Australian Broker 16.11

JUNE 2019 ISSUE 16.11

Leading lady Loan Market’s Andrea McNaughton on the group’s growth /16

All aboard for policy changes Why APRA’s lending updates cannot come soon enough /18

ROYDEN D’VAZ Bluestone’s national head of sales explains why there is more to the non-bank lender than meets the eye /14

Key skills for a new era Lenders and aggregators give their tips for professional development /20

ALSO IN THIS ISSUE… Movers and shakers The latest appointment news from the industry /24 Housing market roundup Why Tasmania’s performance continues to shine /26 In the hot seat Tony MacRae shares his horse-racing tips /30

NEWS

IN THIS SECTION

Lenders Major bank backs green homeowners /04

Aggregators Industry accused of running “Hollywood blacklist” /06

Technology NextGen.Net unveils ApplyOnline V4 /10

Regulators APRA changes “unlikely” to invigorate housing market /12

Market Property market challenges persist /08

www.brokernews.com.au JUNE 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

18 – 20 JUNE

2 5 – 2 7 J U N E

2 5 J U LY

Pepper Money Roadshow

FBAA Masterclass Series

Pepper’s fifth annual roadshow will focus on giving brokers practical solutions to today’s industry challenges. Taking place in Sydney on 18 June, Melbourne on 19 June and Brisbane on 20 June, the 2019 roadshow offers three CPD points for attending brokers. For more, turn to page 4.

The FBAA and Vow have teamed up to deliver the association’s 2019 masterclass series, visiting Brisbane, Melbourne and Sydney on 25, 26 and 27 June. Speakers from ING, Vow, Pepper Money, Suncorp and Thinktank are confirmed to deliver sessions on a range of topics. Attending brokers will receive five CPD points.

MFAA National Excellence Awards Concluding this year’s Excellence Awards series, the MFAA will recognise its national winners in a gala ceremony at Melbourne’s Crown Casino. In addition to naming the winners from the state heats, the ceremony will include a number of national-only recognitions.

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

21 AUGUST

30 AUGUST

4 – 6 SEPTEMBER

National Finance Brokers Day

CAFBA Conference and Awards

Credit Law Conference

Taking place for the fourth time in 2019, National Finance Brokers Day will be marked across Australia, with the theme #brokersareyou. Founder Dino Pacella says this year’s event will showcase the interaction and value that brokers instil in their local communities.

CAFBA’s annual conference and awards take place at the Grand Hyatt Melbourne.

Conference attendance is complimentary, but registration is required. The awards ceremony starts at 6.30pm on the same day, with early bird tickets on sale until 1 July.

Now in its 29th year, Informa’s annual Credit Law Conference will be held at Sheraton Grand Mirage Resort on the 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.

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

ADVERTISING ENQUIRIES

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6 SEPTEMBER

17 SEPTEMBER

18 OCTOBER

Next Generation Banking Technology

Valiant – Introduction to Commercial Finance

Australian Mortgage Awards

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 runs from 9am to 6pm.

As a partner of Connective, Valiant presents this session on SME and commercial lending options for those who want to brush up their skills. Topics will cover opportunity identification, introducing commercial finance to referral partners, and using Valiant to drive solutions. The class runs from 10.30am to noon.

Starting at 7.30pm, this year’s AMAs will see hundreds of mortgage and finance professionals return to The Star in Sydney to celebrate the industry’s best and brightest players over more than 30 categories.

The 2019 event will feature Urzila Carlson, Duke Music and Linden Furnell.

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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 BNK PASSES $200M LOAN BOOK VALUE has exceeded the $200m milestone on balance sheet loans after strong third-quarter growth in its banking and mortgage aggregation businesses. Year-to-date settlements of $51m have already surpassed last year’s settlements of $46m.

Bank MD Simon Lyons said, “One of the benefits of working with brokers nationally is we have been able to improve our portfolio’s geographic diversification, with many loan settlements outside of Western Australia.”

BNK BANK

HAVE WE REACHED A TURNING POINT? Source: CommSec

Sydney median house price, 3-month average $1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

PEPPER MONEY RELEASES ROADSHOW DATES fifth annual roadshow PEPPER’S is underway, addressing the customer, regulatory, digital and business aspects of lending and broking. Aaron Milburn, director of sales and distribution, says the focus is on how brokers create exceptional experiences in the current environment, explore diversification and “ultimately strengthen business by finding their own X-factor”.

Following dates in Adelaide and Perth, the roadshow will travel to Sydney (18 June), Melbourne (19 June) and Brisbane (20 June).

“We have launched a 3.29% loan with uno Home Loans, and we will have three or four more partnerships before the end of this year”

Ken Sayer CEO, Mortgage House

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$0

April 1980

April 1985

April 1990

April 1995

April 2000

April 2005

MAJOR BANK BACKS GREEN HOMEOWNERS CBA has introduced a new scheme to reward energyefficient home loan customers, calling it the “first of many” green measures bank CBA has introduced a scheme to reward energy-conscious home loan customers, giving assurances that it is the “first of many” initiatives in the pipeline to encourage greener choices.

The Green Mortgage initiative will provide $500 cashback to customers who have certified solar panels installed to power their homes.

The scheme was unveiled by the bank’s CEO, Matt Comyn, during the Trans-Tasman Business Circle lunch held on 28 May. Comyn said the bank was seeing strong investor demand for green bonds, and that it planned to pass the associated benefits along to customers.

Commenting on the development, MAJOR

Daniel Huggins, GM of home buying, said, “We want to support more of our customers who wish to install small-scale renewables by reducing their installation costs and payback periods.

“We understand many of our home loan customers could reduce their energy volume and usage and [either] pay less or become net positive for energy by investing in energy-efficient devices.”

According to the Clean Energy Council of Australia, two million homes had solar panels installed as of the end of 2018, and each home with rooftop panels can save $540 a year on energy bills.

Primarily due to energy demand for air conditioning, the warmer Australian states are seeing the

April 2010

April 2015

highest rates of solar panel installation. Four of the five postcodes nationally with the highest number of panels installed are in Queensland; the fifth is in WA. As part of its environmental drive, CBA also expressed a commitment to assisting customers who are looking for energy-efficient solutions to achieving their green goals for the future.

Hand in hand with these developments, calls have been made for the global banking sector to take the lead in helping the world transition to a green economy. In Australia, all four major banks have backed the Australian Sustainable Finance Initiative (ASFI).

Described as an “unprecedented” collaboration, ASFI is working to “reshape” the Australian economy to prioritise human wellbeing, social equity and environmental protection through the actions of the finance industry. Insurers, super funds and non-major banks have also joined the initiative.

NEWS

A G G R E G AT O R S SUBAGGREGATOR AUSSIE STRENGTHENS TEAMS UP WITH TAX GROUP NON-PRIME OFFERING has unveiled a suite of new non-prime loans funded by Pepper Money. Offering up to 95% LVR, Aussie Activate is available exclusively through Aussie brokers, with applications assessed manually. Chief customer officer David Smith said, “This really strengthens the diversity of our offering ... Our brokers are well equipped to find customers a suitable home loan option from one of our partners or white label range.”

AUSSIE HOME LOANS

INDUSTRY ACCUSED OF RUNNING ‘HOLLYWOOD BLACKLIST’ Lawyer says “anticompetitive behaviour” must be addressed after spike in legal enquiries from brokers who report being denied separation letters lawyer is calling on aggregators and lenders to assess how they deal with broker misconduct after receiving a series of legal enquiries from brokers who say they were denied separation letters.

Matthew Bransgrove, partner at the law firm Bransgroves, said brokers were being stripped of their accreditation for alleged misconduct that had not been committed to writing, and that, since the royal commission, the number of brokers seeking legal advice on the issue had increased.

The brokers in question were refused the paperwork necessary to join a new aggregation group.

Bransgrove has written to lenders, aggregators and brokers about the issue, calling for change. He said the A

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practice was “anticompetitive” and was “ruining innocent brokers’ lives”.

“This is an extra-judicial process that bypasses the formal mechanisms available through the MFAA. Aggregators and lenders could use the MFAA, they could report brokers to ASIC, but they choose to do neither,” he explained.

Speaking to Australian Broker, Bransgrove added, “For many years the banks and major aggregators have been operating a Hollywood blacklist to deal with brokers who they individually deem warrant expulsion from the industry.

This exposes brokers to very unfair results as they are given no chance to defend themselves before an independent umpire.”

To address the situation,

Bransgrove is calling for aggregators to add a due process clause to their broker deeds whereby they “agree that they will give a no adverse circumstances or due process when the broker leaves”.

“They also need to stand up to the banks and ask for evidence of wrongdoing before treating the broker as a criminal,” he said.

Despite highlighting that the MFAA was bypassed during the alleged process, Bransgrove has made a plea for the association to step in.

In response, MFAA CEO Mike Felton said, “The MFAA strongly believes that any lender or aggregator with an allegation of misconduct by an MFAA member should refer the matter to the MFAA, to ensure that an independent process is triggered to deal with it and come to an appropriate, peer-reviewed outcome.”

Australian Broker contacted several aggregation groups, and all denied that the alleged collusion occurs.

BUSINESS BEYOND THE BOOKS third annual Leading Ladies of Loan Market summit took place on 27–28 May in Byron Bay and answered the pressing question of “How do I make my business worth more than just my books?” Sessions covered building asset value, managing cash flow and investments, introducing more services to more clients, and recruiting quality staff.

The 2019 event came as the number of women in the industry continues to decline, falling by over 1% since 2016.

THE

“We’ve gone from a stage where we were facing Armageddon in February, to a stage now where we’ve got confidence in the next three years” Sam White Executive chairman, Loan Market Group

NEWS

MARKET SLOWDOWN CONTAGION HITS ECONOMY slowdown in housing activity continued in April as approvals for new homes in the three months prior declined by 20.5% year-on-year. The impact has echoed across the economy, according to Housing Industry Association chief economist Tim Reardon. “This is likely to weigh on economic growth in the national accounts data. An easing of the credit squeeze is necessary to alleviate the adverse impact of the housing downturn on the wider economy,” he said.

THE

NON-MAJOR INVESTOR LOANS TREND UP investment home loan volumes continue to sink across the big four, new data has shown a notable increase in investor loans across the leading non-majors.

According to APRA’s monthly banking statistics for April 2019, the investor-only mortgage volume across the 10 top-performing non-majors climbed by $0.36bn but fell by an additional $0.5bn at the majors.

The owner-occupier loan book at the non-majors came in at $185bn, over $1bn higher than in March.

WHILE

“We look forward to working with Minister Sukkar to develop policies that improve affordability without increasing the tax burden, including the development of a new FHB deposit scheme” Graham Wolfe Managing director, HIA

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PROPERTY MARKET CHALLENGES PERSIST Analysts says attention should be given to monitoring any significant rises in unemployment, mortgage defaults, and the Consumer Price Index the recent surge of optimism regarding the property market, one analyst has said the relief is misplaced.

“There are some people now claiming property prices have hit bottom and it’s all up and away from here. But then there are others who rightly focus on the burden of debt, which is very big and means there will be some limitation to how far property prices can reverse,” explains Martin North, principal at Digital Finance Analytics.

“There is significantly more interest in property now than a few weeks ago, yes. But the jury is still out on whether that will translate to sustainable reductions in the fall in home DESPITE

prices and rises ahead. The probability of coming into a property boom anytime soon is very limited.”

According to North, a large part of the issue lies in a crucial and crippling disparity between supply and demand.

ABS data reports that there are more than one million vacant properties in Australia currently, yet 200,000 new dwellings are scheduled to be built in the next two years.

Aspiring housing market entrants are being barred by tightened lending; immigration has stagnated; and not only are investors disinterested in returning to the market but many are also actively trying to sell the

properties they do have.

Even the initiatives recently proposed, such as APRA changing the servicing rate floor or the promised first home buyer scheme, are likely to have only a “small and positive effect, not a dramatically large one”.

“We’ve still got the very high level of household debt, we’ve still got very high levels of mortgage stress, we’ve still got the banks tight on their lending standards,” the anaylst points out.

While North feels confident that the last 18 months of property values sliding is outside the natural ebb and flow of the housing market, and indicates the presence of a deeper issue, he doubts the validity of using home prices as the key indicator of the state of the economy.

He explains that there are too many factors that play into the property market for it to be an accurate litmus test, calling it “a follow-up, rather than a lead indicator”.

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NEWS

TECHNOLOGY

LENFLO SEEKS BROKER FEEDBACK developers of Lenflo, billed as Australia’s first AI-powered commercial lending platform, are seeking broker feedback to evolve the platform. Global Capital Commercial is looking to “sit down” with brokers this month and showcase updates via video and webinars. GCC director Bill Salouris said, “At the moment, we’re still in the trial run with about 70 brokers. We’ve been updating as we go, so there are a lot of new features coming.”

THE

Deniz Ertem, senior customer success manager, NextGen.Net

NEXTGEN.NET UNVEILS APPLYONLINE CHANGES Version 4 of the industry tech tool brings “significant” enhancements, with seven changes and new features primary technology provider to the mortgage lending industry has “significantly enhanced” one of its core offerings.

NextGen.Net launched its ApplyOnline Supporting Documents service five years ago, dramatically reducing turnaround times and improving rework rates.

As the first of its kind, the service has seen demand only increase since then. Now, the tech developer and provider has gone live with Version 4 of the platform.

According to NextGen.Net, the unanimous feedback following demonstrations of the upgraded product was that it’s more intuitive and easier to use.

“The new version is definitely a lot sexier as well,” said senior customer success manager Deniz Ertem.

THE

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“There’s no checklist any more, and it’s a complete redesign of our user interface. It’s now a card layout that makes for an enhanced user experience.”

Version 4 of ApplyOnline features a completely redesigned user interface; a new, fully responsive design; an improved file upload and attachment process; a simple document management system to house all documents; and an increased file view size for easy verification.

In addition, brokers can now defer documents through a standalone process and add comments for lenders.

“I was very impressed to see that NextGen.Net took time to talk to brokers up front to assess what was needed for Supporting Docs V4,”

said Heather Gallagher, Outsource Financial state manager for strategy and solutions NSW/ACT. “Importantly, the new enhanced version is optional. I want brokers to know 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.”

Speaking to Australian Broker about the efficiencies that ApplyOnline has achieved since 2014, NextGen.Net sales director Tony Carn said, “We’ve seen thousands of dollars cut out of the cost of processing a loan application over the last five to 10 years – literally thousands of dollars.

“We always work very collaboratively with lenders. It’s around realising the benefits of digitisation. If you’re speeding up the process and ensuring quality, ultimately you’re giving a better broker experience, a superior customer experience and, more importantly, you’re reducing costs.”

NEOBANK AIMS FOR BETTER BROKER EXPERIENCE lead developer for products at neobank 86 400 is looking to “eliminate the pain points” brokers experience with other lenders.

Melissa Christy explained, “The focus has been on doing something really different in the broker space. The experience brokers go through with us will be quite different, something that they’re not used to. It’s really exciting, because we think their productivity will definitely increase if they’re applying for our products.”

THE

NEWS

R E G U L AT O R S

REGULATORY COSTS IMPACT SMALLER ADIS has become the latest firm to highlight how the cost of regulatory change following the royal commission is disproportionately impacting smaller ADIs. In a report last month, it said a one-size-fits-all approach “can put undue pressure on the smaller ADIs – such as customer-owned institutions – that strive to compete in an environment where the cost of compliance is already burdensome, and the changing nature of technology continues to strain resources”.

GRANT THORNTON

APRA CHANGES ‘UNLIKELY’ TO INVIGORATE HOUSING MARKET Challenges remain in the housing market despite regulator’s attempts to stimulate interest and activity APRA’s proposed changes to serviceability assessments for ADIs have been broadly celebrated, others have expressed doubt that the regulatory revisions will stimulate the housing market in as meaningful a way as was hoped.

“While these changes are welcome and will help some borrowers that can’t quite access a mortgage currently to get one, it is unlikely to result in a rebound in the housing market,” said CoreLogic research analyst Cameron Kusher.

Kusher referred to ANZ’s recent investor update to the market to elaborate on his stance.

The update from ANZ attributed reduced borrowing capacity to three factors: changes to HEM accounted for 60%, the servicing rate floor was WHILE

ABA GEARS UP FOR ASIC REVIEW Australian Banking Association has announced that it intends to prepare a submission in response to ASIC’s consultation on RG 209: Responsible Lending Conduct and APRA’s APS 220 Credit Risk Management paper. The ABA said it had also been working with banks on “regulatory issues regarding small business lending”.

The association intends to raise with regulators “some of the challenges impacting the flow of credit to consumers and SMEs across the economy”.

THE

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responsible for 30%, and income cuts caused the remaining 10%.

Kusher pointed out that, according to this data, 70% of the reduction in borrowing capacity was unrelated to the current serviceability assessment model.

Even if APRA were to change its current guidelines, it would likely continue to be much more challenging to get a mortgage than it was in the past.

Roger Ward, director of Champion Mortgage Brokers, agrees that the current 7.25% assessment rate is just one of six lending standards that have contributed to the credit squeeze.

Drawing from his 25 years in the banking and finance industry, Ward outlined five challenges to lending as including a “one-dimensional

and inaccurate” approach to identifying spending habits and current costs of living, and LVR changes and limitations, especially those impacting investors.

While allowing lenders to review and set their own minimum interest rate floor would undoubtedly help some borrowers access previously unreachable mortgages, the housing market would require stimulation from elsewhere for dwelling values to begin their rise.

Kusher said, “[APRA’s] proposed changes, in conjunction with the uncertainty of the election now behind, will potentially provide additional positives for the housing market. [They] would potentially slow the declines further and may result in an earlier bottoming of the market.

“Despite that prospect, it will remain more difficult to obtain a mortgage than it has done in the past and we would expect that if or when the market bottoms, a rapid re-inflation of dwelling values is unlikely.”

INDUSTRY UPDATE

30,000 REASONS FOR SME CLIENTS TO ACT FAST 1 in 4 SME owners intend to take out finance before EOFY, but businesses need to act fast to take advantage of the $30,000 instant asset write-down in the current financial year

SME lender OnDeck is urging brokers to encourage their SME clients to act fast to secure finance ahead of 30 June 2019 and take advantage of the $30,000 instant asset write-off in the current financial year.

As part of the 2019/20 Federal Budget, the instant asset write-off was given an uptick to $30,000 effective 7:30pm AEDT on 2 April 2019, and expanded to include businesses with a turnover of less than $50m, up from $10m previously.

Federal Government figures confirm that over 350,000 businesses have taken advantage of the instant asset write-off. A far greater number – 3.4 million SMEs - stand to benefit from the new rules.1 Independent research by OnDeck confirms that over eight in 10 (84%) small business owners are aware of the instant asset write-off. However, two out of five were concerned that the write-off would end with a change in government.

Mr Cameron Poolman, CEO of OnDeck Australia, said, “A more certain political environment together with the enlargement and expansion of the instant asset write-off, means SMEs can now invest in their business with certainty, while benefiting from tax savings to aid cash flow.”

LEADING

Finance is the key to making asset purchases “SMEs often need finance to purchase eligible assets, and this can be an uncertain and time-consuming process when businesses rely on bank funding.”

OnDeck found one in four SMEs have been knocked back for bank finance in the past. Among those that have 1 2 2

- ABOUT THE $30,000 INSTANT ASSET WRITE-OFF2 yy The threshold has increased to $30,000 and been extended to 30 June 2020. yy In addition to businesses with an annual turnover of up to $10m, the instant asset write-off now also includes those with a turnover from $10m to less than $50m.

Cameron Poolman, CEO, OnDeck Australia

successfully acquired funding, 29% say their business was negatively impacted by the time taken to secure finance.

This is where brokers can really differentiate themselves by partnering with alternative lenders, such as OnDeck, who can fast-track the application, approval and funding process.

“With 30 June just around the corner, time really is of the essence. I urge brokers to speak to their SME clients about taking advantage of

the write-down this financial year. It’s not just about tax savings. It’s an opportunity for clients to strengthen their business through increased productivity and efficiency,” said Mr Poolman.

OnDeck, which expanded its SME lending recently to include plant and equipment finance, found that most SME owners would use the instant asset write-off to invest in a new vehicle, IT equipment or tools and machinery.

yy Eligible SMEs can claim a deduction of up to $30,000 for the business portion of each asset (new or second-hand), purchased and used or installed ready for use from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020. yy The entire cost of the asset must be less than the instant asset write-off threshold, irrespective of any trade-in amount. yy The write-off can be claimed for multiple asset purchases.

https://www.budget.gov.au/2019-20/content/tax.htm#backing https://www.ato.gov.au/Tax-professionals/Newsroom/Your-practice/Instant-asset-write-off-increased-and-extended/ https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/In-detail/Depreciating-assets/Simplified-depreciation---rules-and-calculations/?page=4

www.brokernews.com.au

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FE AT URES

SPECIAL REPORT

MORE THAN A SPECIALIST LENDER

After runaway success in 2018, Bluestone is prepared for a repeat performance. But, as national head of sales Royden D’Vaz explains, there’s much more to come from the non-bank lender

KEY BUSINESS METRICS

$2BN

recorded in settlements

96%

increase in application volumes in 2018

69%

increase in settlements

40%

of the lender’s total business is from Crystal Blue

90%

minimum of Bluestone’s business is broker-originated

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say the last 12 months have been important for Bluestone is somewhat of an understatement.

From the non-bank’s acquisition by Cerberus Capital Management to its activity in the near prime space, the business has undergone somewhat of a transformation.

With a renewed focus on near prime loans, applications and settlements of the clear-credit product Crystal Blue increased 255% in the six months to October 2018, when compared to the previous six months. In FY19 year to date, Crystal Blue has accounted for 40% of all Bluestone’s settled loans – up from 17% in FY18 – meaning that near prime now outperforms uptake of credit-impaired products by a significant stretch.

Securitisations have also been strong, with the first transaction of 2019 taking place in April.

At $400m it was Bluestone’s first deal to be made available to European investors.

Building on the success, the non-bank most recently expanded its APAC operations by welcoming additional team members and moving into new, bigger offices across three key APAC locations, Sydney, Auckland and Manila.

“Although the overall market has been down, at Bluestone we’ve had a fantastic year as our results show, and our settlements have increased by 69%,” says Royden D’Vaz, Bluestone’s national head of sales.

Another defining moment for Bluestone was its re-entry to New Zealand at the end of 2017.

While the geographic proximity makes such an expansion a no-brainer, the opportunities are TO

what really sets the market apart.

For example, New Zealand’s aggregation space is highly concentrated. Seeing the opportunity there, Bluestone this year partnered with Loan Market/NZFSG – the largest aggregator in the country with a majority market share – to offer a series of exclusive products.

These include a white label loan, the Select Home Loan, that went live in early June. The rest of the product suite will also enjoy a facelift, with new names and terms expected to be rolled out in the second half of the 2020 financial year.

non-bank lender than brokers and borrowers assume.

“Bluestone is changing. It used to be that brokers would only consider Bluestone after our competitors due to the brand’s legacy being linked to servicing customers with impairment, arrears or bankruptcy.

Now, however, upwards of 80% of our volume is in the clear-credit, near prime space – in the past this was never the case,” D’Vaz says.

“We are a leading non-bank with competitive rates, and we are always innovating. There is a lot more to Bluestone today than there was 12 months ago, and we have even bigger plans for next year.”

New-look loans Across the four products available in Australia – Clean Slate, Business Easy, Lite Blue and Crystal Blue – Bluestone now offers new discounted fixed rates, starting at 3.84%.

“We are a leading non-bank with competitive rates...There is a lot more to Bluestone today than there was 12 months ago” Royden D’Vaz, national head of sales, Bluestone “The business has set and achieved some important goals this year, with the number one being the release of our white label product into the New Zealand market,” says D’Vaz. Predominantly, Bluestone’s success has been attributable to internal drive, but there have been market forces at play too, not least a federal election, the royal commission’s final report, and a readjustment of appetite across the banks, which in itself left a void to be filled.

However, while momentum is strong, D’Vaz has a new focus for this year: to remind the industry that there is more to the

Since mid-April, new borrowers have been able to access rate reductions across all loan products of 20 basis points for two-year fixed term loans and 30 basis points for three-year fixed term loans. The update went hand in hand with policy updates for selfemployed borrowers who take out a Crystal Blue loan.

This means that those without traditional income verification documents can now prove serviceability with six months of business bank statements and either six months’ BAS or an accountant’s letter.

The policy update is one of hundreds witnessed across the

In partnership with

Royden D’Vaz, national head of sales, Bluestone

market in recent months as the industry has come to terms with new competition dynamics.

Additionally, the mainstream media coverage of bank and non-bank lenders, and the brokers who drive their business, has also inspired consumers to take greater control of their financial circumstances.

According to D’Vaz, the typical customer in post-royal commission, post-election Australia today not only shops around for the most competitive rate; they also shop around for their broker.

“Brokers must continue to keep up to date with what is happening.

Customers are getting a lot savvier and many are far more aware of

what is happening in the market,” D’Vaz says.

“Customer sentiment is changing.

They aren’t just shopping between lenders; they are shopping between brokers too. From a broker perspective, it is important to have some very good structures and strategies in place to counter that.”

More than 90% of Bluestone’s business is originated through the broker channel, and with big plans and even bigger targets for the second half of this year and beyond, D’Vaz says business is on the right track.

“Now that we’ve executed our first priority, it’s time to think about the next big thing. Our next priority

is ensuring our proposition remains relevant in the market, that it resonates with brokers, and that we continue to evolve to help our broker partners help more borrowers,” D’Vaz says.

Bright future While it will take some work to beat 2018’s figures, the current year is already shaping up to be a strong one, and D’Vaz has big plans through to 2020 and beyond.

If these growth plans are exceeded, there could even be another office move on the cards.

What is more concerning is the dramatic and constant shifts in the market.

Urging brokers to keep a positive mindset, D’Vaz says, “A lot has been happening and it is a lot to keep ahead of, but I think brokers have to concentrate on their core business and give diversification a shot. It’s something to consider without forgetting what their core business is.”

The market will continue to fluctuate, and the loans offered across it will continue to adapt.

However, the overriding takeaway for brokers is that change happens, and keeping ahead of it may be difficult, but knowing each lender’s specialty in a shifting marketplace is the way to stand out.

“Brokers need to be nimble and agile enough to respond to the changing conditions. As much as they can, they need to get some professional development, whether it’s through coaches or mentors or attending some of the many sessions run by their aggregators or other lenders, such as webinars, training sessions or workshops,” D’Vaz says.

The final piece of the puzzle is how borrower behaviour will influence the broker and lending space.

While D’Vaz says conditions are ripe for an influx of investors, there are plenty of other factors to consider too, including proposed changes for first home buyers and the recent RBA rate cut.

Yet one of the biggest takeaways from 2018 is that borrowers no longer fit the square holes lenders put them in. Research from Morgan Stanley shows that the non-bank sector is growing at twice the rate of the big four majors, and the near prime space is also booming, driven by everything from bank policies to the gig economy.

For Bluestone, a strong demand for credit will ensure business remains equally robust, and, as borrowers and brokers realise more of the competitive advantages of the non-bank sector, the stage is set for another record year. AB www.brokernews.com.au

15

FE AT URES

IN THE NE WS

LEADING LADY Six months into her new role as executive director of Loan Market, Andrea McNaughton outlines the group’s growth plans and explains why female brokers are more important than ever before will come for those who haven’t dropped the ball during all this uncertainty. The customer needs us more than ever,” she says.

There are hard targets in place too, specifically to increase the number of business owners across Australia by 100 before the end of the year.

“It’s a pretty strong target, and we are bringing on some really large businesses at the moment, so that has been exciting. Our pipeline is

Andrea McNaughton, executive director, Loan Market

the course of her career Andrea McNaughton has worn many hats, from those of state general manager and then CEO at Ray White, to state director for Victoria at Loan Market.

At the start of this year she moved into another corner office when she took on the role of Loan Market executive director, working directly to support the group’s brokers.

“All business owners want the same thing. It’s all about what are the systems, processes and structures that OVER

16

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I need, where do I find good people, and how do I manage growth and cash flow,” she says.

McNaughton’s remit to 2020 will see her focus on productivity, tech and customer relationships, supporting new-to-network and existing brokers through technology – from investments in the CRM to automated marketing tools – in addition to onboarding support staff and efficiency in processes.

“The next six months will be a bit more back-to-business, and the results

often seek assistance from brokers who reflect their social and cultural background; and, with one in three women retiring without super, it’s imperative that female representation in finance remains strong.

“There’s never been a better time to be a broker and never a better time than now to be a female broker with regard to the position of trust that they are in with their clients and the state of financial health of women in

“We are giving them the skills to run local workshops on financial wellness and really get them advocating for their female clients” strong,” she says.

Not only is McNaughton at the top of her game as a woman in the industry but she’s also leading Loan Market’s work to support other women in broking and finance.

This year saw the third instalment of the group’s Leading Ladies event, which took place in Byron Bay in late May. There are some hard-hitting reasons as to why it is important for women to enter – and excel in – broking. Not least the fact that clients

Australia,” McNaughton says.

“We are giving them the skills to run local workshops on financial wellness and really get them advocating for their female clients.”

In turn, McNaughton is a strong advocate for female brokers, advising her peers to work together to generate results.

“It’s very hard to achieve a lot in business on your own. It’s important to surround yourself with a quality team, but also to enjoy what you do.

It’s too hard if you don’t.” AB

TECHNOLOGY UPDATE

SMARTLINE: ‘NEW SUPPORTING DOCS SIMPLER AND EASIER’

Mitch Thompson, IT Support Team Leader, Smartline

recently released enhanced ApplyOnline Supporting Documents service gets a big thumbs-up from Smartline’s IT Support Team Leader Mitch Thompson.

At a design feedback gathering and demonstration, Thompson watched as NextGen.Net Senior Customer Success Manager Deniz Ertem compared the original and new versions of Supporting Docs, pointing out the enhancements to the process.

“The unanimous response in the room was that the new version is simpler and easier,” says Thompson.

“The fundamentals are the same, but the visuals for interaction with the screen are clearer and cleaner.

NextGen.Net hasn’t reinvented the wheel with these changes, but they’ve made the wheel much sleeker, nicer and easier to roll down the hill.”

Ertem says, “The new version is definitely a lot sexier. For example, there’s no checklist any more. It’s a card layout on the screen. I get an immediate THE

and collective, ‘wow, that looks different’ response in demonstrations.

“I equate it to a myGov-style design, which uses a similar card structure.”

Off the back of widely sought lender and broker feedback, NextGen.Net has enhanced its trademark ApplyOnline Supporting Documents service to create a more intuitive and streamlined user experience (UX).

The ApplyOnline Supporting Docs service was the first tool of its kind in the Australian marketplace. Accommodating shifting lender requirements, with a commitment to a best practice usability format, has led to a reassessment of the core design principles of Supporting Docs’ highly complex capabilities.

The end result is a Supporting Documents upgrade that dramatically enhances the UX. Changes include a complete redesign of the user interface (UI), a fully responsive design to cater for all devices, an improved file upload/attach

Deniz Ertem, Senior Customer Success Manager, NextGen.Net

process, uploaded files easily assigned to document conditions, a simple document management system to house all documents (even those not going to the lender), and an increased file view size for easy self-verification.

The aim of supplying and verifying all supporting document requirements and creating a complete package of information for the lender upfront is to work towards Straight-Through Processing (STP).

Thompson maintains that the enhancements “will make it easier for brokers to move through the process and achieve STP”.

“I like a lot of the new features,” he says. “The standout is the screen design, which is easy to navigate and visually eye-catching.

“I particularly like the fact that the number of colours has been reduced, specifically the red, which psychologically promotes irritability, and by the time brokers get to Supporting Docs their attention

is already waning.”

Ertem nominates his top feature as the ability to easily assign uploaded files to document conditions.

“The best part of it is the ability for brokers to select instantly what is included in their uploaded file and attach the document directly to each required category. That step wasn’t in the previous version.

It’s a game changer,” he says.

Both Thompson and Ertem point to the fact that brokers who opt to trial the new version won’t be locked into it.

“The ability to toggle between the original and new versions has been received very positively,” says Ertem.

Thompson is in agreement.

“The fact that at any time you can revert back to the previous version really appeals,” he says.

“Some of our brokers embrace change; other are resistant to it. What I like about this is that you can switch back anytime. They can change back and forth. They will always have the option. I’m very impressed.”

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FE AT URES

OPINION

ALL ABOARD FOR POLICY CHANGES Robert Perks, MD of Fifth Avenue Finance Group, says overly conservative lending policies at the banks are essentially an audit of consumers, and APRA’s changes to serviceability rules cannot come soon enough get straight to the point – the banks need to back APRA’s recent easing of mortgage serviceability rules.

It’s really a no-brainer – the proposed changes make sense given the current interest rate environment, added to the expectation that rates will fall further and remain lower for longer.

But the banks need to support assessment rates and remove all overregulation and red tape applied to lending policy in the post-royal commission era.

APRA’s suggestion that banks change the way they assess customers’ abilities to meet their mortgage repayments is a move that should let people borrow more.

The regulator is effectively proposing to remove guidance that customers should be able to repay their loan if their interest rate increased to at least 7%. It recommended lenders instead make serviceability calculations using a 2.5% rate buffer.

While it’s great news that APRA is taking a proactive approach to policy in helping the banks lend more money, the 7% servicing assessment rate hasn’t previously been a problem in home loan approvals prior to the banking royal commission.

APRA’s very reasonable directive was for

mortgage brokers and lenders to make “reasonable enquiries” into living costs instead of using the House Price Index or HEM living expense measurements as a default living expense calculation.

The banks have overreacted to the directive and taken an overly cautious approach when applying this to updated

I’LL

statements of living expenses. It is tantamount to an audit of a home loan customer’s living expenses statement, and also of their personal lives.

This disingenuous policy suggests that home loan customers are not capable of telling the truth to the bank or their broker in order to get a home loan approved. It is overstepping into customers’ personal privacy. Home loan customers are entitled to their privacy, providing it’s legal, period.

What this policy serves to create is an environment in which customers protect themselves by having non-disclosed secondary bank accounts that they can use to pay subscriptions, for example.

I can assure you it’s not best practice to audit a client’s life by way of their bank statements. Making reasonable enquiries into living expenses should instead involve discussing fixed and non-fixed expenses, and the client’s appetite to reduce or cancel these expenses should home loan affordability become an issue. This could mean having a discussion around cancelling subscriptions like Netflix, Stan and Foxtel if the need arises, providing they

Requiring customers to provide personal bank statements to prove their statements of living expenses is tantamount to an audit ... of their personal lives

Robert Perks MD of Fifth Avenue Finance Group

lending policies. This, as well as the red tape around responsible lending, is the real driver of home loans being declined.

An example of this responsible lending red tape is the policy of a number of banks that require a home loan customer to provide a personal statement detailing their living expenses and commitments.

But they go further than that, requiring customers to provide personal bank statements of their accounts to prove their

aren’t under a fixed contract.

Bigger picture when looking at APRA’s proposed changes – they are simply very welcome and, if implemented, will help some borrowers who can’t quite get there currently with a mortgage.

These changes, along with the uncertainty of the election now over, will potentially provide more positives for the housing market – so my message to the banks is, get on board! AB

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19

FE AT URES

BUSINESS TALK

KEY SKILLS FOR A NEW ERA

Broking has been shaken and stirred over recent months, with many more potential changes on the horizon. Lenders, aggregators and associations all have a role to play in keeping brokers ahead of their game, and this is driving new methods of training and development all good brokers know, education doesn’t end when the diploma is complete – to get ahead and stay there in this fast-paced industry, continued development is critical.

Add to this the need to reform and strengthen processes in response to new regulations, and it’s time for brokers to upskill for the future.

“If there is one thing we have observed over the last few years, it’s that change has become a constant within our industry,” says Peter Vala, head of sales and distribution at Thinktank Commercial Finance.

“The call for, and value of, deeper skill sets in residential and commercial broking has never been greater.”

Those skill sets demand brokers widen their focus, leverage their AS

Cory Bannister, VP, chief lending officer, La Trobe Financial

“Brokers should partner with lenders they feel comfortable working with. At La Trobe Financial, we are continuing to educate and support brokers in their professional development through webcasts, webinars, broker workshops and Coffee Clusters. In addition, the national one-on-one coaching conducted via our 24 credit-skilled senior manager client partnerships is designed to ensure that brokers are kept up to date with the latest products and policies, and to ensure that they don’t miss an opportunity to find a solution for their clients.”

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simple formula for staying ahead.

“Staying close to your lender partners and aggregator contacts is the most effective way to keep up to date with relevant changes,” she says.

With a network of 1,700 brokers, PLAN takes a tailored approach to training and development, supporting members in meeting their obligations as well as achieving their individual goals as business owners.

Recent PD events for PLAN brokers have seen industry players such as CIF chair Anthony Waldron, MFAA CEO Mike Felton, and FBAA executive director Peter White address the room.

“Keeping brokers updated on compliance and regulation has been a key focus,” Pannek says.

Changes in the market are also having an impact on skill sets, with

“If anything has become obsolete it is the monoline business model; in our view, these types of businesses will get left behind” Cory Bannister, VP, chief lending officer at La Trobe Financial networks and dedicate serious time to self-development – all while juggling the demands of their day-to-day jobs.

The stakes are high, but the returns can be lucrative.

“This is a pivotal time for the industry, and it is important for broking businesses to have a strong foundation to ensure their future viability,” says PLAN Australia CEO Anja Pannek.

But while there are many changes to adapt to, Pannek says there’s a

the property downturn, recent election and tighter lending criteria all making it harder for brokers to secure positive results for customers.

Liberty group sales manager John Mohnacheff says such trends demand a back-to-basics approach.

“While the industry is certainly experiencing a shift, many of the key skills that have traditionally been linked to broker success are just as relevant today as they were 20 years ago – the most important being

good, old-fashioned customer service,” he says.

Drawing on his vast industry experience, Mohnacheff says the most successful brokers are transitioning away from the one-size-fits-all approach towards finding and creating customised solutions and nurturing their existing databases.

Old-school approach Picking up new skills doesn’t mean that established skill sets are becoming obsolete. Hand in hand with exemplary customer service, an old-school approach to broking must dovetail with the new competencies demanded by the job.

“If anything has become obsolete it is the monoline business model; in our view, these types of businesses will get left behind in the wake of full-service, diversified operations,” says Cory Bannister, VP, chief lending

has been tailored to helping brokers strategise beyond their core skills.

“Business planning and strategy are a key focus for PLAN Australia at present,” says Pannek.

“We believe the current environment is offering significant opportunities for brokers to build on their business expertise and skills by putting into place quality business processes that help them to work on their business – not just in their business.”

When offering practical advice to brokers, Mohnacheff says the key skill to master is mining client information to identify new opportunities in the CRM; for instance, potential business customers, auto finance clients, SMSF lending or other complementary services.

“We know that customers have access to more lending options than ever before. To remain competitive,

“Brokers must look outside the box to support customers with access to options they might not have otherwise considered” John Mohnacheff, group sales manager, Liberty officer, at La Trobe Financial.

“In addition to this, there is a broad know-and-show thematic playing out in financial services, whereby it is expected that you will be able to clearly demonstrate how your actions are appropriate, and how they have resulted in good customer outcomes.”

The new skill set that brokers must master combines business acumen as well as an understanding of lending regulations and a new set of obligations around best interest, as recommended by Commissioner Hayne.

In simplifying this, PLAN Australia advises its brokers to place customers “first and centre” and, to assist, the aggregator is guided by the four Cs: putting customers first, being compliance fixated, being commercially oriented, and having a clear commitment to the industry.

“For us, the four Cs provide a guide that brokers can follow to help continue to drive great client outcomes, regardless of the operating environment,” Pannek says.

In 2018, PLAN took a cohort of brokers to Harvard. This year, support

brokers need to be informed about a variety of product offerings and consider new ways to meet customers’ needs,” he adds.

However, one of the most pressing trends is that the market is forcing brokers to diversify.

“With major banks exiting specific market segments due to their simplification strategies, there has been a resulting reduction of available credit broadly, with policies being tightened and some products being removed altogether,” says Bannister.

“This has meant that many of the brokers’ traditional supply channels have been heavily restricted or closed altogether.”

Study buddy When it comes to expanding focus, brokers aren’t expected to do it all alone. Knowing their core strengths is essential to growth and success, and in safeguarding these many brokers have partnered with specialists from other fields of lending, whether business, SMSF or personal, in their efforts to diversify.

“Some of the most robust broker

John Mohnacheff, group sales manager, Liberty

“Liberty is proud to provide a range of high-quality training and development opportunities, as well as broker tools.

These include our national conference, regular webinars, email updates on the latest industry developments; and our tracking tool, Liberty IQ, runs on desktop and mobile and links directly to a BDM, underwriter or settlement officer. Diversification has always been a key message for Liberty, and our ‘Do More’ sessions help to give brokers the support, information and product training they need to diversify and build their businesses.”

businesses have multiple sources of income, yet this approach may not suit some, and brokers should continue to focus on their core strengths and the key drivers of their client base so that they can offer solutions which match their particular need,” Vala says.

For those brokers who prefer to stick to what they know, the way around this is to onboard a partner or recruit a specialist in their new focus area. It goes without saying that management of the new team member is vital to this running smoothly.

“The decision to bring on a new resource rather than upskilling can come at a real cost. However, the recovery of this cost can be quite rapid depending on the candidate,” he adds.

In conjunction with aggregators and various industry bodies, Thinktank provides a range of tailored educational events and

content that attract corresponding CPD points. The information and development sessions range from commercial to SMSF finance, balance sheet lending and prospecting, all at no cost to the broker. In addition, formal masterclass events are held at a national level, alongside other lenders and industry bodies.

“This is a collaborative effort to help further develop a broker’s capabilities and take advantage of new opportunities,” says Vala.

The ‘R’ word The royal commission has probably had the most impact of any development in recent years, and how Hayne’s recommendations will be realised by the re-elected Coalition will define broking until at least 2022.

“This will really shape our industry going forward,” Pannek says.

“These recommendations could www.brokernews.com.au

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Anja Pannek, CEO, PLAN Australia

Peter Vala, head of sales and distribution, Thinktank

“PLAN Australia has actively contributed to raising professional standards in the industry by continually investing in market-leading and award-winning training, from face-to-face events to digital content. Our packed conference agenda includes a National Conference, Commercial and Asset Finance conference, a Strategic Partners Leadership Gathering, High Performance Conference and PD days. We have also invested heavily in digital education tools – we offer webinars, YouTube videos, social media updates – and PLAN Australia was one of the first aggregators to offer high-definition digital PD days.”

potentially result in changes to process, documentation, education standards, how brokers work with customers, and what customers can expect from their mortgage brokers going forward.”

For Bannister, the royal commission and federal election have created a highly complex environment, both for brokers and consumers, and he says this will see more people seek the assistance of a professional when applying for finance, thus boosting broker market share. It’s a situation he describes as a “golden opportunity”.

“The unknowns and complexities are the very fuel that drives finance broker growth. Today, consumers are experiencing a high level of uncertainty, low confidence and brand confusion in the finance world, and therefore ‘trusted advisers’ like finance brokers are, and will continue 22

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to be, highly sought after,” he says.

But there is a catch.

“It is not a total free kick, however, because with greater market share comes greater responsibility.

“In conjunction with aggregators and industry bodies, Thinktank is active in providing a range of tailored educational events and content that attract corresponding CPD points. Sessions range from Commercial 101 to SMSF Finance, Balance Sheet Lending and Prospecting, all at no cost to the broker.

In addition, formal masterclass events are held at a national level in a collaborative effort to help further develop a broker’s capabilities and take advantage of new opportunities.”

A new era With so much change in a few short months, 2019 has already been a significant year for the industry, so much so that the MFAA is calling it a

“The call for, and value of, deeper skill sets in residential and commercial broking has never been greater” Peter Vala, head of sales and distribution, Thinktank Brokers now more than ever need to remain vigilant in their processes and their pursuit of good customer outcomes, as there are more eyes on this industry segment than ever before, and as we know, futures can be changed with the stroke of a pen,” Bannister says.

“new era”.

What this means for the future of broking is something many in the industry have an opinion on.

For Mohnacheff, it means brokers need to go above and beyond to retain their clients by leveraging their relationships with the non-banks,

identifying new client opportunities and providing new solutions.

“The royal commission recommendations and the recent federal election have put the industry under the microscope and on high alert,” says Mohnacheff.

“It’s definitely an interesting time for the broking industry, and I expect that we will see more customers start to gravitate towards alternative lenders rather than sticking with the big four.”

The outlook seems simple enough, but to thrive in these testing times brokers will need one more thing – a strong helping of ingenuity.

“Brokers must look outside the box to support customers with access to options they might not have otherwise considered before. By doing so, they can create meaningful opportunities and position themselves as true finance experts,” he says. AB

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23

PEOPLE

MOVERS AND SHAKERS

SUNCORP CHIEF EXECUTIVE STEPS DOWN

Board thanks CEO and managing director Michael Cameron as interim replacement is named

Mark Haron

AGGREGATOR HEAD JOINS MFAA BOARD MFAA has announced the appointment of a new director, effective last month.

Connective’s Mark Haron will bring knowledge covering strategic management, operations, sales, relationship management, compliance and governance to the association. “I am pleased to be able to lend my experience and expertise to the efforts of the MFAA as it continues to play a critical role in assisting our great industry to evolve and reform,” Haron said.

THE

Michael Cameron (left) and Steve Johnston (right)

non-major has just announced that its CEO and managing director will be stepping down from both roles.

Suncorp CEO and MD Michael Cameron is to leave the company after nearly four years in his current role and seven years as a board member. He will remain employed in an advisory capacity until 9 August 2019, following the release of Suncorp’s full-year results on 7 August.

In his time at the helm, Cameron has been credited with carrying out “a significant digital transformation of Suncorp”, even amid the period of increased regulatory change.

Cameron said, “Suncorp now has the digital foundations in place to enable it to be nimble and to seize opportunities. I believe the business has great potential and will continue to enjoy success.”

A

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In the interim, the board has appointed group CFO Steve Johnston as acting CEO. Johnston has served in various leadership roles in his 13 years at Suncorp.

Chairman Christine McLoughlin said, “This will provide the opportunity for the company to enhance its performance in a highly competitive and challenging external environment as Suncorp seeks to strengthen its core businesses by focusing on its customers, products and brands.

“On behalf of the board, I would like to thank Michael for his leadership in accelerating our digital capability and in driving a customer-first culture.”

McLoughlin also spoke to interim CEO Johnston’s experience and thorough understanding of Suncorp’s core insurance and banking businesses.

“He is best placed to lead

Suncorp and build on the group’s multichannel capability,” she said.

Johnston said, “I recognise the importance of this role, especially during this challenging time for the financial services industry. I am truly passionate about what we do and confident in our future.”

The board hopes to announce its new CEO in the latter part of the year. Jeremy Robson will act as CFO while the board completes the succession process.

According to APRA’s monthly statistics, Suncorp is the second leading non-major in terms of loan volumes, second only to ING. Suncorp has confirmed that its FY19 cash earnings are in line with market expectations considering the external operating environment, investment market performance and unforeseen regulatory costs.

Adam Crane

ME BANK CFO NAMED is to welcome Adam Crane into the role of CFO as Gary Dickson concludes his six years at the bank. ME CEO Jamie McPhee said, “I am excited to have Adam join at this point in ME’s journey as he brings great skills to the executive table, especially in the areas of leadership and industry expertise.”

Crane has spent more than 25 years in the banking and financial services industries, working with ANZ and Suncorp.

ME BANK

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25

DATA

WESTERN AUSTRALIA

TAS SPOTLIGHT

Negativity takes its toll despite the positive signs of recovery The results of the ANZ/Property Council Survey Index for June 2019 revealed that confidence levels in Perth have fallen by four index points since the previous quarter.

“Whilst WA is a separate property market to the eastern states, the media coverage and negative sentiment in Sydney and Melbourne may have influenced Perth,” says Sandra Brewer, executive director of the Property Council of WA. However, there is still good reason to have faith.

“Confidence in the WA property sector has taken a slight hit across the board but remains overall in positive territory and the third-highest in the country,” Brewer points out. “It was promising to see an increase in staffing levels over the past four consecutive quarters, demonstrating that the industry expects an overall increase in activity.

"The WA industry remains confident that strong economic growth can return; this is reflected in the fact that WA had the highest state economic growth expectations of all jurisdictions.”

Area

Type Median value

Quarterly

12-month

growth

growth

Perth

H

$473,000

-1.0%

-2.0%

WA country

H

$330,000

-0.3%

-2.4%

Perth

U

$375,000

0.0%

-3.8%

WA country

U

$270,000

4.4%

-2.2%

QUEENSLAND

Brisbane could be in a shaky position in spite of its past strength While it is not experiencing a noticeable price drop like Sydney and Melbourne, Brisbane's property market may not be in the best position.

“We are holding on for dear life to a positive growth figure – a rate of 1.1% means Brisbane is really performing the best out of the three largest capital city property markets. However, it’s important to recognise investors are jittery and the market is slowing, and it’s easy to see why,” says Real Estate Institute of Queensland CEO Antonia Mercorella.

The federal election was certainly a factor, with political movements negatively affecting investors’ view of property investment.

“Combine this with a state government review of the tenancy legislation and the likelihood that landlords will lose some rights, and investors were understandably questioning the value of property as a wealth-building tool. Our property market is currently in the shadow of some large, gathering storm clouds,” Mercorella says.

Area

Type Median value

Quarterly

12-month

growth

growth

Brisbane

H

$529,694

0.9%

2.9%

Qld country

H

$430,000

-1.1%

-2.2%

Brisbane

U

$372,500

-0.5%

-2.5%

Qld country

U

$365,000

-1.1%

0.3%

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TASMANIA’S BALANCING ACT Steady supply and demand levels mean market conditions remain healthy in Hobart, but the rental market is losing the benefit of affordability has always been Hobart’s strongest advantage and has helped propel the market to incredible heights over the past few years. However, this advantage is beginning to waver.

In CoreLogic’s Home Value Index for April 2019, head of research Tim Lawless reported that property prices “remain at record highs” throughout the Apple Isle. Hobart was one of the few areas to avoid a decline in dwelling values, while parts of regional Tasmania were among the best performers of all capital city subregions in the 12 months to March 2019.

This appears to indicate a ripple effect from the capital city to the major regional centres of the state, because as market conditions in Hobart begin to soften, buyers are looking towards the lower quartile of the market for opportunities.

“There are only five significant urban areas in Tasmania, and every one of them has an impressive demand-to-supply ratio. Each one had an increase in demand relative to supply from where they were 12 months ago,” says Jeremy Sheppard, head of research at Select Residential Property.

“The ratio is consistent across houses and units in pretty much every significant urban area in Tasmania – the state is still making a mockery of naysayers. I expect more of the same across 2019.”

The buyer hotspots, as named by the Housing Industry Association’s Population and Residential Building Hotspots 2019, include Hobart suburbs like Old Beach and Brighton, as well as Launceston’s Port Sorell.

However, in the rental market tight vacancy rates are pushing rents up rapidly. It’s a trend that is causing Hobart to lose its grasp on the title of most affordable capital city rental market in Australia. AB

BROKER PERSPECTIVE

AFFORDABILITY

Strong property values are boosting buyer activity as borrowing capacity improves It is no secret that the Tasmanian property market has been experiencing a boom cycle. The latest MyState Bank Tasmanian Economic Update shows Hobart dwelling values have bucked the downward trend nationally, with growth of 3.8% in the year ending April 2019.

The buoyancy of Tasmanian property values has meant our business has increased loans by 40% in the last year. We’re servicing an almost equal number of refinances and purchases as homeowners realise a lot more equity in their homes and buyers’ borrowing capacity is improved.

The recent state government announcement of a 12-month extension of the First Home Builders Grant is an effort to further stimulate housing supply and combat the state’s rental shortage.

However, there are signs the Tasmanian market is softening, and we expect a levelling out over the next year. We don’t expect drops mirroring Sydney and Melbourne, but some heat is likely to leave the market, in the form of fewer open homes, for instance.

Jonathon Coleman Mortgage broker, One Stone Finance, Rosny Park

SUBURB TO WATCH: KINGSTON BEACH Median price (houses) $587,906

Median price (units) $380,969

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

7.8%

32.2%

42.8%

3.1%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

10.7%

37.8%

50.4%

4.3%

, OPPORTUNITIES AND KEY INFRASTRUCTURE

HIGHEST-YIELD SUBURBS IN TASMANIA Suburb

Type

Median price

Quarterly growth

12-month growth

Queenstown

H

$73,000

-3%

9%

Rosebery

H

$83,000

4%

11%

Action

H

$170,000

0%

4%

Clarendon Vale

H

$220,000

2%

29%

Gagebrook

H

$210,000

8%

24%

Herdsmans Cove

H

$210,000

0%

27%

George Town

H

$172,250

4%

6%

Burnie

U

$126,250

-20%

-39%

Waverley

H

$175,500

0%

10%

Ravenswood

H

$175,000

0%

9%

Brooklyn

H

$184,000

0%

16%

Risdon Vale

H

$255,000

0%

20%

AUSTRALIAN CAPITAL TERRITORY

Area

$2.8bn

2,000

to be spent on infrastructure in Tas this year, according to the latest state budget

Tasmanians bought their first home in the year to March 2019

19.2%

20.1%

increase in lending for property development in the year to March 2019

increase in residential building approvals in the 12 months to February 2019

Type

Median value

Quarterly growth

12-month growth

Canberra

H

$660,000

0.8%

3.1%

Canberra

U

$421,500

0.3%

1.4%

Politics isn’t the only driver of the Canberra property market Canberra is one of the best examples of how employment opportunities can significantly support the property market. The Housing Industry Association’s Population and Residential Building Hotspots 2019 report suggests that, even with the election outcome, building activity is likely to carry on as normal. The report noted that over 2017/18 the population rose rapidly, drawing in migrants from both within and outside the country.

A major reason for the capital’s appeal to overseas buyers is its focus on international education, which in turn is a necessity given Canberra’s place as Australia’s main political centre. Migrants are also drawn to the capital’s robust economy, which boasted the lowest unemployment rate in Australia during that period, at 3.5%.

Buoyed by these factors, seven suburbs were identified by the HIA as hotspots for buyers to look out for based on residential building approvals and population growth from 2017 to 2018. The list includes the suburbs of Greenway, Phillip, Kambah and Curtin.

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DATA

VICTORIA

12-month

growth

growth

Melbourne

H

$670,000

-0.8%

0.0%

Vic country

H

$365,000

1.1%

5.6%

Melbourne

U

$510,000

0.0%

1.0%

Vic country

U

$275,000

0.4%

-1.5%

MEDIAN HOUSE AND UNIT PRICES

Recent turnaround in Adelaide’s fortunes pays off

$1,000,000

Quarterly

12-month

growth

growth

Adelaide

H

$467,500

0.6%

1.7%

SA country

H

$278,000

1.1%

1.1%

Adelaide

U

$340,000

0.0%

0.0%

SA country

U

$210,000

5.0%

10.2%

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81

Cleared

22

Uncleared

28

Clearance rate

44%

PERTH Total auctions

29

Cleared

4

Uncleared

12 25%

Houses

$900,000

Units

Sydney Melbourne Brisbane Adelaide

Perth

Hobart

$440,000

$465,000

$365,000

$0

$356,250

$100,000

$472,500

$200,000

$312,000

$300,000

$435,000

$500,000 $400,000

$520,000

$600,000

$665,000

$700,000

$635,000

$800,000

$805,000

Consumer confidence is increasing in Adelaide, according to the NAB Residential Property Survey report for Q1. The report listed SA as having the highest sentiment levels in Australia based on capital growth and rent expectations – it’s the only state that recorded positivity.

“South Australia’s market sentiment is 47 points higher than the national average – a reflection of the state’s strengthening economy,” says Libby Greenwood, acting general manager of NAB SA. In fact, Adelaide is predicted to have the strongest growth in the country, with house prices expected to be up by 0.5% in 2020. This is the highest forecast for a mainland capital city.

“As dwelling prices trend lower or level out, household incomes are edging higher and mortgage rates remain around the lowest level since the 1960s. First home buyers are clearly taking advantage of the improved levels of affordability and less competition in the market,” says CoreLogic head of research Tim Lawless.

Type Median value

Total auctions

Clearance rate

SOUTH AUSTRALIA

Area

ADELAIDE

Darwin

$400,000

Quarterly

$380,000

Type Median value

As the nation stopped amid the federal election hype, only 917 homes went to auction this week, with preliminary results showing 57% were successful. In the week prior, 1,218 homes were auctioned, and the final auction clearance rate came in at 54% – the highest final result since September last year. Comparing results with the same week last year, a higher 2,100 homes were taken to auction, returning a 56.8% final clearance rate.

In Melbourne, a preliminary auction clearance rate of 62.9% was recorded across 427 auctions, making it the best-performing auction market according to preliminary figures. Last week the number of auctions was higher, at 546 held across the city, returning a final clearance rate of 55.7%. Meanwhile, Sydney’s final clearance rate was in the high-50% range for the last two weeks, and as final collection comes in this week we will see if this was maintained for another week. The last time Sydney’s clearance rate was in the high-50s was in mid-May last year.

$538,000

Area

WEEK ENDING 19 MAY 2019

$640,500

Dwelling values have been falling steadily in Melbourne over the last several months; however, still-high prices are pushing buyers to look into the lower quartile of the market. The capital recorded the greatest annual decline in the national housing market at 13.9%, according to the CoreLogic Home Value Index for April 2019, but prices have yet to drop to a manageable level for buyers.

“Despite Sydney and Melbourne housing values falling, overall dwelling values relative to household incomes remain substantially higher than in other cities, which could be another factor skewing credit availability towards the middle to lower end of the market,” says Tim Lawless, head of research at CoreLogic.

Roy Morgan’s Inflation Expectation Index shows that inflation expectations in Melbourne nosedived to 3.9% in February 2019 from 4.7% a year earlier – the lowest in over two years. First home buyers are showing more interest in the market, but lending policies could continue to restrict borrowing.

CAPITAL CITY AUCTION CLEARANCE RATES

$280,000

Buyers looking to lower end of market as city’s prices remain out of reach

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

-0.3%

-1.1%

-4.6%

-11.2%

Melbourne

-0.2%

-0.7%

-4.3%

-10.2%

Brisbane

0.0%

-0.4%

-1.7%

-2.2%

Adelaide

-0.1%

0.1%

-0.7%

0.4%

Perth

-0.1%

-0.3%

-3.5%

-8.4%

Combined 5 capitals

-0.2%

-0.8%

-3.9%

-9.0%

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

BRISBANE CANBERRA Total auctions

32

Cleared

14

Uncleared

11

Clearance rate

Total auctions

75

Cleared

17

Uncleared

27

Clearance rate

38.6%

56%

SYDNEY Total auctions

270

Cleared

102

Uncleared

66

Clearance rate

60.7%

TASMANIA

MELBOURNE Total auctions

427

Total auctions

3

Cleared

207

Cleared

0

Uncleared

122

Uncleared

1

Clearance rate

Clearance rate

62.9%

NORTHERN TERRITORY

Area

Growing interest in the market, but many hurdles remain The NT is the last of the troubled mining areas left to play catch-up, but after several years of struggle the state could finally be recording some stability.

“The overall demand-to-supply ratio for Darwin is no different to what it was 12 months ago. It’s stabilised a fair bit but is still just under what would be considered balanced,” says Jeremy Sheppard, head of research at Select Residential Property. “The key problem indicators include slow selling times, high discounting, too many renters, vacancies nearly at 3%, and too much stock on market.” Nonetheless, Sheppard highlights Darwin’s high yields as a feather in its cap, and says this capital sees “a decent amount of online search interest”.

He singles out the Alice Springs area as one that is gaining steam. Vacancy rates are under 2% in most suburbs for which data is available, and online search interest is higher than one would expect.

N/A

Type

Median value

Quarterly growth

12-month growth

Darwin

H

$490,000

0.0%

-2.0%

NT country

H

$435,000

0.0%

0.2%

Darwin

U

$327,000

-2.2%

-10.0%

NT country

U

$317,500

0.9%

6.7%

All data sourced from CoreLogic.com.au

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29

PEOPLE

IN THE HOT SEAT Tony MacRae, GM of banking for MyState Bank, talks about his love of horse racing, the professional achievements he’s prioritising for 2019, and the role of brokers in a new operating environment

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

The role brokers play in helping customers has been A heightened to a level that we have never seen before.

We should not miss the opportunity to continue the conversation around the value of brokers and use this as a platform to move forward. Brokers need to ensure that they stay focused and put the ongoing noise aside. The focus right now is on delivering for customers and not getting distracted by noisy influences that are going on in the industry at the moment, and if they keep that focus I think they will thrive and grow, and that is absolutely key.

Q

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

It might actually add to the frustration, but it is a good A way to get away from things – I have a number of racehorses, and I love watching them in the early morning at the track. Adding zero value to the process, I may add.

Or I like getting out and watching them at the races.

I find that’s a great way to switch off, and you are dealing with all walks of life in that field. It’s great fun and you meet some real characters.

Q

What are your top survival tips for working in finance?

Diversity of thought is critical. Having a really A strong support network is really important to this, and by that I mean having a group of people who are willing to, and do, challenge you. And potentially they challenge you with thoughts you may not like, because there is an opportunity to learn from that experience. Those are all really important factors for a career in finance.

Q

What is one thing, personal or professional, that you would like to achieve before the end of 2019?

On the personal front, I’m a racehorse enthusiast, so A I would like to get my star horse to a Saturday race at Sydney’s Randwick – and win. On the professional front, there are three areas of key goals at MyState: to create deeper relationships, maintain a strong balance sheet, and do the right thing by all our customers and partners. If we can say we ticked those boxes and met those targets, we will be really pleased. AB

Q

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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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