Australian Broker 16.12

JULY 2019 ISSUE 16.12

Leaving the comfort zone The diversification opportunities any broker can leverage /16

The role of the SME broker Why brokers should protect their SME clients from lenders /20

NANCY YOUSSEF The founder of Classic Finance explains how diversification helped her find her purpose in life and business /14

Back to school All the highlights from the 2019 Broker Business Exchange /22

ALSO IN THIS ISSUE‌ News The latest happenings from across the industry /04 Market data Property market insight from New South Wales /26 In the hot seat Smartline broker Andrew Bromley on nurturing professional ties /30

NEWS

IN THIS SECTION

Lenders Citi brings commercial suite to Australia /04

Aggregators AFG restructures executive team /06

Market Critical flaw in the property market /08

Technology Digital verification moves into the fast lane /10

Regulators Customer will “ultimately pay” for regulation /12

www.brokernews.com.au JULY 2O19 EDITORIAL Editor Melanie Mingas News Editor Madison Utley Production Editor Moira Daniels

DATES TO WATCH

Upcoming can’t-miss events

ART & PRODUCTION Designer Martin Cosme

3 J U LY

2 5 J U LY

14 AUGUST

Wealth Through Property

MFAA National Excellence Awards

Commercial Lending Workshop

Aimed at brokers and their investor clients, this two-hour evening event by Blue Wealth kicks off at 6.30pm at Sydney Olympic Park and will cover property investment as a tool for wealth creation, providing insight into Blue Wealth’s research methodology.

Concluding this year’s Excellence Awards series, the Mortgage & Finance Association of Australia 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 nationalonly recognitions.

In collaboration with MFAA, Simplicity Loans & Advisory will host a two-hour commercial lending workshop from 3.45pm at the Pullman Hotel, Sydney. This casual event is geared towards residential brokers looking for the tools required to identify, analyse and capitalise on the opportunities in commercial lending.

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 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 SUNCORP RECOGNISED FOR INCLUSIVITY

MORTGAGE BOOST ACROSS LENDERS Source: APRA Monthly Banking Statistics

has achieved Silver Employer Status for its LGBTI inclusion in the Australian Workplace Equality Index. The bank, which runs an LGBTIQ+ employee network, picked up the award at the LGBTI Inclusion Awards last month. Pip Marlow, CEO customer marketplace at Suncorp Group, said, “I passionately believe that we will only be our best when our workforce is as diverse as the communities in which we live and operate.”

SUNCORP

BUSINESS LENDER EXPANDS TO AUSTRALIA -based lender Tradeplus24 has opened for business in Australia, offering real-time assessments for a “significantly underbanked niche”.

Backed by Credit Suisse, Tradeplus24 has raised $173.6m in debt and equity and is due to announce its funding partner imminently. Variable credit lines will range between $500,000 and $10m, and property will not be required as collateral. According to MD Adam Lane, the model arose from “an urgent need for more innovative business credit solutions”.

$0.36bn

$185bn

increase in new investor loans at the non-majors

total owner-occupier loan book at the non-majors

$2.5bn

$896bn

boost to owner-occupier loan book at majors

in owner-occupier mortgages across Big Four banks

SWITZERLAND

“Over the last two years we’ve prioritised investment in digital and broker offerings in line with our vision to deliver amazing customer experiences” Ian Rakhit Head of third party banking, Bankwest

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BANKS DEPART FROM FINANCIAL PLANNING Tasmania-based MyState to sell financial planning division in “strategic move” as CBA announces it too will divest Count Financial Limited -based bank MyState is to sell its retail financial planning business to Fiducian Group Limited for $3.5m.

The move will allow MyState to concentrate on other areas of its business. MyState Limited’s financial planning client book is valued at more than $340m in funds under advice.

“This is a strategic move for the MyState Group which allows us to simplify our business and invest for growth in the areas where we can have a competitive advantage,” said MyState MD and CEO, Melos Sulicich.

“Through our Tasmanian Perpetual Trustees brand, we are building a simplified national and highly scalable wealth management TASMANIA

business focused on managed funds and trustee services,” he added.

The transaction is not expected to have a significant impact on MyState’s net profit for the year.

“We are very pleased to have reached this agreement with Fiducian,” said Sulicich.

“We believe its Tasmanian footprint and dedicated financial planning focus provide a great fit for our customers and staff. We look forward to working with Fiducian to ensure that the transition for our customers is smooth, simple and straightforward.”

Established in 1997, Fiducian Group describes itself as a “diversified financial group offering funds management, financial planning, platform administration,

financial planning software and administration systems development”.

The news was announced the same week that CBA confirmed it is to divest Count Financial Limited, in a deal that will see CountPlus Limited pay $2.5m for the business.

CBA said CountPlus is the “logical owner of Count Financial given its historical corporate relationship and equity holdings in 15 Count Financial member firms”.

The bank has assured customers that it will continue to handle remediation matters arising from past issues, even after the transaction is complete.

In its March quarter results, CBA shared that it has spent $714m on customer remediation provisions thus far. Of that sum, $144m was made in relation to Count Financial.

The major has made a contingent liability of $56m more available to Count Financial, with the qualification that CBA be notified of all claims within four years of the transaction’s completion.

NEWS

A G G R E G AT O R S SUBAGGREGATOR CHL RESOLVE LAUNCHES TEAMS UP WITH TAX GROUP has teamed up with CONNECTIVE

Thinktank to launch a commercial property finance suite, CHL Resolve. Aimed at business owners, investors and SMSF borrowers, it has no annual reviews or ongoing fees and offers funding of up to $3m at 75% LVR over 30 years. “We are essentially taking a residential approach to commercial property lending and this makes for an easy transition for any broker,” said Michael Goerner, head of Connective Home Loans.

AFG RESTRUCTURES EXECUTIVE TEAM Move aims to reflect firm’s “increasingly diversified earnings base” and address ongoing industry changes aggregator has reshaped its executive team to reflect its “increasingly diversified earnings base”, as well as to better carry out the industry and regulatory engagement necessary following the royal commission.

Australian Finance Group (AFG) has consolidated executive accountability for all residential mortgage product sales and created a new executive role, GM for the AFG Securities (AFGS) business.

AFGS recently passed the $2bn under management milestone, highlighting the growth of the business line.

Under the new structure, GM of residential and broker Mark Hewitt will shift to GM of industry and partnership development. Hewitt AN

will oversee all lender relationships across the AFG home loan, commercial, business and personal loan lines.

“During the recent challenges the mortgage broking sector has faced, Mark has played a significant role in ongoing advocacy of both AFG and the broader industry, stewarding much of the activity undertaken as our industry became a focus during the election campaign,” said AFG CEO David Bailey.

“With the three-year review period now underway, the need for AFG and the industry more widely to represent our brokers positively in the eyes of regulators and government is even more important. Mark will focus on our engagement with regulators and

work to drive positive change across the industry,” Bailey added.

Chris Slater, GM of home loans, will assume the broader sales and distribution leadership role across both the residential broking and the AFG Home Loans businesses.

Bailey praised Slater’s skill set and his demonstrated success in other roles over the last 12 months, adding that these will “hold him in good stead as he takes up this new challenge”.

Commenting on the wider impact the changes are intended to bring for AFG, Bailey continued, “The external forces impacting our business across the past 18 months have underlined why it is crucial to constantly engage with the broader industry and continue to position AFG as taking a leadership role in the market with both regulators and our lending partners.

“We must ensure that the broker proposition remains front and centre of the debate as the industry shapes its future over the next three years,” he added.

LOAN MARKET GOES BYOB has launched Bring Your Own Brand (BYOB) as it aims to onboard 100 new broker businesses before 2020. BYOB allows “quality businesses” to become part of the group without relinquishing their own identity.

Executive director Andrea McNaughton said, “We have a full application process. We take business plans and marketing plans. We review their website, look at their compliance, look at where they sit today and where they want to be.”

LOAN MARKET

“Making money is important, but it is absolutely a by-product of giving the customer – in this instance, the mortgage broker – a better product, service or experience” Anthony Thomson Chairman, 86 400

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NEWS

MARKET RATE CUT BOOSTS VULNERABILITY RBA’s decision to cut the interest rate last month has eaten into the buffer needed should the economy slide into a recession. The basic strategy among central banks dealing with a recession is to cut the interest rate in a significant way, often by as much as 500 basis points.

Martin North, principal of Digital Finance Analytics, said, “They haven’t solved the fundamental economic issues: growth is still weak, debt is still very high.”

THE

CREDIT CARD DEBT HITS EIGHT-YEAR LOW data has confirmed that Australian credit card debt is at an eight-year low, following a 3.9% decline in the year to April that equates to $39.62bn in outstanding debt. Stuart Stoyan, founder and CEO of MoneyPlace, said, “This absolutely impacts mortgage applications and serviceability. Over the last couple of months, we’re seeing more and more brokers who are using personal loans to clean up a customer’s situation ahead of a mortgage application.”

RECENT

“People often forget house prices doubled in recent years, so falls of 10% to 15% won’t do much to improve affordability over the long term”

Andrew Bartolo GM of home loans, ME Bank

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CRITICAL FLAW IN THE PROPERTY MARKET Affordability is the “fundamental issue” that is likely to inhibit future property market success, according to researcher expectations continue to mount for the property market to bottom out and dwelling values to begin to rise, a researcher has highlighted an urgent issue that has been left out of the conversation.

CoreLogic’s Hedonic Home Value Index for May 2019 revealed the smallest month-on-month decline in national dwelling values in over a year. However, in explaining the results, CoreLogic head of research Tim Lawless revealed that affordability is the fundamental issue likely to inhibit future property market success.

He explained, “This improvement is primarily being driven by a slower rate of decline in Sydney and Melbourne where WHILE

housing values were previously falling at the fastest rate of any capital city.

“However, while housing affordability has improved in Sydney and Melbourne, it’s improved from a very, very high level to something that’s still fairly high. Before the marketplace started to downturn, Sydney’s dwelling price to income ratio was getting up to 10 times, meaning a typical household was spending about 10 times their gross annual income to afford the median price dwelling. That’s fallen to a little bit more than eight-and-a-half times now,” he continued.

“Affordability has been a major issue in Australia for a very long time. There have been all sorts of

things tried, generally unsuccessfully, to improve this,” Lawless added.

He continued to name the “worst example” as stimulatory measures supporting first home buyer demand but neglecting to address the supply side of the equation.

Instead, Lawless sees a great need for improving supply, improving infrastructure, and making affordable housing options more desirable and accessible to first home buyers.

The head of research did note that the combination of lower rates passed on after the RBA’s latest rate cut, APRA relaxing its serviceability floor and confidence returning post-election would undoubtedly provide some market stimulus.

“But, to qualify that, I don’t think the stimulus is going to be as effective as what we’ve seen over periods of previous rate cuts, simply because we still have a fairly stiff set of credit policies in place,” he added.

NEWS

TECHNOLOGY

FEMALES IN FINTECH GET A BOOST has launched a ‘Females in Fintech’ program to establish a network for women working in fintech, where they can benefit from specially tailored events, mentoring and education. Applications are open to all fintech start-ups in Victoria. “We are excited to launch a program specifically dedicated to growing and supporting women in the fintech ecosystem,” said Alan Tsen, GM of Stone & Chalk.

STONE & CHALK

DIGITAL VERIFICATION MOVES INTO THE FAST LANE The CEO of two successful broker-tech businesses sees “a massive opportunity” to expand product application

was made available to brokers just a few months ago, but it has already revolutionised the process of financing second-hand cars. Now its creator has set his sights on future applications.

“The feedback from everybody is that it’s great. In fact, they’re pushing us to expand Verimoto beyond motorcars into all the other assets that people finance, like caravans, trailers, boats and campervans,” explained Ezidox and Verimoto CEO, Geoff Kendall.

“We’re about to launch the second version of Verimoto which will cover all those aspects as well,” he added.

VERIMOTO

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Kendall’s vision for the future extends even further and he expects to move into the plant and equipment space next, with hopes to eventually release Verimoto as a consumer product to be used by anyone buying a car, even if they are doing so with their own money.

“The opportunity is truly massive,” Kendall said.

A large portion of the app’s success lies in the unique approach to business taken at Lakeba Group, the incubator hub that supported the development of both Ezidox and Verimoto.

“We couldn’t have built Verimoto as quickly as we did without having Ezidox

sitting underneath it to do all the document management.

That’s taken us years to build, but because we could use it as a component inside the Verimoto solution, it made it so much faster.”

According to Kendall, realising the numerous and varied ways in which Ezidox can be applied to other ventures was “a massive turning point”.

He elaborated, “We just rebranded the product to make it look a bit fresher and newer. If you look at our website, there’s a new logo, a new look and feel, a whole new pricing model for smaller businesses so they can get on board much more easily.”

“Ezidox solved one specific problem – getting all the information you need from a customer and making sure that you receive it all in the format and the timeframe that you need.

Now, that component can be used in any of our other ventures, in so many other ways,” Kendall added.

FREE CREDIT APP LAUNCHES new, free app allows borrowers to monitor their personal credit health in real time and aims “to help Australians take advantage of the changing way in which credit scores are determined”.

With the goal of helping people manage their score, Credit Health was developed by online comparison site Credit Card Compare and allows users to check their score, track its trajectory and receive notifications when it changes.

A

NEWS

R E G U L AT O R S SUBAGGREGATOR TEAMS UP APRATAX RESPONDS WITH GROUP TO ADI FEEDBACK receiving 18 industry submissions, Australian Prudential Regulation Authority (APRA) has released its response to the first round of consultation on the proposed changes to the capital framework for ADIs. Following the feedback, APRA could revise some of its proposals. The regulator’s chair Wayne Byres clarified that APRA does not expect its proposed revisions to have “any material impact on the availability of credit for borrowers”.

AFTER

CUSTOMER WILL “ULTIMATELY PAY” FOR REGULATION Credit and risk specialists likens ASIC to “aggressive” US SEC following its 25% funding boost in latest federal budget increasing regulatory power THE being granted to ASIC has impacted lenders of all sizes and infringes on the best interest of the consumer, according to a credit and risk specialist.

“ASIC is reinventing itself as something remarkably similar to the aggressive US Securities and Exchange Commission (SEC). Those that I speak to in the industry say this is not only going to expose operators to more ASIC action, but to more rejected applications and lower levels of business. They see many lenders leaving because they cannot adapt to the new environment,” explained Andrew Tierney, a credit and risk specialist who held almost a decade of experience at Equifax before

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launching his own consultancy.

In April’s federal budget, the coalition government announced it would be giving ASIC more than $400m in additional funding – up 25% compared to the year before.

While Tierney acknowledged that regulation can be a useful tool to protect the consumer, he feels certain that the ideal balance has yet to be achieved.

“If you think of it as a pendulum, before the royal commission, ASIC was a very low-touch, toothless tiger at one extreme end of the swing. The pendulum has now swung the other way and we are in an aggressive compliance culture,” he said.

It is not just lenders likely to struggle under the new model, although they certainly will –

especially smaller institutions less able to absorb the additional expenses associated with compliance.

“There is the feeling in the marketplace that it will be the customer who ultimately pays in the end, because those costs will get passed through,” said Tierney.

For now, lenders need to be proactive about not allowing the demands of compliance to erode their profit and strip them of their sustainability.

“While this has highlighted that we have areas we need to fix up, we do have the tools to do it. But we need to work on those tools to make them better, to make them able to address the issues we have, and to take away the need to fund manpower,” Tierney said.

“The only way it can be done is with data. Open banking is not only a neat solution to the higher bar that the regulator is putting in place, but it is additionally a tool that can maximise profits in the new age of cautious lending,” he added.

ASIC APPROVES NEW EQUITY RELEASE has approved a “first-ofits-kind” equity release product, following a six-and-ahalf year development process.

DomaCom conducted consumer testing and faced substantial ASIC reviews. It is offered with broker training that focuses on lessons, tests and suitability of the applicant. CEO Arthur Naoumidis explained, “In Australia, we’ve got a very large problem with baby boomers hitting retirement.

Superannuation came too late for them to build up balances.

Instead, they have their house.”

ASIC

TECHNOLOGY UPDATE

TMBL ATTRIBUTES EFFICIENT GROWTH TO APPLYONLINE WORKFLOW

Mark Middleton, Head of Third Party Distribution, Teachers Mutual Bank Limited

Mutual Bank Limited’s Head of Third Party Distribution, Mark Middleton, cites the sharp growth trajectory that TMBL has undergone over the past three years as the reason behind opting to implement NextGen.Net’s ApplyOnline workflow manager.

At the same time says Middleton, TMBL’s growth has been supported by the synergies created by having all processes, electronic lodgement and back-end processing (workflow manager), within ApplyOnline.

“The capability of ApplyOnline has certainly assisted our growth,” he says.

“ApplyOnline gives us equal opportunity to play in this space and over the past 12 months, across all our four brands (Teachers Mutual Bank, Firefighters Mutual Bank, UniBank and Health Professionals) under the Teachers Mutual Bank Limited brand, over 50 percent of our total volume flows now from the broker space.”

Asked what he puts that TEACHERS

down to, Middleton replies, “our offering, our values, what our organisation stands for (TMBL has been recognised internationally for its ethical standards and behaviour and sustainability policies) and our efficiencies, which brings us back to ApplyOnline”.

Middleton says: “We’ve only been in this business just over five years and we picked a solution, ApplyOnline, that we want to commit to longterm. We want to grow with this solution so we’re taking additional components as our business expands. Workflow is the latest component we have implemented.

“We get a real synergy in operational efficiency by having all our processes within ApplyOnline.”

ApplyOnline provides true Straight-Through Processing, backed by an advanced workflow and decision engine that significantly improves loan approval turnaround times.

NextGen.Net Sales Director Tony Carn stresses the importance of “a robust and

Tony Carn, Sales Director, NextGen.Net

flexible workflow platform”.

“ApplyOnline electronic lodgement ensures quality and accuracy at Point of Sale. The lender then has to take that application and do a credit check, a valuation and verify documents. All of which is seamless when both the electronic lodgement and internal processes are within ApplyOnline.

“The implementation of ApplyOnline workflow manager and electronic lodgement gives easy integration with third parties such as valuers, mortgage insurers, solicitors and credit agency Equifax,” Carn says.

“The other advantage of course is scalability. When you get double your volume you can handle it when you have end-toend management that includes fast, efficient and reliable workflow processing solutions.”

Middleton says efficiencies that have stemmed from implementing workflow manager has led to positive feedback from TMBL loan assessors.

“Our loan assessors can see the full application. It mirrors

exactly what a broker submits in an application into the system, including all brokers’ notes, supporting documentation and our requirements. That means instead of assessors needing to go to multiple systems to obtain information in order to make a credit decision, the capability is all there in one holistic engine in one location,” he says.

Middleton says as TMBL continues to expand its operations, the Bank will look to bricks and mortar offices in key locations to support brokers and the customers. This continuing growth, he says, will demand increased efficiencies and service delivery created from its internal workflow platform.

Carn refers to the “mystique” around workflow platforms and the erroneous view that it’s a long and expensive process to upgrade to a new one.

“It’s not,” he declares.

“A lot of banks like Teachers Mutual Bank Limited realise it can be a simple, easy and expedient path. So good on them for being a pioneer in that space.”

FE AT URES

SPECIAL REPORT

BEYOND BROKING

As more brokers look to diversify their business model, Nancy Youssef reflects on her career as a serial entrepreneur and philanthropist and offers her advice for those who dream of making a difference

KEY BUSINESS METRICS

2003

Classic Finance is established

2011

Classic Mentoring launches

150 BROKERS

have been mentored through its programs

2015

Nancy Youssef holds her first fundraising ball

$200,000

Donation target set for the end of 2020

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many of her industry peers, Nancy Youssef chose a career in broking for its fast pace, flexibility to travel and the thrill of a new challenge. She had experienced firsthand the process of securing a mortgage through a bank and had worked with brokers in her early career – factors that presented a strong business case to complement her personal goals.

After specialising in corporate training for a finance company at the national level, she was also keen to take charge of her own destiny and make a difference to the lives of those she encountered.

“I was born with a lot of ambition and being pigeonholed into a job didn’t really suit my curious personality; I felt like I could do more and had an entrepreneurial drive from a young age,” she says.

Classic Finance launched in 2003, when Youssef was still in her 20s, but little did she know that it would become the foundation on which she would launch a series of other ventures over the next 16 years.

“I was quite out of my depth in those early days. I didn’t have a clue how to start a business, let alone operate one successfully! I didn’t have a business plan at all and, if I’m totally honest, I didn’t really know how to put one together.

“I thought it was only something you needed to worry about if you were running a bigger company, not a one-person show,” she says.

Like many brokers, her dedication to the venture saw her retain control of its every aspect, collaborating only with an accountant to prepare BAS paperwork when necessary.

Simultaneously she was also LIKE

educating new-to-industry brokers through a contract role.

“My own fear and [not] ‘letting go’ really stopped me from growing the business in the early years and I did everything myself – which I know is still the case for many brokers today,” she says.

Then, her outlook changed.

Youssef delegated the financials to a bookkeeper and started to dedicate more time to analysing the progress of the business’s growth; armed with this information she hired a number of staff and contractors, including a CFO to optimise the business and

The venture’s unique selling point draws on what also set Youssef ’s broker business apart: educating people in plain English and cutting the confusion around finance products.

“This industry is really and truly built on relationships, so if you’re not the type of person who thrives on developing strong personal relationships, then this might not be the industry for you,” she says.

Giving back While there is near endless satisfaction to be found in achieving professional goals, many today are inspired to supplement their career achievements with charitable work.

Whether it is through a fun run, bake sale, endurance race or a simple donation, giving increased 1.2% in the year to February 2018, according to the NAB Charitable Giving Index.

Youssef ’s own experience started when she travelled to Malawi,

“Launching any idea, whether it’s a business or a philanthropic endeavour, is hard work.”

Nancy Youssef, founder Classic Finance assist in tracking new goals, rather than just the bottom line.

By the end of the decade the stage was set for Classic Finance to expand.

As an experienced trainer and mentor, Youssef had kept a close eye on professional development for brokers and as such had facilitated Certificate IV and diploma courses.

However, things were changing; not only was there now a requirement for new-to-industry brokers to be mentored, but the industry was experiencing a high attrition rate among new finance businesses.

Inspired, Classic Mentoring debuted in 2011 and to date more than 150 brokers have been educated and supported through its programs.

Africa, on a trip she says “genuinely changed” her perspective on life.

“I’ve been fortunate enough to travel to many different countries around the world, on work trips and vacations where I’ve created lasting memories. But no trip has ever made an impact quite like my visit to Malawi. I left [Australia] as one person and returned with a completely new and deeper sense of purpose,” she says.

With a population of 18 million, Malawi is one of the world’s poorest countries and Caritas Australia reports that three quarters of people there live on less than $2 a day.

Drought affects four million annually and a mere 2% of primary students

In partnership with

Nancy Youssef, founder, Classic Finance

have basic numeracy skills.

Not content with simply donating to one of more than 60 charities operating in the country, Youssef partnered with the Human Kind Project as well as its sister venture the Hunger Project. Founded by entrepreneur Jacinta McDonell – who brought the US gym franchise Anytime Fitness to Australia – both aim to empower local people to help themselves.

Seeing a clear fit for her skills, Youssef partnered with the organisations to help local people create and grow small business ventures and build a financially sustainable future.

Not only does she donate practical

support and time to the cause, Youssef also hosts fundraising gala balls, which since 2015 have raised more than $135,000. Far from

purpose-led life in every sense of the word. Partnering with the Human Kind Project and Hunger Project has allowed me to step into my purpose

“Seeking advice along the way from successful people both in and out of the industry has been instrumental for me” Nancy Youssef, founder, Classic Finance content with her achievements to date, her next target is to reach $200,000 in donations by the end of 2020.

“I’m extremely lucky to lead a

in a much bigger way,” she says.

Never say never This month, Youssef releases her first book, Fear, Money, Purpose – a

handbook for business owners and entrepreneurs who want to overcome the financial and personal doubts they feel hold them back.

While writing a book has been a relatively unexpected twist in her career story, Youssef says there is no set formula for bringing a new idea to life, whether charitable, business or personal. Instead the key is to bring a fresh approach and lots of passion to the execution.

“The biggest thing you need is passion. Launching any idea, whether it’s a business or a philanthropic endeavour, is hard work. There are so many roadblocks along the way, and it can be an emotional rollercoaster at times,” she says.

Despite the new direction, Youssef still has plenty of advice to impart to brokers, specifically those who are at the start of their journey and may be unsure where to begin during what has become a turbulent time for the industry. Despite this, she says the first step is clear: know your business’s value proposition and know your personal strengths.

“You need a strong vision of what you are trying to achieve and what success looks like at the end of that journey. Once you have defined this, then you need to reverse engineer all the activities and resources you need to make it happen,” she says.

“Seeking help and advice along the way from successful people both in and out of the industry has also been instrumental for me,” she adds.

The overriding theme in Youssef ’s story is growth. However, unlike the growth the finance industry is accustomed to, her end goal is personal development, whether her own, that of her professional peers or other people. And while she would be the first to admit that her journey has been far from easy, there is much more still to come.

“I never say never! There are so many ideas and opportunities in the industry, I just need more hours in my week. So, for now, I’ll say… watch this space” AB www.brokernews.com.au

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BUSINESS TALK

LEAVING THE COMFORT ZONE

Although the need to diversify is less urgent than it was five months ago, the business case remains sound. Australian Broker hears the why, when and how from a cross-section of lenders and aggregators

the royal commission released its recommendations for the future of the financial services industry, the outlook for mortgage brokers was anything but rosy. In response, thousands looked at how they could diversify their income to protect the future viability of their business.

From commercial to auto finance, SMSF lending, business loans and even financial literacy programs for consumers, the ideas came thick and fast.

While the election of a probroker government has since negated much of that work, thousands who operate in the third-party channel have realised that putting all your eggs in one basket has rarely made compelling business sense.

“It is an interesting observation to suggest diversification may no longer be important,” says Peter Vala, GM partnerships and distribution, Thinktank.

“In our view, recent industry events have been an awakening as to why diversification is a vital strategy to consider. Diversification of revenue when it comes to a broker’s business can provide an increased level of protection against potentially adverse changes in the industry while also opening up the opportunity for leveraging additional business with existing clients and increasing the prospects for developing an even wider, more valuable client base,” Vala adds.

“We believe the rationale for diversification really is here to stay and should be seriously considered when it comes to building a robust, sustainable business with a broad income base,” Vala continues.

WHEN

16

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His comments are echoed

by Bluestone’s head of sales, Royden D’Vaz. “Protecting revenue or cash flow,

Rather, it should be an integral part of long-term business planning,” he says.

D’Vaz notes the lending

“If brokers are not asking their customers about their diverse needs then someone else will be, and they ultimately risk losing these customers altogether” Mario Rehayem, CEO Australia, Pepper Money be it by diversification or other means, shouldn’t be looked at as a short-term priority that is only relevant in times of uncertainty.

environment changes with each economic and property cycle, influenced by everything from regulatory intervention to macro-

and micro-economic factors, geographic and demographic factors that all influence demand.

He adds, “Building on strategies that protect a business while conditions are favourable is key to preventing reactionary and potentially sub-optimal moves in times of decline.

“As such, I believe that any time is a great time to start creating new income streams, and there’s no better time than the present to explore certain under-serviced segments of the market, like near-prime and self-employed borrowers,” he continues.

The first steps While a huge commitment in principle, diversification starts with

DIVERSIFIED BROKERS Source: MFAA

The number of residential brokers who are also writing commercial loans 4,000 3,500

3,668

3,000 2,932

2,500

2,647 2,374

2,000 1,500

1,673

1,641

Apr 15 - Sep 15

Oct 15 - Mar 16

1,000 500 0

Apr 16 - Sep 16

Oct 16 - Mar 17

Apr 17 - Sep 17

Oct 17 - Mar 18

Mario Rehayem, CEO Australia, Pepper Money

a single step – deciding which area of lending will generate the most successful outcomes.

“If your business is standing still, it’s going backwards. It’s imperative for a broker’s business to grow and to ensure their offerings are meeting their customer’s needs and expectations,” says Mario Rehayem, CEO for Australia at Pepper Money.

In doing this, Rehayem says that brokers should consider their strengths and “learn how to play to them”. After all, the key to a successful broking business is to anticipate and respond to the needs of as many customers as possible.

Failure to do so will see that customer look elsewhere. Pepper Money says that more than 60% of borrowers refinance their mortgage with another broker, adding to the need to offer a solution that reverses that trend.

“If brokers are not asking their customers about their diverse needs then someone else will be, and they ultimately risk losing

Peter Vala, GM partnerships and distribution, Thinktank

these customers altogether,” Rehayem adds.

“Remember, the information a broker gathers about a customer during a home loan enquiry represents the bulk of the information, if not all in some cases,

establishing a referral network to re-training support staff or changing existing processes.

With these elements in place it is time to start talking to customers.

As daunting as that first conversation can be, expanding the

“We believe the rationale for diversification really is here to stay and should be seriously considered when it comes to building a robust, sustainable business” Peter Vala, GM partnerships and distribution, Thinktank required to complete an auto loan, a commercial loan or a personal loan,” he continues.

Next is to consider the cost of what is essentially an expansion of the business. Rehayem observes multiple low-cost ways for a broker to expand their services, from

broker-client interaction will road-test the new strategy and provide the most useful feedback on how to hone the proposition.

“For brokers moving into commercial lending, it’s all about being prepared to discuss their client’s business strategy and future

plans. Those discussions allow a broker to identify appropriate products and solutions.

“For the new-to-industry broker, it’s important to remember that a broker’s business needs to remain customer centric and solution orientated,” Rehayem adds.

To support brokers throughout this process, Pepper has developed technology and support programs such as the Pepper Product Selector, which can provide the rate, fees and an Indicative Offer (where applicable) in less than two minutes.

“Pepper’s five-step process – a proven approach to successfully positioning a specialist home loan with a client who may have not been expecting this type of solution – makes the transition to offering new products to a client a whole lot easier,” Rehayem adds.

Drawing on experience Lenders too are diversifying. Having built its business as a specialist www.brokernews.com.au

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FE AT URES

planning to move out of their prime focus area: establish strong relationships with several lender BDMs who can providing a sounding board for transactions, and put systems and processes in place to ensure that a return will be forthcoming.

“Commercial transactions can be more complex and take longer than residential loans. Take care with clients who might be just shopping a transaction in order to extract a better rate with their current institution. You can help them out in these situations but manage the time and effort involved and see it as an investment in creating future opportunities.

“One way to ensure the transaction and client are genuine and receive payment in the process is to put a fair mandate letter in place which then secures you the transaction and defines both the scope of effort and what the mutually agreed outcomes are,” he adds.

Royden D’Vaz, head of sales, Bluestone

commercial lender to SMEs, Thinktank is now offering a range of residential lending solutions including full- and alt-doc loans, to its SME and self-employed clients.

“Diversification has been a good play for us,” says Vala.

Sharing the advice that has underpinned their own success, Thinktank suggests several key points to consider in the diversification process. Once a review of existing clients is complete, Vala says the next step is to look at what their business does and where it operates from.

With interest rates as low as they are, there is a strong case for buying a commercial property. If the client already owns their premises, consider the finance against it and whether there are better products, prices or terms that can put the client in a better place.

“Even taking out finance against unencumbered property is a frequent means of investing further 18

www.brokernews.com.au

in a business, or supporting external wealth creation goals,” Vala says. “Then talk to your referral partners such as accountants, financial planners and lawyers and find out what you can

encouragement of broader business initiatives,” Vala adds.

Product knowledge is the next consideration. For example, debtor finance can greatly assist client cash flow by speeding up the receipt of

“Building on strategies that protect a business while conditions are favourable is key to preventing reactionary and potentially suboptimal moves in times of decline” Royden D’Vaz, head of sales, Bluestone about the industries their clients are active in, and where their needs and interests are. This sort of review should produce a good level of insight into potential opportunities and the

income, while equipment finance can be used for the replacement of tired assets or the expansion of a business.

Following this Vala offers two pieces of advice for any broker

Closer to home Although diversification conjures up images of going above and beyond one’s comfort zone, that does not necessarily have to be the case. For example, a mortgage broker operating in a high-income metro area will likely have seen borrowers who were previously considered prime vanilla customers sliding into the near-prime or alt-doc category.

While still dealing in mortgages, the change of step requires new skills and different considerations.

“If a broker has only ever dealt in prime mortgages with the major banks, this would be an easy first step. It’ll open up a whole new range of customers and products without the need to learn a drastically different set of skills,” D’Vaz says.

“The banks’ retreat up the credit curve left many borrowers behind who never before struggled to access loans. Brokers are in the perfect position to alleviate these

Brendan Wright, CEO, FAST

issues because of their deeper industry knowledge and relationship with more lenders, who may be able to offer a larger range of solutions,” he adds.

When it comes to maximising the diversification opportunities in mortgage lending, there are opportunities for the commercial broker, too.

“Diversification can equally be applied to commercial brokers seeing potential in the residential space, as one way or another, the majority of a commercial broker’s clients will have residential finance needs,” says Vala.

“Either way, it is about offering clients more holistic solutions for most, if not all, of their financial needs,” he adds.

The tools for the job As FAST CEO Brendan Wright explains, in addition to the referral partners and CRM mining, another important consideration in the

diversification process is to have access to an equally diverse range of lenders.

With a panel of 36 lenders, including several white label options and specialist lenders, FAST has developed a series of specific capability programs for

building knowledge, making the most of BDM support, opening up to networks and asking as many questions as possible,” says Wright.

FAST actively encourages its brokers to consider writing loans across residential, asset finance and specialist commercial broking

“Shifting property markets have made it more difficult for business owners to use property as collateral for a business loan” Brendan Wright, CEO, FAST commercial and asset finance lending in partnership with such industry bodies as the MFAA and CAFBA. “Making the transition across product solutions can be challenging at first; however, for those starting out we recommend

areas such as invoice financing and trade financing.

“In many cases where a customer is self-employed, their home lending and business lending become closely linked. However, shifting property markets have made it more difficult for business

owners to use property as collateral for a business loan. In addition, tightening credit conditions have also contributed to a slowdown in funding supporting the business sector,” Wright says.

Business lending is just one potential avenue and Wright says there are many parallels brokers can find with their SME clients, who may require financing for an array of reasons – whether that is to meet short-term cashflow challenges, or to expand or replace equipment.

“The one thing these businesses have in common is that they find accessing finance difficult, so from this perspective diversifying into commercial broking is a win-win for both brokers and their customers.

“Brokers are business owners and therefore in a unique position to understand their self-employed clients. It makes sense for brokers to build the capability in their business around business models, strategy and final statements to enable them to meet the business and personal needs of their client base,” he adds.

Accreditation is also key, whether the intended diversification will incorporate home, business or asset finance.

As a result of the aggregator’s groundwork, more than 60% of FAST brokers offer more than one type of lending solution to their clients. Further, 88% of brokers who attend FAST workshops have lodged a loan in a new product line within a month of attending.

The sixth edition of the MFAA’s Industry Intelligence Service confirms a 25% increase in the number of mortgage brokers who wrote commercial loans in 2018. As that figure increases further the competition to access support tools, PD resources and even clients will become stronger.

For those who are serious about spreading their risks and maximising their business streams, the time to diversify, truly is now. AB www.brokernews.com.au

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OPINION

THE TRUE ROLE OF THE SME BROKER

Leo Tyndall, founder of marketplace lending platform Marketlend, says SMEs are being let down and preyed upon by both banks and fintechs – and brokers have an increasingly important role to play in tackling the issue

no exaggeration to say that SMEs are the backbone of our economy. Yet SMEs are being stiffed by traditional lending practices: 44% of small businesses have been knocked back for finance in the last 12 months.

Put simply, SMEs are being underserved and ignored by the banks. At a time when the Australian Bureau of Statistics considers lack of access to finance as the most common barrier to innovation, these practices actively hurt Australia’s place in the global economy. Fintechs have begun meeting the demand, but many are unscrupulous and trade security for speed.

In this new lending environment, a broker’s role has never been more crucial.

At a recent broker event we held at our Sydney offices, I spoke to several brokers who had experienced frustration securing finance for their smaller business clients, especially those in the $5m to $10m turnover range.

Unlike large corporates, these firms are put through the ringer by the banks. The SME spends months proving its financial health, often to be denied the finance it

needed months ago. Twenty per cent of Australian SME owners say the opportunity cost of applying for and negotiating finance is too high, and as a result, they don’t even bother to apply. Around 44% of Australian

IT’S

20

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collateral is the most common reason for a business’s inability to access finance; 37% of all rejections can be attributed to this issue.

With this state of affairs, it’s little wonder an alternative is being offered by fintechs.

For the last five years, so-called peer-to-peer lenders have connected investors and borrowers to provide more than $20bn in finance, faster than the banks ever could.

However, it’s been something of an overcorrection, as this speed often comes at the expense of security. For all their faults, the time banks take to approve loans is at least somewhat in the service of overcoming an information imbalance.

We’ve funded more than $250m in turnover by directly connecting borrowers with investors – and done so while beefing up risk assessment in the process. The proof is there that SMEs, investors and indeed brokers are looking for viable alternatives to the banks, but not at the cost of security.

With the lending practices of banks lagging and a menagerie of technologyfuelled solutions filling the void, the role of a broker has never been more important. A broker’s job is not just to secure finance for

“While the banks represent one extreme, the sugar-high lending of many fintechs offers even less value”

Leo Tyndall Founder, Marketlend

SMEs spend more than 19 working days on banking-related tasks a year. That represents about $6.8bn in lost revenue to the Australian economy.

SMEs that have loans approved by the banks are rarely better off. Because SMEs are typically unable to provide financial performance updates with the same level of detail or frequency as large corporates, they attract higher capital requirements. As a result, more than two-thirds of all SME loans are currently secured by housing.

The impact on SMEs is clear: while collateral will lower loan rates, lack of

a client, but to find the right finance. While the banks represent one extreme, the sugar-high lending of many fintechs offers even less value.

SMEs need the protection of lenders that put a high value on robust risk management. Brokers have a role here: SMEs are the foundation of our economy but are being let down and preyed upon by lenders on both extremes. Good advice and great financial management from brokers is crucial for the success of small businesses in 2019 and beyond. Let’s work to encourage this. AB

$ $

$

$

$

$

$

$

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BUSINESS TALK

BACK TO SCHOOL

At the 2019 edition of BBX, held last month in Sydney, hundreds of brokers learned the latest business tips and productivity hacks from the industry’s biggest names 2019 edition of the Broker Business Exchange (BBX) took place on 5 June at The Westin Sydney. This year, BBX focused on how brokers can stay profitable and sustainable in an operating environment where change has become the only constant. The event, which provides delegates with six CPD hours from both the MFAA and FBAA, hosted more than 350 brokers for a full day of professional development and networking.

Chaired by Tim Brown, CEO of THE

The day kicked off with a high level panel on the future of broking

The second panel covered how to attract new clients and referrals

FBAA

Sponsors

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Prospa

NextGen.Net

Ezifin Financial Services, the day kicked off with the panel session ‘How to Future-Proof Your Business Post-Royal Commission’, featuring MFAA CEO Mike Felton, Connective director and principal and MFAA board director Mark Haron, and FBAA executive director Peter White.

Over the course of the one-hour session, panellists shared their advice for creating sustainable revenue streams and a diversified broker business. However, the real insight came when they shared details of their discussions with politicians following the final report from the royal commission. On this point, the conversation turned to the best interest duty and how brokers can prepare for the next remuneration review, scheduled to begin in three years’ time.

White noted that by then, the industry will have endured more than eight years of remuneration reviews and debate, and that the threat of further change “has got to go”. His calls were backed by Haron, who said that now that the broking industry has secured the backing of the government, treasury

In partnership with

Bluestone

Suncorp

and ASIC, action must be taken before the next election.

“The biggest risk we face right now is that we think we can go back to doing what we’re doing. We cannot afford to face apathy in our industry,” Felton said.

Continuing to highlight that self-reflection and regulation will be crucial to the future viability of the third-party channel, Felton urged brokers to engage with regulators and embrace the reforms from the royal commission and ASIC.

CashDeck

“We cannot be defensive or reactive. We have a little more than two years before they will have another detailed look at our industry.

We have to keep that [satisfaction] data good,” he said.

“If there is a problem in our industry, we need to take care of it and deal with it and not be afraid to regulate it ourselves. We cannot sit back and do nothing. The prize will be that we can maintain our current structures going into the future.”

Canada’s top mortgage broker,

Mortgage EZY

Pepper Money

Secured Lending

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Scott Durrant explained how brokers can use data to boost retention

Several of MPA’s Top 100 Brokers discussed generating high performance

The day-long event attracted more than 350 delegates

Shawn Allen, principal owner of Matrix Mortgage Global, delivered the international keynote and chaired a three-hour exclusive masterclass for a cohort of 20 brokers.

Sharing his secrets to running a high-revenue mortgage business, he told Australian Broker, “It’s trial and error – a lot of error, but the thing is you have to be able to bounce back from error.

“The truth of the matter is you have to be able to take risks and take chances in your business.

That’s what being a business owner and entrepreneur is all about.

You have to take risks to know within yourself that if I do this, I will be able to succeed.”

On stage Dozens of speakers were featured throughout the day; other conference sessions included target-setting and

Sponsors

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business-building advice from iChoice managing partner Jason Khoury, who shared his tips on communication, brand strategies and the key questions to ask clients.

Meanwhile, panel sessions featured

Andrew Duerden from Loanworks

Sales, director of Finance Warehouse; and Peter Vassilis, MD at Black and White Finance.

Over the course of the session, the brokers shared their own personal stories of building and running a

“We cannot sit back and do nothing.

The prize will be that we can maintain our current structures going into the future” Mike Felton, CEO, MFAA several of MPA’s leading brokers.

In the session ‘How to Attract New Clients and Referrals’, two of MPA’s Top 100 Brokers, Karen Bashford and Andrew Mirams, were joined on stage by Tracy Keary, director of Home Loan Connexion; Christopher

business and provided practical takeaways for how other brokers can generate similar results.

This was followed by ‘How to Generate High Performance in Your Team’, featuring three of MPA’s Top 100 Brokers: Alycia Inglis, director of

Stoneturn; Hannah Nguyen, director of HAH Finance Solutions; and Navjeet Singh Matta, CEO of Gain Home Loans.

The three brokers – each running three very different businesses – shared their tips for productivity and provided insight on how they manage their teams, both onshore and off.

Concluding the sessions in the main conference room, the final panel featured three of MPA’s Young Guns: Faris Dedic, director of Red Door Financial Group; Nitish Kumar, mortgage broker for Clarity Home Loans; and Taku Ekanayake, director of Kin Financial. In a panel entitled ‘Broking’s Next Generation’, the three young brokers shared their processes, relationship-building tips and productivity hacks.

Around the conference In the conference’s workshop

In partnership with

Canada’s top broker, Shawn Allen, delivered the international keynote address

OnDeck

stream, delegates learned practical techniques and tricks for nonmortgage lending, including SME finance, outsourcing, specialist lending and asset finance. Chaired by mentor, author and Classic Finance founder Nancy Youssef, the packed agenda included five sessions over

brokers with the same live data held by a client’s bank. Led by Scott Durrant, founder and director of Successful Ways, this session demonstrated how brokers can boost their bottom line by reducing their working hours.

“Systems run the business, and people run the systems. If you have a

“The truth of the matter is you have to be able to take risks and take chances in your business. That’s what being a business owner and entrepreneur is all about” Shawn Allen, principal owner, Matrix Mortgage Global four-and-a-half hours.

In the first session, Michael Burke, head of sales for OnDeck Australia, sat down with three brokers to discuss the trends and opportunities that are currently defining the SME finance space. Over the course of the session, panellists discussed new industry codes, tips for cultivating a pipeline of small business leads, and guidance for brokers who have yet to diversify into SME lending.

Later in the day, delegates saw a demonstration of Alexus CRM, a client management system that provides

great system and processes, and admin staff to administrate, then it frees up time for the broker to get in front of more people, tell their story and build up relationships,” Durrant said.

While the first half of 2019 has brought some unprecedented challenges to the industry, the second half is set to bring some unique innovations. From open banking to new fintech, regtech and broker-tech solutions, these new developments will set the stage for another must-attend BBX in 2020. AB

Classic Finance founder Nancy Youssef chaired the workshop stream

Jason Khoury told brokers how to exceed targets and generate more business

Tim Brown, CEO of Ezifin Financial Services, chaired the main conference stream

OnDeck’s Michael Burke led a session on SME lending

www.brokernews.com.au

25

DATA

WESTERN AUSTRALIA

NSW SPOTLIGHT

Perth’s first home buyer activity a shot in the arm Resources are making a comeback in supporting Perth’s economy; coupled with the nowaffordable properties the downturn created, it’s led to a rise in first home buyer activity as coastal lots become available at low prices. Numerous projects are in the pipeline, including FMG’s $1.7bn Eliwana iron ore mine and the $28bn spend for Woodside’s Browse LNG development.

“This new investment in the resources sector has seen employment in the mining sector increase over the last two financial years in a row, and these improving employment opportunities are resulting in a surge in the number of younger FIFO families buying house-and-land packages,” says Jarrod Rendell, project director for Atlantis Beach Estate in Two Rocks. “This is part of the general trend of growing first home buyer activity in WA, with first home buyers now accounting for 34% of all owner-occupier finance commitments in the state. This is the highest rate for any state in Australia.”

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 conditions secure its immunity to national trends Brisbane is powering through the national downturn with low prices that are helping to shield it from the impact of increasingly restrictive lending criteria.

“This means the Queensland property market is generally less exposed to growing uncertainty around tightening lending criteria and any further changes that may come into play as a result of the royal commission,” says James Nihill, director at Patrick Leo. “The real opportunity emerges as housing in some key areas remains undersupplied and will further tighten as the population continues to grow as forecast.”

In addition to affordability, interstate migration and infrastructure projects are also supporting the market, Nihill notes. Regions to watch include Logan and Ipswich, which are facing undersupply due to the predicted population growth of 144% between 2016 and 2036. Similarly, Logan’s population is set to grow by 56%, while the CBD is forecast to receive a 21% bump.

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%

26

www.brokernews.com.au

SYDNEY’S STRONGHOLD Despite recent declines, strong investor activity in recent years has helped Sydney retain its title as the nation’s most expensive rental market downward slide shows no signs of stopping, but while prices continue to fall, this capital city’s rental market is in a rather interesting position. According to CoreLogic’s Quarterly Rental Review for March 2019, Sydney remains the most expensive capital city rental market, even with the recent declines in rents. The median rent per week comes in at $582, a full $32 above that of second-placed Canberra.

The report acknowledges the mixed nature of the rental market. However, because Sydney accounts for such a significant percentage of combined capital city rentals, its decline has pulled down overall performance across Australia. CoreLogic explains that Sydney, like Melbourne, is seeing the impact of high investor demand in recent years, along with a corresponding increase in apartment supply, much of which was purchased by investors. The Residential Vacancy Rate Report, published by the Real Estate Institute of NSW (REINSW) in March 2019, supports these findings, pointing out that vacancy rates have increased across the metro area and in the outer-ring suburbs.

“The vacancy rate in Sydney’s inner ring – areas such as Ashfield, Leichhardt and Marrickville – increased in March due to lower demand and high supply,” says REINSW president Leanne Pilkington.

“Sydney’s outer ring is also experiencing a similar situation. Feedback from real estate agencies in areas such as Baulkham Hills and Blacktown has been that old, dated units are harder to lease for the same price they had been getting previously, and landlords are unwilling to drop rental prices.” By contrast, business appears to be picking up in the middle-ring pockets, where landlords are more open to negotiation.

“Sydney’s middle ring is experiencing a decline in vacant properties,” Pilkington says. “According to real estate agencies in areas such as Strathfield and Parramatta, landlords have been willing to reduce rents to attract tenants.” AB SYDNEY'S

BROKER PERSPECTIVE

All indications point to a recovery in Sydney, supported by multiple developments Sydney has thousands of submarkets, but most property values are driven by buyers such as first-time buyers, upgraders, downsizers and holiday homes, while pockets are flooded by investors, such as high-rise apartments and townhouses. Home buyer confidence and credit was hit with servicing cutbacks, which were the key contributor to falling prices.

However, now that the market is growing again with recent positivity created by the election result, APRA’s serviceability assessments and the 5% deposit scheme, potential big rate drops and rising competition are leading some to feel a sense of urgency again. For scarce property in tightly held owner-occupier-driven suburbs, there is a quality stock shortage, and I believe the market has already passed bottom, with prices bouncing back because of low supply.

However, poor properties have gone stale, despite all-time lows in new stock. Investor-driven high-rise apartments also have many years of pain still ahead with low valuations, over-supply and spooked investors following recent high-profile cases of poor-quality builds. Like always, buyers should focus on scarce quality assets.

Chris Bates Financial adviser and mortgage broker, Wealthful

SUBURB TO WATCH: JINDABYNE Median price (houses) $582,993

Median price (units) $334,032

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

4.7%

44.5%

83.7%

4.3%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

1.8%

43.8%

67.2%

5.3%

AUSTRALIAN CAPITAL TERRITORY

Election inspires a ‘wait and see’ approach OPPORTUNITIES AND KEY INFRASTRUCTURE

$41.4bn

$4.2bn

2.71m

725,000

Transport infrastructure program underway in NSW, Australia’s largest

Invested in 120 schools across the state, to 2021

Population growth predicted between 2011 and 2036

New homes that will be required in Sydney alone by 2036

HIGHEST-YIELD SUBURBS IN NEW SOUTH WALES Suburb

Type

Median price

Quarterly growth

12-month growth

BROKEN HILL

H

$124,000

3%

24%

COONAMBLE

H

$104,000

0%

-20%

WELLINGTON

H

$150,000

-3%

-10%

HAY

H

$129,500

-19%

-24%

BATLOW

H

$160,000

2%

7%

In the capital, properties continue to lean towards the pricey side. However, the fallout of the federal election has been driving buyers to be cautious.

“Investors tend to pull their heads in and not buy or get aggressive in investing leading into or immediately after an election – there’s always a bit of wait and see,” says Results Mentoring director Brendan Kelly.

“Combined with the royal commission outcomes and the APRA changes, which have been encouraged by the RBA to ease lending criteria, at the moment we are seeing a change, and there’s uncertainty.”

The impact is not just a result of local politics – global issues like Brexit and the rise of China have an effect as well. “Canberra’s political environment drives property rather than standard market forces, so it’s the bureaucratic political decision that broadly affects or influences the housing market significantly,” Kelly says. “We’ll settle over the next six months; consequently, I think we won’t see a lot of activity in buying in Canberra. I’m anticipating we’ll end up with more of a balanced market.”

Area

Type Median value

Quarterly

12-month

growth

growth

Canberra

H

$660,000

0.8%

3.1%

Canberra

U

$421,500

0.3%

1.4%

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27

DATA

VICTORIA

5.6%

Melbourne

U

$510,000

0.0%

1.0%

Vic country

U

$275,000

0.4%

-1.5%

SOUTH AUSTRALIA

Adelaide no longer Australia’s ‘middle of the pack’ market After a long period of being the ‘middle of the pack’ capital, Adelaide is starting to come out of its shell. CoreLogic’s Quarterly Rental Review for March 2019 indicates rents are increasing in the city, while rental returns were reasonably strong over the March 2019 quarter at an average of 4.42%. CoreLogic’s April 2019 Home Value Index also notes that pockets of Adelaide achieved positive growth over the last 12 months.

According to CoreLogic head of research Tim Lawless, Adelaide’s affordability plays a part in the city’s improved profile. “As dwelling prices trend lower or level out, household incomes are edging higher, and mortgage rates remain around the lowest level since the 1960s,” he says.

“First home buyers are clearly taking advantage of the improved levels of affordability and less competition in the market.”

In particular, buyers seem to be capitalising on being able to nab properties near the capital at a good price.

Type Median value

Quarterly

12-month

growth

growth

46

Uncleared

34

Clearance rate

57.5%

PERTH Total auctions

32

Cleared

4

Uncleared

9 30.8%

MELBOURNE

Total auctions

697

Total auctions

971

Cleared

353

Cleared

496

Uncleared

152

Uncleared

292

Clearance rate

69.9%

Clearance rate

BRISBANE

62.9%

CANBERRA

Total auctions

139

Total auctions

63

Cleared

34

Cleared

33

Uncleared

58

Uncleared

20

Clearance rate

37%

Clearance rate

62.3%

MEDIAN HOUSE AND UNIT PRICES $1,000,000

Houses

$900,000

Units

$800,000 $700,000 $500,000 $400,000

H

$467,500

0.6%

1.7%

SA country

H

$278,000

1.1%

1.1%

$200,000

Adelaide

U

$340,000

0.0%

0.0%

$100,000

SA country

U

$210,000

5.0%

10.2%

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Cleared

SYDNEY

Adelaide

28

135

Clearance rate

$600,000 Area

Total auctions

$300,000

$0

Sydney Melbourne Brisbane Adelaide

Perth

Hobart

Darwin

$420,000

1.1%

ADELAIDE

$660,000

$365,000

N/A

$327,500

H

2

$489,500

Vic country

Uncleared

$365,000

0.0%

1

$465,000

-0.8%

Cleared

$356,250

$670,000

4

$464,500

H

Total auctions

Clearance rate

$312,388

Melbourne

$435,000

growth

$395,500

12-month

growth

$545,888

Quarterly

Preliminary results showed a clearance rate of 62.6% across the combined capital cities during the week ending 26 May, although CoreLogic warned that downwards revision was likely.

The previous week’s final clearance rate came in at 55%, the highest rate since September last year. Over the same week last year, the final clearance rate was recorded at 56%.

In Melbourne, a preliminary clearance rate of 62% was recorded across 971 auctions, while the previous week saw 432 auctions, returning a final clearance rate of 60%. There were 697 auctions held in Sydney the week of 26 May, returning a preliminary clearance rate of 69.9%. In comparison, there were just 276 auctions held over the previous week, returning a final clearance rate of 56.5%. There is a chance that the final clearance rate for 26 May might be able to hold above 60%, given that Sydney has seen its final clearance rate sit above 55% for three weeks in a row.

$519,000

Type Median value

TASMANIA

WEEK ENDING 26 MAY 2019

$675,000

Area

CAPITAL CITY AUCTION CLEARANCE RATES

$650,000

Melbourne recorded the greatest annual decline in the national housing market at 13.9%, according to the CoreLogic April 2019 Home Value Index, but prices have yet to drop to a manageable level for buyers. However, changes in rental rates and yields are happening faster than shifts in property prices.

“Property is traditionally a long-term investment, and clearly investors who jumped into Melbourne 20 years ago are reaping the benefits now,” says James Nihill, director at Patrick Leo. Nihill points out that because Victoria’s economy is one of the best in the country, it lends resilience to the property market, which is also supported by initiatives to improve transport infrastructure and strong population growth rates to combat supply problems.

“It is undeniable that the housing market slowdown will dominate the headlines for the foreseeable future, but the reality is that the property market is dynamic, and there are always opportunities if you know where to look,” Nihill says.

$811,500

Long-term investors reap their rewards

Canberra

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29

PEOPLE

IN THE HOT SEAT Reflecting on his own career growth, Andrew Bromley, personal mortgage adviser for Smartline, talks about the different paths to becoming a broker and how to nurture professional relationships

What inspired you to become a broker?

I was working in construction sales, and a crucial part A of my job was to make sure the deals stuck. As part of this process I had to work with brokers, and over time I grew more and more curious about the industry. With a final push from my father-in-law – who himself was a broker until he retired a couple of years ago – I started on my two-year mentee program.

Q

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

There has been so much noise surrounding the industry A over the past few months. Settling back down to work and doing what we do best is going to be crucial. We have some stability back in the industry, so it is important that we maintain service standards and deliver excellent outcomes to our clients. A delighted client is also more likely to refer further.

Q

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

I have been surfing since I was 11 years old, and I still try A to get out as often as possible. Depending on my workload and family commitments, this can be once a week, but is more often once a month. I also enjoy hitting a small white ball badly across a golf course every now and then.

Q

What do you wish you’d known when you started out as a broker?

That there are different pathways available to new A brokers. There are good mentor programs out there, and it’s a matter of finding one and taking what you need in order to progress your career and knowledge. Relationships are the key to everything in business, and broking is no different.

Nurture the positive ones and let go of the referral partners who don’t share your vision and work ethic. It needs to be a two-way street, so if it’s not working for you, exit.

Q

Q A 30

What are your top survival tips for working in finance?

I have three tips for working in finance: persevere, build relationships and just be a good person! AB www.brokernews.com.au

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