedback.

“At our live demonstrations we invite input from participants, because comments such as we received from Heather are a critical part of our product road map,” he says.

“Our aim is to address things that actually make a difference and help users in their day-today operations.”

Complimenting Outsource Financial on its commitment to educating brokers about technology to ensure that its members are aligned to a more efficient process and positive customer outcome, Carn hints at a few of the enhancements to Supporting Docs.

“It’s a complete redesign of our UI [user interface], which makes for an enhanced UX [user experience]. We’ve also simplified

the document checklist, which gives greater ease to assigning documents for submission; improved the upload process, and generally created a more intuitive and streamlined Supporting Documents UX,” he says.

“Having a more intuitive UI makes it easier for brokers to verify documents and improve the quality of the loan package from the point of sale, which translates as improved turnaround times.”

Gallagher says while there will be some members who won’t need a training session to bring them up to speed with the planned enhancements to Supporting Docs, she encourages them to participate regardless because “my aim is to use education to turn good brokers into great brokers”.

“I like the way the new UI looks, and I like the way it feels, and I’m sure it’s going to be really well received,” she says.

“This enhancement doesn’t just take it one step up, it leapfrogs a couple of steps.

NextGen.Net have listened to both the lenders and the end user, and the outcome will benefit all.”

Brokers will be able to try the new and improved ApplyOnline Supporting Documents service from the end of May.

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FE AT URES

SPECIAL REPORT

THE BROKER KNOWLEDGE EXCHANGE

Juggling the demands of compliance, revenue generation and team management is no easy job, but in a post royal commission environment – and with a new government to boot – these are the essential pillars of any broker business. Ahead of the 2019 Broker Business Exchange, some of the event’s top speakers share their tips to survive and thrive

compliance to market corrections, tightened lending criteria and a federal election, this year is shaping up to be even more demanding than the last. But Australia isn’t alone in its challenges.

This year’s Broker Business Exchange will not only arm delegates with the knowledge required to master their local market but also shine a light on how one country has overcome some very familiar obstacles.

In the last decade, brokers in Canada have had to contend with tighter lending standards, a housing correction, an d a proliferation of non-conforming and private lending solutions.

International keynote speaker Shawn Allen says that as such changes arise in Australia brokers must become policy experts.

“As global markets contract and house prices correct it is paramount that brokers constantly analyse products and guidelines to provide the most current solutions available to their clients,” he says.

Allen founded Matrix Mortgage Global in 2008, steering it to become Canada’s largest private lending brokerage, achieving $1.1bn in volume and more than 610% growth in the past five years.

In 2018, it was named one of Canada’s fastest-growing companies FROM

in the Growth 500 list.

When it comes to building a high-performing business, Allen advises brokers to reduce waste, standardise duplication and outsource whenever possible.

“A high-performing business must have sound governance.

The establishment and continuous monitoring of processes, communication, procedures and their subsequent implementation, or lack thereof, will quickly allow

very costly,” Allen says.

“Constant follow-up, transparency and reducing verbal conversations to writing as soon as possible will enhance the prosperity and viability of your organisation.”

Hitting targets When it comes to setting goals, many brokers have their own tried and tested ways of reaching targets and measuring success. However, targets mean nothing unless a broker – or

“Constant follow-up, transparency and reducing verbal conversations to writing ... will enhance the prosperity and viability of your organisation” Shawn Allen, principal owner, Matrix Mortgage Global for any variances of these rules to be addressed so that the business may function harmoniously.”

He says it is therefore essential to document current workflows, assign roles and responsibilities to team members, and hold those team members accountable for their work.

“Failure to do so will result in major waste and duplication of resources, which could become

their team members – are motivated to achieve them.

MPA Top 100 broker Alycia Inglis is no stranger to attaining targets.

With degrees in commerce and economics, she transitioned from the world of corporate tax to broking in 2006, going on to establish Stoneturn in 2015.

Recognising an underserved niche in the market, Stoneturn has

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a dedicated focus on time-poor professionals and expatriates who wish to invest in property. In a sales and marketing role, much of Inglis’s day-to-day focus is on targets, specifically around revenue, and she dedicates significant time to revenuegenerating activities, such as talking to new and existing clients as well as referral partners, and working on general marketing messages and activations.

“Revenue goals are very useful as they are a simple and standard way of measuring the performance of the business. However, revenue is just one means of measuring performance and should be considered along with other indicators,” she says.

While setting goals is one thing, motivating a team to achieve them, and measuring their success, is quite another.

“As a team we spend several hours per week focusing on improving our processes, so we’re constantly becoming more efficient and improving the quality of our service regardless of the role or task,” Inglis says.

To keep her team in top performance mode, Inglis uses a comprehensive approach that spans every role and function of the business. The Stoneturn team reviews the number of new enquiries, existing client loans and applications

In partnership with

Shawn Allen, principal owner, Matrix Mortgage Global

and settlements, according to number and dollar value and where they were derived from, on a weekly, monthly and annual basis.

“This gives me a detailed understanding of what is driving the business and helps identify areas for improvement. It gives everyone something to work towards and makes it easy to know how you’re tracking on a weekly basis,” she says.

Crucially, there is still time to smell the roses.

“We also take time out to have fun and celebrate our wins,” Inglis says.

The power of referrals For Tracy Kearey, managing director of Home Loan Connexion, as much as 80% of her business is derived from repeat clients or referrals – a figure she attributes to a robust marketing strategy and consistent client contact.

“Finance broking is not a transactional business or about continually having to secure new clients; it’s about building a portfolio of valued clients who you can look after for life,” she says.

“It is vital to touch base with existing clients regularly so as not to miss important milestones or happenings on their life journey. The truth is there’s a fortune sitting in most broker databases just waiting to be explored.”

In business for more than 20 years, Kearey is now writing loans for her clients’ children as they commence their own journeys into the property market.

“Without doubt, building a professional broker business on relationships and referrals is the easiest and fastest way to achieve success,” she says.

Karen Bashford settled more than 600 loans in the 2018 financial year and is one of the leading brokers at South Coast Business and Financial Solutions in Ulladulla.

With 15 years under her belt, around 60% of Bashford’s business comes from repeat clients, who then refer their friends and family.

“If you are servicing your clients – contacting them for health checks, rate reviews, product rollouts and so on – you continually stay front of mind with them when they need anything finance related,” she says.

However, it isn’t enough to simply keep in touch. Brokers must also demonstrate their worth – and values – by conducting themselves in an honest, upfront and truthful way.

“Reputation is everything in this industry, especially if you are regionally based as I am. Trust is earned, and if you are totally honest with every single client, the trust will grow, and so will your

Tracy Kearey, managing director, Home Loan Connexion

CONFERENCE SCHEDULE 9:10am

PANEL: How to future-proof your mortgage business post royal commission

10:00am

International keynote: How to build a high-performance business

10:50am

Morning tea and networking break

11:20am

How to exceed your targets and get more business

12:00pm

PANEL: How to attract new clients and referrals

12:40pm

Networking lunch

1:40pm

PANEL: Raising the bar: How to generate high performance within your team and achieve revenue goals

2:40pm

Afternoon tea

3:10pm

PANEL: Meet MPA’s elite young guns: broking’s next generation

4:10pm

Closing remarks

Interested in attending BBX? Brokers can register fee-free at: brokerbusinessexchange.com.au/register-now/

www.brokernews.com.au

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reputation,” Bashford says.

Another point of difference is to refrain from thinking of time as money.

“Give freely of your time, especially to clients who are unable to borrow right away. Show them how to get to where they want to be, and you will eventually do finance for them. Then watch how many people they refer to you along the way because you’ve taken the time, at no charge, to help them towards their goal,” Bashford says.

Being committed to the local community also helps, and that doesn’t always mean charity work.

Bashford advises her fellow brokers to get involved in their local business chamber to meet like-minded people and potentially new sources of business. She says it’s all part of giving back.

“Supporting your local community is paramount. Meeting like-minded business people, building new relationships, sponsoring and volunteering for community events – these things will all increase your connections and also your profile,” she says.

For both Kearey and Bashford, these activities strengthen their professional reputation, creating a positive feedback loop that accelerates the success of their careers and businesses.

Kearey entered broking in 1998 to satisfy her professional ambitions while working around her obligations as a single parent.

After working in administration support for an all-male mortgage broking team she obtained her qualifications and joined Home Loan Connexion. Then in 2013 she took the opportunity to negotiate a 50% buyout of the business in order to better manage its future success.

Today, Kearey is the firm’s number one loan writer in Australia.

The secret? There are two sides to building a strong professional reputation.

“Remember, it’s what your clients say about you when you’re not in the room that really counts.

Hence, staying in constant contact, servicing and providing clients with

information and resources to assist with meeting their financial goals is of utmost importance. Good news travels, but bad news travels faster!”

In short, a broker’s reputation with clients is based on follow-ups, honesty, transparency and keeping your word. However, when it comes to their peers, the formula changes.

First and foremost, Google needs to be consulted before affiliating with any new business partner.

“Do your due diligence by researching any person or company you’re considering building a relationship with,” Kearey says.

Elsewhere, she says the secret is to be seen and get known.

“Network, connect and build strong and reciprocal relationships with business referral and lender partners. In addition, seek out possible opportunities where you can contribute, share your expertise and make a difference to the finance industry as a whole,” she adds.

Diversification The move from residential to commercial lending is probably one of the most discussed points in broking, but savvy brokers have been positioning themselves ahead of the curve for some time.

MFAA data show that between

Alycia Inglis, director, Stoneturn

on his experience of working as a commercial BDM with a non-major, the firm offered both commercial and residential services when it first started up.

Vassilis says the challenges of running a diversified business are easily overcome, but maintaining good relationship management is key.

“Fundamentally, lending principals are the same between the two. It’s just different terminology, different

“Trust is earned, and if you are totally honest with every single client, the trust will grow, and so will your reputation” Karen Bashford, GM, South Coast Business and Financial Solutions 2016 and 2018 the number of brokers who also sold commercial finance products increased by 124%.

Furthermore, commercial loan settlements reached almost $9bn in the six months to March 2018.

Many businesses have run diversified operations from the start.

Managing director Peter Vassilis opened the doors at Black and White Finance in March 2017 and, drawing

jargon, or different grey areas in commercial lending. Those are probably the biggest hurdles when diversifying,” he says.

Vassilis also advises that brokers establish a support network for their new business focus, whether by joining a forum or networking group, or recruiting a mentor.

“You don’t know what you don’t know,” he says.

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“It pays to stay close to BDMs and relationship managers and to participate in, and engage at, educational seminars and PD days. It also pays to ensure you have adequate commercial lending arms for all kinds of scenarios, and you need to ask questions all the time.

Stay humble; never assume you know it all.”

The hard work is worth it. Black and White achieved $10m in commercial lending in the first year of operations through a mix of motor vehicle and equipment finance, commercial property purchases, debtor finance and SMSF lending. In the second year, that increased by 50%, and Vassilis says things are on track to set another personal best in 2019.

The issue of diversification has triggered wider discussions across the industry in recent months, with many now asking if the finance broker of the future will remain a specialist or become a generalist. For Bashford and Kearey, the answer is clear-cut.

“To enable your clients to be yours for life, you need to be able to provide them assistance regardless of what type of finance they require,” Bashford says.

Meanwhile, Kearey says part of her success as a broker has come from her ability to grow with her clients.

She says many of her original home

In partnership with

Karen Bashford, general manager, South Coast Business and Financial Solutions

loan clients are now self-employed and regularly come to her for business funding.

However, simply diversifying into SME lending on the chance that your clients will become SME owners isn’t the solution.

“It’s about keeping pace with the evolution of a client’s lending needs.

That’s essential to the longevity of any broker’s business. Brokers need to remain at the top of the game to succeed,” she says.

“If we can somehow turn the low sentiment round, with lower rates which are imminent or lower benchmark assessment rates as we see now from the RBA, APRA and the banks, then it could really turn things around.”

Part of the task of managing sentiment comes back to managing customer expectations. Bashford says explaining the challenges in the current lending environment is key to this process, and the conversation

“It pays to ensure you have adequate commercial lending arms for all kinds of commercial scenarios, and you need to ask questions all the time”

Peter Vassilis, managing director, Black and White Finance

DIVERSIFICATION SCHEDULE 11:20am

SME finance: Future opportunities for brokers – In partnership with OnDeck

12:00pm

How to increase your revenue and protect your client base – In partnership with Alexus CRM

12:40pm

Lunch

1:30pm

Offshoring for success – In partnership with Loanworks

2:05pm

Specialist lending: Making it work for you

3:10pm

Asset and equipment finance

3:50pm

Closing remarks

Peter Vassilis, managing director, Black and White Finance Don’t forget to mention #MPABrokerBiz Overcoming challenges That 2019 has been difficult is no secret. In April, insight published

by Westpac revealed that only 9% of people believe the property market is the safest place to invest savings. The figure represents a 45-year low.

“Yes, the banks are making it a little tougher for us to get loans approved, but we can sort of manage that,” Vassilis says.

should cover approval time frames and second-choice options.

“Make sure you underpromise and overdeliver. If the deal will be difficult to set, make sure that is explained to the client at first meeting and advise you will do your very best, but no promises,” she says.

In terms of day-to-day operations, Inglis says change is part and parcel of running a business.

when sharing

your pictures and posts on 5 June

“The challenge is how to juggle changes and how to incorporate them into your existing processes, business model and team roles in a timely manner, which minimises the impact on your ability to service customers.”

While it isn’t possible to weather every storm, it is possible to shelter from the damage that can occur.

Arming brokers with the knowledge required for this, the 2019 Broker Business Exchange takes place at The Westin Sydney on 5 June. AB

www.brokernews.com.au

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OPINION

LUCK FAVOURS THE PREPARED As thousands of brokers look to break into commercial lending, Jean-Pierre Gortan, founder of Simplicity Finance, says a strong training framework is needed to prevent poor customer outcomes

me begin by saying I am 100% for the expansion and development of the mortgage broking industry. However, as with other aspects of our lives, before we decide to embark on a new path we should stop to reflect on our skills and support networks to ensure we have the best chance of a positive outcome.

There is a significant amount of press from lenders and industry bodies that are pushing hard for sector diversification in order to expand the broker’s product and service range.

But before the industry decides to wholeheartedly embrace this strategy it should be highlighted that it does not come without risks – for the industry, for the individual broker and, more importantly, it’s a big risk for the client.

The best way to mitigate these risks, while working towards positive growth, is to put appropriate frameworks in place to assist with commercial broker training, which will ensure the upskilling of those who wish to play in the industry, and ultimately that the industry continues to act in the best interests of clients.

By way of context, the large majority of well-established commercial brokers have between 15 and 30 years of commercial lending experience, which is in large part the reason why they are successful.

Importantly, they also understand the risks and intricacies associated with a particular transaction, based on their experience with other successfully closed

facilities over the years.

To elevate the industry and ensure we don’t disappoint all the clients who place their faith in our sector, we need to solidify a training framework for new commercial brokers, and this should include three key areas of focus.

Firstly, brokers need theoretical and

LET

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new-to-industry commercial writers.

Finally, brokers seeking commercial accreditation should be required to hold substantial industry experience of five or more years, or to have successfully completed their education and found a suitably experienced mentor.

A broker without the proper skill set and experience will result in a client not receiving the best advice. These clients will often end up having their transaction placed with an unsuitable lender, structured incorrectly and priced poorly for risk. Undoubtedly the whole process will take much more time than necessary.

The worst and quite likely result is that a commercially viable transaction is not placed at all, because of the inability of the consultant to locate a suitable lender that meets the borrower’s requirements.

Given the proposed changes to remuneration and the general tightening of policies, the royal commission has emphasised the need for residential brokers to expand and diversify their businesses into other areas – but we shouldn’t be pushing brokers in a new direction before they are adequately skilled and prepared for it.

There is a reason why most commercial business is written by a small percentage of the industry. It takes a very different skill set and level of experience to correctly structure, negotiate and place commercial transactions; it is not simply about connecting a lender with a borrower and hoping for the best.

Besides the possible risks to the

The large majority of well-established commercial brokers have between 15 and 30 years of commercial lending experience, which is in large part the reason why they are successful

Jean-Pierre Gortan Founder of Simplicity Finance

practical training. Lenders and aggregators should insist on mandatory training courses like the Certificate IV in Commercial and Asset Finance launched by the Commercial and Asset Finance Brokers Association of Austalia. This course covers key issues in the industry: deal structuring, credit memorandums, preparation and product knowledge.

Secondly, after training, a suitable mentor is perhaps the most important pillar. The notion of a mentor is mandatory for new-to-industry residential brokers, but not in commercial. A similar framework should be implemented for

reputation of the industry, there is also probably a legal minefield facing brokers who provide poor advice and whose clients suffer losses.

The last thing we should want for our industry is to have hundreds of inexperienced brokers attempting complex transactions without the proper knowledge and tools. Before we push traditional residential brokers into commercial finance, we need to understand the potential ramifications for our industry and, more importantly, for clients who might be on the end of a poor experience.

As the saying goes, only fools rush in. AB

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BUSINESS TALK

EQUIPPED FOR SUCCESS Following in the footsteps of its US business, last month OnDeck officially launched its new Equipment Loan, designed to provide funds when the major banks can’t. Australian Broker attended the launch event to find out more

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limitations on asset age, make or model, meaning even second-hand equipment can be financed.

“Through our research we identified that 30% of our customers were using our Unsecured Loan product to buy equipment, so we are really excited to be able to launch our second product, the Equipment Loan, here in Australia,” says OnDeck Australia CEO Cameron Poolman.

The new product leverages OnDeck’s global reach and systems – as well as its knowledge of communications; cost of funding; partnerships and learnings – to create economies of scale in the Australian market.

The lender also has a wealth of information on customer acquisitions and the third party channel, not to mention technology that it can tailor and roll out locally.

To explain these benefits to the local market, OnDeck global CEO Noah Breslow flew in from the US to

Michael Burke, Noah Breslow and Cameron Poolman

address brokers at the launch event.

“This is about choice. When we started OnDeck back in 2007, banks were doing a terrible job of serving small businesses in the US, and great businesses every day were having a hard time borrowing to grow,” he says.

“We started the company with the belief that by using tech, analytics and a customer-first approach, and by bringing this product category

online, we could serve businesses in a totally different way.”

Twelve years later, Breslow says the vision has become a reality. Today, 95% of SME customers in the US say they have more choices of where to get financing than they did five years ago, and 98% say that’s a positive outcome.

“OnDeck specialises in taking risks when banks don’t know how, and taking those risks in a responsible

SNAPSHOT OF EQUIPMENT SPENDING ACROSS AUSTRALIA Source: CommSec, ABS

% change December quarter on decade average TAS NSW SA

State

it comes to the themes that define 2019, commercial diversification has undoubtedly become one of the most prominent.

While the royal commission influenced this to an extent, new forms of broker education as well as heightened awareness of consumer demand have also played into the trend, and today more brokers than ever before are writing commercial loans.

“We would like to think that isn’t by accident, because over the years, particularly in the last 10 years, we have been boosting prudential and education standards to make sure all our members are professional,” says David Gill, CEO of the Commercial and Asset Finance Brokers Association of Australia (CAFBA).

In 2017, CAFBA commissioned global analytics firm East & Partners to investigate the third party channel’s commercial market penetration. Its report concluded that, on average, 67% of commercial equipment finance was sourced through brokers.

However, the challenges of commercial lending range from security to the fact that banks won’t even consider financing second-hand equipment. Tackling these head-on for the benefit of businesses across Australia, OnDeck launched a new loan product last month.

Following a soft-launch phase at the end of last year, OnDeck’s new Equipment Loan launched exclusively through the broker network in April, marked by launch events for brokers in Melbourne and Sydney.

The loan has several features that OnDeck says are market leading: not only is it unsecured but there are no WHEN

VIC ACT QLD WA NT -40%

-30%

-20%

-10%

0%

10%

20%

30%

ONDECK EQUIPMENT LOAN Loans up to

$100,000 ($250,000 when aggregated with Unsecured Loan product)

√

No requirement for property ownership

√

No limitations on asset age, make or model

√

Weekly or monthly repayments

√

Funding within three business days

Applicant eligibility

2 years in business

500 business and guarantor credit score

$100,000 annual revenue

ONDECK UNSECURED BUSINESS LOAN and intelligent way. We now see an opportunity for equipment finance here in Australia, and we want to bring it into the modern age,” Breslow says.

Funding frustrations Over the last 12 years, OnDeck has loaned more than $10bn to 100,000 business customers in the US, Canada and Australia. It has also contributed to the development of

overlaying their own consumer credit guidelines onto small business credit.

There was no recommendation from the royal commission that said lenders had to do this, but they still seem to be doing it … that’s part of why we welcome OnDeck’s new product,” says Gill.

According to Scottish Pacific’s latest SME Index, 53.2% of all SMEs borrow to fund new plant and

“OnDeck specialises in taking risks when banks don’t know how, and taking those risks in a responsible and intelligent way” Noah Breslow, CEO, OnDeck Global online SME funding in the markets where it operates, pioneering the SMART Box and heightening transparency of lending contracts.

But for mainstream and major bank lenders, equipment finance remains at arm’s length.

“Lenders now seem to be

equipment. However, the number of SMEs planning to turn to their main bank for funding dropped below the 20% mark for the first time in March 2019. When compared to the previous index released six months earlier, this is a drop of more than 3%. In September 2014, the figure

stood at 38%.

Non-bank lenders were listed as the first-choice funders for almost 18% of SME owners, up from 15% just six months earlier, while the percentage of SMEs who said they would not consider a non-bank lender dropped from 43.5% to less than 33%.

Meanwhile, OnDeck calculates that 25% of SMEs plan to seek additional business financing in the next 12 months, with the research revealing that 44% of SME owners would consider borrowing from an online lender.

For OnDeck, this is another area in which its overseas experience pays dividends.

“In this type of business, we need to deliver capital quickly to small businesses so they can do what they want to do. To do that we need to have best-in-breed credit models,” says Poolman.

“The US business is on version six of their credit score, pulling a number of different data sources to best predict the health of the business and their propensity to pay us back.”

Loans up to

$250,000

√

Six- to 24-month terms

√

Daily or weekly payments

√

No hidden security clauses

√

Funding in as little as one business day

Applicant eligibility

1 year in business

500 business credit score

$100,000 annual revenue

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Supporting the network Crucially, 70% of Australian SME owners access capital via brokers or intermediaries.

To support brokers, OnDeck has made a series of pledges, including the promise that a borrower won’t be contacted without the broker’s permission, and commission will not be loaded into the customer’s price.

Further, loans can be provided with only six months’ bank statements, dedicated BDMs are on hand to triage and prioritise broker deals, and funds can be cleared in

Despite the growth in demand for commercial lending, huge numbers of brokers are yet to diversify from their residential focus, due in part to concerns about education and experience. With the potential abolition of trail commission still lingering on the horizon, that could be about to change, and CAFBA is ready to support those looking to take the leap.

CAFBA’s diploma, to be released soon, will address how different financial concepts in the commercial space should be applied to customers. And there is

“Through our research we identified that 30% of our customers were using our Unsecured Loan product to buy equipment” Cameron Poolman, CEO, OnDeck Australia as little as three business days.

“The good thing about a new product like this is that it provides more choice, and every broker you talk to will always welcome having a choice of where to put their business and having a different product,” Gill says.

“In the US there is so much choice for small finance companies, and they are all niche products. We seem to just have four or five choices, and all of them have pretty much the same credit standards. Here the product features I have seen look very good, and I think it will be taken up by brokers and be very welcome.”

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more to come.

“We have been boosting prudential and education standards to make sure all our members are professional,” Gill says.

“We have just formed an alliance with the National Equipment Finance Association in the US, but the brokers in Australia seem to have a much better reputation and are all very professional. As CAFBA, it is our role ... to make sure that continues.”

Meanwhile, OnDeck is also going from strength to strength. “We are very proud of our Equipment Loan and we want to engage, learn and understand more from the brokers who use it,” Poolman says. AB

“Here the product features I have seen look very good, and I think it will be taken up by brokers and be very welcome�

David Gill, CEO, CAFBA

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23

PEOPLE

CAUGHT ON CAMERA NAB-owned aggregator FAST hosted its brokers at the Business Leadership Summit held in NSW in April.

The event enabled brokers to meet with six lenders from FAST’s extensive panel, share best practice ideas with peers, and preview updates to FAST’s software platform, Podium. FAST CEO Brendan Wright, NAB general manager of performance and operations Nicole Devine, and executive general manager of NAB broker partnerships Anthony Waldron all shared their views on the current industry environment and regulatory changes. Brokers also heard from Richard King of public affairs agency GRACosway, who spoke about effectively managing complex and sensitive communications.

24

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25

DATA

VICTORIA

ACT SPOTLIGHT

Melbourne’s rate of decline could go into double digits Melbourne’s downturn doesn’t seem to be letting up.“We are likely to see the annual decline move into double-digit falls over the coming months, with values currently 9.1% lower over the year,” says CoreLogic’s head of research, Tim Lawless, in the March 2019 Hedonic Home Value Index.

“The February housing market results marked a subtle improvement in the rate of decline; however the housing market downturn is now more widespread geographically and we aren’t seeing any indicators pointing to the market bottoming out just yet.”

However, what Melbourne does have going for it is consistent population growth. The larger cities and towns around the capital are drawing much interest, due to their convenience, relative affordability, public transport hubs and atmosphere.

“Potential upside may exist in some regional areas that offer an affordable escape from capital city markets,” says Geof Snell, principal property economist at BIS Oxford Economics.

Area

Type Median value

Quarterly

12-month

growth

growth

Melbourne

H

$685,000

-1.3%

0.8%

Vic country

H

$365,000

0.3%

4.7%

Melbourne

U

$515,000

0.0%

1.0%

Vic country

U

$265,000

-1.5%

-1.9%

NEW SOUTH WALES

Sydney illustrates ripple effect of tight lending criteria Things continue to look rocky for Sydney, which now features on the poor property performers’ list on a fairly regular basis. CoreLogic’s Hedonic Home Value Index for March 2019 indicates that Sydney’s subregions are the weakest among the capital cities. Premium pockets are suffering considerable declines as buyers seek out the cheaper end of the market.

“The stronger conditions across the more affordable properties can be explained by the surge in first-home buyer activity in these cities, as these buyers take advantage of stamp duty concessions available in NSW and Victoria,” says CoreLogic head of research Tim Lawless.

“Lenders are also likely reducing their exposure to borrowers with high debt levels relative to their incomes, which could be skewing demand towards the middle to lower end of the housing market in the most expensive cities.”

Lawless sees all this as a clear sign of the ripple effect of tight lending criteria across Australia.

Area

Type Median value

Quarterly

12-month

growth

growth

Sydney

H

$890,000

-1.6%

-3.6%

NSW country

H

$457,000

0.0%

2.2%

Sydney

U

$690,000

0.0%

-1.4%

NSW country

U

$390,000

0.1%

0.3%

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KING OF THE CASTLE Canberra is forging ahead of other markets, supported by stable prices and strong demand. But is a 4.1% rise in home values enough to make it the strongest market nationwide?

Australia’s property market continues to struggle through a national downturn, the country’s capital is powering through, showing some of the strongest market conditions, with an increase in house values of 4.1% overall.

According to CoreLogic’s Hedonic Home Value Index for March 2019, Canberra’s rental market was one of the tightest in the country as of February 2019. The average rental rate has increased by 4.7% in the past year – a testament to demand. There has also been an increase in property sales across different price points over the most recent five-year period – CoreLogic data indicate that properties priced in the $400,000 to $600,000 range comprised the biggest share of sales activity in Canberra. Furthermore, the share of million-dollar sales soared to 8.8% of all dwellings during that time.

In a March 2019 research report, Domain economist Trent Wiltshire said Canberra “sits in the middle of the pack of price volatility compared to other capital cities. Within Canberra, mid-price properties have generally seen more stable price growth than cheaper and more expensive properties, particularly for houses”.

Houses have generally been the dominant property type in the ACT, but units have been catching up due to their relative affordability.

“Both houses and units are in strong demand, and 12 months ago houses were ahead of units.

But there’s been a change, perhaps to more affordable properties, and now units seem to have a slight edge over houses,” says Jeremy Sheppard, head of research at Select Residential Property.

While high prices have affected demand in some respects, a decrease in supply has compensated for this. As a result, Canberra’s property market remains largely stable, with strong growth opportunities still on the horizon. AB AS

BROKER PERSPECTIVE

Strong outlook and heightened demand for brokers In Canberra, the top and middle parts of the market are performing well, with the lower-priced properties a bit slower right now due to long-forecast changes to first home buyer stamp duty, which come into effect on 1 July.

After that, first home buyers who meet certain criteria will not pay any stamp duty on a property, whether new or existing.

There have been some changes in the lending landscape, which have blown out approval times. Deals that would previously have been approved in a matter of days are now routinely taking weeks. There has never been more demand for a broker, given the continuing difficulty clients have in securing finance directly through a branch, but we also have to do a lot more work per application than ever before.

The fundamentals for Canberra are very strong. The city has not had the same level of growth as Sydney and Melbourne, so we may avoid going through the same correction.

Canberra borrowers by nature are more conservative and less highly geared, and this means our market is less susceptible to the boom-bust cycle.

Craig Dadds Owner, Objective Wealth

SUBURB TO WATCH: YARRALUMBA Median price (houses) $1,277,531

Median price (units) $559,211

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

1.3%

16.6%

43.0%

3.1%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

-41.0%

-32.8%

-21.7%

3.8%

, OPPORTUNITIES AND KEY INFRASTRUCTURE

HIGHEST-YIELD SUBURBS IN AUSTRALIAN CAPITAL TERRITORY Suburb

Type

Median price

Quarterly growth

12-month growth

City

U

$446,500

-3%

-22%

Gungahlin

U

$364,950

7%

-2%

Franklin

U

$379,750

0%

3%

Braddon

U

$430,000

-1%

-4%

Wright

U

$400,000

1%

0%

Harrison

U

$387,000

0%

5%

Belconnen

U

$366,000

-4%

-7%

Watson

U

$375,000

-20%

6%

Bruce

U

$375,000

-3%

-1%

Calwell

U

$395,000

-5%

14%

Florey

U

$407,000

1%

7%

Palmerston

U

$409,250

1%

6%

SOUTH AUSTRALIA

Area

Adelaide named premier city for developments in the state CoreLogic’s Hedonic Home Value Index for March 2019 showed that, alongside Hobart, Canberra and Brisbane, Adelaide had the best housing market conditions among the capital cities. Results Mentoring director Brendan Kelly says Adelaide’s market is quite similar to Brisbane’s – where the annual growth rate was 5% five years ago, it has since fallen to near 0%. Nonetheless, modest growth is still there.

“There is a reasonable amount of growth in Adelaide. Across the country, it’s probably the premier city for doing developments,” Kelly says. “There’s a lot happening in Adelaide right now ... like small three- to four-unit developments. I’m anticipating an increase in the number of both growth and declining suburbs – some suburbs go down further, while others climb.”

As these market movements essentially cancel each other out, Kelly says, “The effect is near zero, but the market will be more volatile in the next 12 months.”

Housing

Transport

New developments will be mindful of factors such as lifestyle and affordability

Light Rail Stage One, the city’s biggest infrastructure project, was completed in April

Redevelopment

Construction

Among this year’s projects, a CBD car park will be turned into 1,200 apartments

28 cranes were in use by the end of March, and 85% are for residential projects

Type

Median value

Quarterly growth

12-month growth

Adelaide

H

$466,000

0.0%

1.1%

SA country

H

$280,000

2.1%

1.1%

Adelaide

U

$335,000

0.0%

0.0%

SA country

U

$220,000

8.8%

12.4%

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27

DATA

QUEENSLAND

12-month

growth

growth

Brisbane

H

$530,000

0.2%

2.1%

Qld country

H

$430,000

-1.1%

-2.2%

Brisbane

U

$380,000

0.0%

-2.5%

Qld country

U

$372,000

-0.7%

0.0%

WESTERN AUSTRALIA

MEDIAN HOUSE AND UNIT PRICES

Perth heads for second slump, but affordable areas thrive

$1,000,000

Type Median value

Quarterly

12-month

growth

growth

Perth

H

$480,000

-1.0%

-2.0%

WA country

H

$330,000

-0.2%

-2.4%

Perth

U

$375,000

-1.3%

-3.8%

WA country

U

$223,750

-1.6%

-8.3%

28

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Total auctions

59

Cleared

10

Uncleared

13

Clearance rate

43.5%

PERTH Total auctions

53

Cleared

5

Uncleared

15

Clearance rate

25%

Houses

Sydney Melbourne Brisbane Adelaide

Perth

Hobart

$534,400

$475,000

$360,000

$0

$355,000

$100,000

$490,000

$200,000

$325,000

$300,000

$450,000

$500,000 $400,000

$530,000

$600,000

$680,840

$700,000

$645,000

$800,000

$850,000

$900,000

After a positive start to the new year, Perth has gone into another slump and house values fell by 6.7% over the year to March 2019.

According to CoreLogic’s Hedonic Home Value Index for March 2019, the annual rate of decline increased in this capital city, coinciding with weakened conditions in the job market and a lack of credit.

“Perth was coming back up from a negative, but it’s dipped right back again. Around 40% of the market is in decline,” says Brendan Kelly, director of Results Mentoring. Yet he doesn’t see this down period lasting for long.

“I’m anticipating that we’re going to see a swing back into neutral territory – I don’t think Perth is going to dip that much more. We’re going to see a more balanced market.”

However, falling values in Perth are inspiring activity from first home buyers, who made up the majority of sales transactions in February 2019.

Area

ADELAIDE

Units

Darwin

$397,475

Quarterly

$384,000

Type Median value

There were 1,472 homes taken to auction across the combined capital cities during the week ending 5 May, up from 1,026 over the previous week, although much lower than this week last year, when Melbourne had 1,144 auctions. Preliminary results show a clearance rate of 58.8% across the combined capitals, increasing from last week’s final clearance rate of 50.4%, while this week last year the clearance rate was 62.1%. Once final results are collected, the clearance rate will most likely revise down to the low-50% range.

In Melbourne, 678 homes were taken to auction, increasing from 498 over the previous week, meaning preliminary clearance rates came in at 60.8%, up from 53.6% the previous week, although lower than this time last year (63.7%).

Sydney was host to 535 auctions, with preliminary results returning a 66.6% clearance rate. Over the previous week, 332 auctions were held across the city, with a final clearance rate of 52.4%. This time last year, 63.1% of the 797 Sydney homes auctioned were successful.

Across the smaller auction markets, Brisbane was the only city to see a fall in both volumes and week-on-week clearance rates.

$530,000

Area

WEEK ENDING 5 MAY 2019

$680,000

Just as there have been hits to the property markets in Sydney and Melbourne, Brisbane has also experienced a slight blow, with the annual change in its growth rate slipping into the negatives for the first time in seven years.

CoreLogic’s Property Pulse report for March 2019 indicated that house prices in this city fell by 0.4% in the 12 months to February 2019. It seems that the time for investing in capital cities has passed, and many experienced investors are now looking to other markets in the Sunshine State for growth. “[Savvy investors] could see that the period of growth was at the end of its cycle. They have increasingly looked interstate and to regional locations for both lower entry prices and better growth prospects. Right now all roads lead to southeast Queensland,” explains James Nihill, managing director of Patrick Leo. “Southeast Queensland property prices really are on the brink of a growth phase after almost a decade of stagnation.”

CAPITAL CITY AUCTION CLEARANCE RATES

$280,000

Brisbane follows its neighbours as investors look beyond the city

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

-0.3%

-0.6%

-4.0%

-10.9%

Melbourne

-0.2%

-0.4%

-4.0%

-10.1%

Brisbane

-0.2%

-0.3%

-1.5%

-1.9%

Adelaide

0.1%

-0.1%

-0.7%

0.3%

Perth

0.0%

-0.3%

-3.3%

-8.3%

Combined 5 capitals

-0.2%

-0.5%

-3.5%

-8.8%

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

BRISBANE CANBERRA Total auctions

53

Cleared

20

Uncleared

17

Clearance rate

Total auctions

90

Cleared

13

Uncleared

33

Clearance rate

28.3%

54.1%

SYDNEY Total auctions

535

Cleared

217

Uncleared

109

Clearance rate

66.6%

TASMANIA

MELBOURNE Total auctions

678

Total auctions

4

Cleared

317

Cleared

1

Uncleared

204

Uncleared

0

Clearance rate

Clearance rate

60.8%

TASMANIA

Area

Growth strong as million-dollar sales increase Hobart is still arguably the most affordable capital city in Australia, but the tide is starting to shift. In the 2018 calendar year, less than half of all sales in Hobart were of properties priced at under $400,000 – a considerable dip compared to five years ago, when that price point made up 68.8% of sales, according to CoreLogic’s March Property Pulse report.

In fact, the proportion of million-dollar property sales increased to 3.8% from 1.4% in 2013. This upswing has continued into 2019, with Hobart the only capital city to show a rise in property values over the February quarter. However, the rental market has weakened slightly in terms of gross rental yield, which dropped to 5% in February 2019 from 5.2% a year earlier. Property values are rising at a faster rate than rents, but rents are becoming less affordable due to tight supply.

N/A

Type

Median value

Quarterly growth

12-month growth

Hobart

H

$460,100

2.6%

14.3%

TAS country

H

$310,000

1.7%

8.3%

Hobart

U

$360,000

1.0%

10.6%

TAS country

U

$240,000

-0.2%

-0.4%

All data sourced from CoreLogic.com.au

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29

PEOPLE

Aggregator Connective

IN THE HOT SEAT Two Birds One Loan director Alissa Childs is a BDM-turned-broker with a passion for photography and the outdoors. One year into her broking career, she explains why she made the leap and how she finds new business opportunities

Who or what inspired you to become a broker?

I spent 10 years working as a bank BDM, most recently with the A wonderful team at Macquarie Bank. I worked closely with so many incredibly successful brokers during my BDM career, and I always knew that one day I would use my knowledge and experience to start a business of my own. In 2018, I decided it was time to take the leap of faith. I am absolutely loving it, and I have not looked back!

Q

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

I think the biggest challenge for brokers is to block out the A negativity and fear of the unknown. It’s important to focus on building a resilient and diverse business, which is adaptable through the inevitable times of change that lie ahead.

Q

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

I don’t get too many hours to relax these days with two toddlers A at home, but when I do get some down time, I love to spend time on my photography. It is a pastime which I studied when I spent a year overseas in 2012. I live on acreage with a menagerie of animals, and we back onto the State Forest, so just getting home into that environment at the end of a long week tends to instantly help me wind down and switch off.

Q

What are your top survival tips for working in finance?

I have three. Firstly, build strong relationships with your fellow A brokers and lender BDMs. Throughout my career, I have established a solid network of contacts across the industry, and these have been an invaluable asset to our business. We regularly speak with other brokers to share best practices, and are always reviewing our processes, goals and strategies. Secondly, be agile and open to new ways of doing things – and don’t be complacent. It’s easy to get caught up in your daily workload and deals in progress. We allocate one day a week to sales, when we call or drop in on local businesses, seek out new opportunities, and focus on generating new business.

Lastly, value your clients and referrers like family. If you’re not regularly touching base, monitoring your database and conducting reviews, you’re at risk of losing the relationships and business which you worked so hard to attain. 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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31

HELPING YOU HELP YOUR CUSTOMERS

GET ON TOP OF BUSINESS With ANZ vehicle and equipment finance your customers could get the gear their business needs, without added pressure on their cash flow.

Better yet, approved customers may not have to pay a deposit, which means their capital could be put to work in other areas of the business.

Help your customers get on top of business today.

Call your ANZ Commercial Broker Manager to find out more.

ANZ Business Any advice does not take into account your personal needs and financial circumstances and you should consider whether it is appropriate for you. All applications for credit are subject to ANZ’s normal credit approval criteria.

Terms and conditions available on application. Fees and charges apply. Australia and New Zealand Banking Group Limited (ANZ) 2019 ABN 11 005 357 522.

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