Australian Brokers 17.02

FEBRUARY 2020 ISSUE 17.02

Where property resales are raking it in CoreLogic report sheds light on the performance of property resales across Australia /08

What Aussie brokers can learn from the UK A look at the key differences between the two markets /17

BRENDAN O’DONNELL Liberty Network Services managing director discusses the importance of technology and how to be a ‘future smart’ business in 2020 /14

01_Cover_SUBBED.indd 1

A big deal Atelier Wealth’s Aaron Christie-David learns to tackle challenges head-on /22

ALSO IN THIS ISSUE… Latest ABS data offers fresh insights into lending Data reveals value of new home loan commitments and more /04 The key to capitalising on open banking Why brokers need to be digitally prepared for this opportunity /10 In the hot seat Kirsty Dunphey of Up Loans reveals her biggest inspirations to date /30

3/02/2020 1:59:26 PM

NEWS

IN THIS SECTION

Lenders Latest ABS data offers fresh insights into lending /04

Associations Westpac appoints ex-ABA director /06

Technology The key to capitalising on open banking /10

Regulators Pressure on financial sector “likely to intensify” /12

Market Where property resales are raking it in /08

www.brokernews.com.au FEBRUARY 2O20 EDITORIAL

SALES & MARKETING

Editor Victoria Ticha

Sales Manager Simon Kerslake

News Editor Madison Utley

Global Head of Communications Adrijana Monevska

Production Editor Roslyn Meredith

DATES TO WATCH

Upcoming can’t-miss events

ART & PRODUCTION

24-27 FEBRUARY

27-28 FEBRUARY

2-3 MARCH

Women in Banking & Financial Services Leadership Summit

Australian Mortgage Innovation Summit 2019

Responsible Lending and Borrowing Summit

The 9th iteration of this summit will take place in Sydney at the Radisson Blu Plaza Hotel. This event will address how to lead effectively when faced with change and adversity, with a particular emphasis on how to position oneself for success in the wake of the royal commission.

RFi Group will be hosting the 10th annual innovation summit in Sydney, covering everything from the aftermath of the royal commission to the “visibly turning” credit cycle. In addition to the two days focused on innovation and efficiency, the group will be presenting its Australian Lending Awards.

To be held at the Radisson Blu Plaza Hotel in Sydney, Informa’s 4th responsible lending summit includes addresses by ASIC exec Tim Gough and Mortgage Choice CEO Susan Mitchell. Along with the other speakers, they will shed light on open banking’s impact on financial services and the industry’s recalibration following the royal commission.

Designers Martin Cosme Jommel Ramos Production Manager Alicia Chin Traffic Coordinator Kristine Jamir

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

Madison Utley +61 2 8437 4700 madison.utley@keymedia.com

SUBSCRIPTION ENQUIRIES

12 MARCH

18-19 MARCH

25–26 MARCH

Connective’s first PD Day for 2020

Financial Inclusion Conference

ASIC Annual Forum 2020

At this event you will hear from Connective on the latest industry updates, including presentations by Mark Haron, Connective director, and Daniel Oh, Connective group legal counsel, on the best interests duty and how it could impact your business. Attend and earn four CPD points. The event will be held at Sydney’s Royal Randwick racecourse.

The fourth edition of this event, dubbed ‘Roads to Resilience’, will be held in Sydney and aims to engage the community sector, government and peak organisations in working towards a more financially inclusive future for Australians.

Conference content will address the building blocks of financial resilience for consumers.

ASIC’s Annual Forum features long-standing key events for participants in the financial services and markets sectors. This year’s speakers include Attracta Lagan, co-principal at Managing Values; Paul Harrison, deputy director at Deakin Business School; and Nicolette Rubinsztein, non-executive director at Zurich Australia.

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

ADVERTISING ENQUIRIES

Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au Key Media Pty Ltd Regional head office, Level 1O, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Seoul

30-31 MARCH

7 M AY

05-06 NOVEMBER

AFR Banking & Wealth Summit

Banking Summit Sydney

Future of Financial Services Conference

Banking and wealth leaders, regulators, policymakers and stakeholder groups will gather to debate the future of financial services at the Sofitel Wentworth in Sydney. The 2020 summit will provide the opportunity to hear from “key industry leaders” during the implementation stage of many of the royal commission recommendations.

Held at Doltone House, Hyde Park, this event brings together over 100 chiefs and divisional heads at Australia’s largest banks and financial services organisations to share insights on industry trends and emerging technologies that will change the face of the industry in the coming years.

ST Media’s flagship event and the largest of its kind in the southern hemisphere, Future of Financial Services will set the digital agenda for 2021 and beyond. It will examine open banking, customer experience, AI and machine learning, data analytics, digital transformation, the emergence of neobanks, and much more. It will be held at the ICC Sydney Exhibition Centre.

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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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Let’s chat. 13 11 33 Approved applicants only. Lending criteria apply. Other fees and charges are payable. Liberty Financial Pty Ltd ABN 55 077 248 983. Australian Credit Licence 286596.

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3/02/2020 2:02:46 PM

NEWS

LENDERS NEOBANK DEBUNKS MAJORS’ CLAIM ABOUT SME LENDING the nine months since securing its full licence, Australia’s first SME-focused challenger bank has lent over $1bn to small and mediumsized enterprises nationally, discrediting a myth perpetuated by the major banks. Judo Bank co-CEO Joseph Healy explained, “The big banks have claimed that their ability to lend to Australian SMEs has been hampered by tightening lending standards, arguing that there is a lack of demand for credit from small and medium-sized businesses.”

SHARE OF VALUE OF NEW LENDING COMMITMENTS (EXCLUDING REFINANCING) Owner-occupier loans

Investor loans

Total loans

IN

NICHE LENDER PLANS TO GO PRIME lender Brighten Home Loans says it is expanding into the prime, near prime and alt-doc lending spaces after securing $250m in tranche funding. The products will be launched in the next quarter.

“We believe we will be able to compete through a combination of a streamlined product offering, a simple and competitive pricing structure, along with a superior service proposition assisted through our enhanced technology platform,” said Jason Ford, Brighten head of lending operations.

Oct-19

Nov-19

Oct-19

Nov-19

Oct-19

Nov-19

Major banks

70.16%

69.96%

73.79%

73.14%

71.15%

70.84%

Other ADIs

25.83%

26.42%

21.86%

22.85%

24.74%

25.43%

4.01%

3.62%

4.35%

4.00%

4.10%

3.73%

Non-ADIs

NON-BANK

“First home buyers are now accounting for 29.7% of new housing commitments for owner-occupiers”

Steve Mickenbecker, Group executive of financial services, Canstar

4

Source: ABS

LATEST ABS DATA REFLECTS A RECOVERING HOUSING MARKET ABS data on the state of the Australian housing market supports the view that a recovery is underway and investment lending is on the rise from the ABS shows that the value of new home loan commitments rose in November 2019, up 1.8% when seasonally adjusted, with new owner-occupier loans recording the sixth straight month of growth.

Interestingly, the lift in the value of new investment lending in November outstripped that of owner-occupier loans, at 2.2% growth compared to 1.6%.

According to Canstar group executive of financial services Steve Mickenbecker, these figures confirm the housing market is recovering and that it does seem as if investors are actually returning to the market.

The ABS data revealed a decline in the number of loan DATA

commitments to first home buyers in November, despite the value of loans to this market sector being up 2.1% over the month and almost 20% year-on-year.

“First home buyers are now accounting for 29.7% of new housing commitments for owneroccupiers, well above levels of recent years,” said Mickenbecker.

“The 0.9% decline for the month in first home loan numbers might suggest a postponement of purchase plans as new buyers awaited the introduction of the First Home Loan Deposit Scheme.”

Mickenbecker suggested that the recent recovery in house prices in Sydney and Melbourne might put the brakes on first home buyer

activity in these markets, which may be further compounded by the “limited scope” of the government’s scheme.

“The number of first home loan borrowers has been hovering around 10,000 a month for quite some time – also the limit in the number of borrowers to be assisted by the First Home Loan Deposit Scheme,” he said.

The ABS data also revealed a decline in the big four’s command of the market for new home loans.

“The major bank share of new lending has declined for the month, with non-ADIs also down,” said Mickenbecker.

“The majors’ loss of share has been most marked in the investment market, where perhaps relatively tighter credit standards have held them back.”

The data showed that it was second-tier banks and other ADIs that were picking up market share, marking the area to watch in 2020.

www.brokernews.com.au

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3/02/2020 2:03:47 PM

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Australian Credit Licence 333163

3/02/2020 2:04:27 PM

NEWS

A S S O C I AT I O N S INDUSTRY HALFWAY TO BUSHFIRE RELIEF GOAL Mortgage and Finance Industry Bushfire Relief fund successfully raised half of its goal amount – $375,000 of a target of $750,000 – for the Australian Red Cross as of 16 January. It’s “only fitting”, says the fund’s webpage, that an industry centred on making homes, investment properties and business funding accessible to Australians supports the bushfire-affected communities and brokers operating within them. Industry groups continue to offer their support.

THE

WESTPAC APPOINTS EX-ABA DIRECTOR TO LEADERSHIP ROLE The new non-executive director and chairman-elect will play an integral part in the appointment of a permanent CEO following the resignation of Brian Hartzer Australian Banking Association director John McFarlane will assume the role of chairman of Westpac this month, subject to regulatory approvals. He will succeed Lindsay Maxsted and work closely with Peter King, current acting CEO of the major bank.

McFarlane has more than 44 years’ experience in financial services across retail and wholesale banking and markets, as well as in life and general insurance.

“This experience, coupled with his strong customer and employee focus, will be invaluable to Westpac as the organisation executes its strategy and implements its Response Plan for the AUSTRAC Statement of Claim,” said Maxsted.

“As chairman-elect, McFarlane FORMER

will be responsible for appointing a permanent CEO, with an internal and external search process currently underway. In the interim, he will work closely with the acting CEO, Peter King, and the board, to effect needed change.”

Most recently, McFarlane was chairman of Barclays in London during “the decade of challenge” following the GFC. “During his four years as chairman, the company was streamlined, repositioned and has sustainably returned to profit,” Maxsted said.

“Prior to this, he delivered a successful turnaround program at UK insurer Aviva, a company similar in scale to Westpac.”

McFarlane also possesses a “deep understanding” of Australia’s banking sector, given

his previous 10-year tenure as CEO of ANZ from 1997 to 2007, as well as 10 years as director of the ABA. The newly named chairman has returned to Australia permanently and has dubbed the appointment “an honour”.

“People close to me know that on my return to Australia I hadn’t intended to take another major leadership role. However, I’m passionate about the Australian banking sector, and I’m excited by the challenge of returning Westpac to its place as a leading global bank, following recent events,” McFarlane said.

“To some extent, the internal and external challenges ahead for Westpac are not dissimilar to those in my last five financial institutions, and I have therefore grown comfortable about my capacity to work with the board and management to effect the necessary change.

“Nevertheless, I’m sufficiently battle-hardened to realise things can be tougher than you think and that in banking, nothing is ever certain.”

DONATIONS BOOST AID EFFORTS OF RED CROSS scope of donations to the Red Cross, including the $375,000 raised by the mortgage and finance industry, has allowed the organisation to add to relief efforts that have been in effect since the beginning of summer.

The organisation has doubled its emergency cash grant to $10,000 for those who have lost their homes as a result of the fires and will provide an initial $20,000 bereavement payment to the families.

THE

“Last year saw a significant recalibration of APRA’s focus and breadth of responsibilities” Wayne Byres Chairman, APRA

Faster than banks Cheaper than caveats Difficult loans • When banks can’t help •

For quick solutions call today

Catherine Willoughby

Adelaide 08 8408 0800 | Melbourne 03 9225 5189 | Sydney 02 9239 3144

eastwoodsecurities.com.au 6

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3/02/2020 2:05:09 PM

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17/05/2019 10:27:27 AM 3/02/2020 2:05:35 PM

NEWS

MARKET WESTPAC CUTS RATES TO STAY COMPETITIVE has made cuts across its package and non-package fixed investment interest rates to stay competitive in the “stagnating subsection of lending”. The cuts were between 0.19% and 0.50% across all terms for both interest-only and P&I repayments. “You know the home loan market has become competitive when a loan from a major bank has the top rate in its category,” said Canstar group executive of financial services Steve Mickenbecker.

WESTPAC

BIG FOUR MARKET SHARE HITS ALL-TIME LOW market share of the majors fell to an all-time low over the past three months, according to the latest AFG Index. Non-major banks accounted for 47% of lodgements in the September quarter, the highest percentage since 2007, with 35% of first home buyers arranging loans through a non-major. “Homebuyers taking out P&I loans are increasingly focused on the opportunities offered by the non-majors,” said AFG CEO David Bailey.

THE

“Oversupply, which contributes to lower prices and higher vacancies, has impacted returns for unit resellers” Eliza Owen Head of residential research, CoreLogic

WHERE PROPERTY RESALES ARE RAKING IT IN A new report has shed light on which markets and property types are making the biggest profits on resales across Australia 85% of properties resold

AROUND over the September

quarter for more than their previous price, delivering a gross profit of $18.7bn for resellers across Australia, according to the CoreLogic Pain and Gain Report.

This was a slight increase in profitable resales, up 0.1% on the previous quarter, while gross profits went up by $2.4bn over the same period.

Hobart sellers were most likely to experience gains, with 98.1% of properties selling for a profit over the three months to September 2019. Regional Victoria (96.6%) and regional Tasmania (96.4%) also delivered positive returns for sellers.

“Hobart has experienced particularly large capital gains over the past five years, and this has

translated into exceptionally strong results for resellers of both houses and apartments during the past quarter,” said CoreLogic head of residential research Eliza Owen.

“When it comes to generating a profit for the seller, owner-occupied properties have outperformed investment properties in all markets except for Hobart and Regional Tasmania,” Owen said.

“Over the September 2019 quarter, 98.8% of investment properties resold in Hobart were profitable compared to 98.0% of owner-occupied dwellings.”

Nationally, 88.9% of owneroccupied properties resold for a profit, compared to 83.4% of investment properties.

Overall, house resellers were more likely than unit resellers to

experience gains. Nine in 10 houses across Australia sold for more than their previous purchase price, compared to eight in 10 apartments. The disparity was greatest in Brisbane and Canberra.

“In recent years, there has been a relatively high level of newly constructed apartments in state capitals, especially across Brisbane and the ACT. This oversupply, which contributes to lower prices and higher vacancies, has impacted returns for unit resellers,” explained Owen.

During the September quarter, regional markets outperformed capital cities, with sellers making a profit from 88.0% of regional resales compared to 87.1% of resales across the state capitals.

Nationally, gross losses amounted to $764.8m over the quarter, generated from 12.6% of property resales. Sellers in Darwin experiencing the greatest pain: just 51.7% of properties resold for a gross profit, followed by regional Western Australia at 56.9% and Perth at 63.6%.

TREND IN LOSS-MAKING PROPERTY SALES ACROSS MAJOR CAPITALS Source: CoreLogic

25%

Sydney

Melbourne

Brisbane

Adelaide

20%

15%

10%

5%

0% Sept 2004

8

Sept 2007

Sept 2010

Sept 2013

Sept 2016

Sept 2019

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3/02/2020 2:06:53 PM

New bank criteria left you high & dry?

La Trobe Financial offers common sense lending solutions to clients who may not qualify at a bank.

Our personal approach to assessment means we can be more open to your customers’ needs.

Send us a file today. Call 13 80 10 or visit latrobefinancial.com

La Trobe Financial Services Pty Ltd ACN 006 479 527 Australian Credit Licence 392385. La Trobe Financial Asset Management Limited ACN 007 332 363 Australian Financial Services Licence 222213 Australian Credit Licence 222213. Terms, conditions, fees, charges and La Trobe Financial lending criteria apply.

To view our ratings and awards please visit our Awards and Ratings page on our website. This publication is for accredited broker use only and is not for distribution to consumers. Copyright 2019 La Trobe Financial Services Pty Ltd ACN 006 479 527. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial.

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3/02/2020 2:07:31 PM

NEWS

TECHNOLOGY

ASSET FINANCE TOOL LAUNCHES NEW FEATURES

DIGITAL READINESS THE KEY TO CAPITALISING ON OPEN BANKING For brokers looking to take full advantage of the new opportunities offered by open banking, digital preparation is crucial, says Loan Market has been touted as a game changer for the lending industry, with much discussion about what the transition means for brokers.

Indeed, the change is expected to bring massive opportunity for brokers as the introduction of this complex and unexplored environment is likely to push even more borrowers to rely on their expertise.

But in order to be a responsible and successful adviser to customers, it’s crucial that brokers themselves understand the nuances of the new open banking landscape.

According to Jason Furnell, chief customer experience officer at Loan Market, the key for brokers looking to take full OPEN BANKING

advantage of the new opportunity lies in digital preparation.

“If we haven’t seen it already, open banking will certainly signal the death of ‘pen and paper’ broking,” he said.

“Customers want to win back their financial identities. They’ll want to use their own data to explore new options. And they’ll want experts with the knowledge of products and policies to help them utilise their data for better outcomes.

“What [then] becomes important in an environment where more data is shared is the ability to store, analyse and act on those insights.”

It’s therefore vital that brokers – and aggregators – ensure they’re digitally ready for the new system’s

rolling implementation.

For lenders, open banking will make room for more personalised solutions, reduced cost of operations, faster time to market, more achievable scalability, and more flexibility within business models.

For consumers, it will deliver more choice, lead to the creation of better and more specific products, and empower Australians who are able to utilise their personal data as a tool.

“What will become fundamental is the ability to analyse and develop insights around that data, and this is where, in fact, [Loan Market is] already talking to a number of vendors to provide analysis tools to help brokers through that process,” said Furnell.

With the help of their aggregator, he said brokers would be better able to integrate efficient tech and data mining into their existing customer relationship management systems and reap the rewards of their preparedness.

verification tool Verimoto, which brought the ease and efficiency of Ezidox into the sphere of second-hand asset finance, has released two new features.

These will enable automated verification of vendors’ banking details and instantaneous upload of vehicles’ roadworthy certificates.

“We’ve put a stop to the endless paper shuffle of chasing the money with automation. These additional features eliminate a further two hurdles that brokers face in getting the deal done quickly,” said Peter Hewett, CEO of Verimoto.

DIGITAL

BANKS EXPECTED TO INCREASE USE OF CLOUD SYSTEMS IN 2020 HIGHER ADOPTION OF PUBLIC CLOUD 2018

2019

Source: Infosys Finacle

2020

BANKWEST, LENDI INTEGRATE ASSESSMENT TOOLS has integrated Lendi’s Approval Confidence Rating into its existing assessment tools, delivering a more simplified loan experience to its customers. Approval Confidence informs borrowers of available home loan options and their chances of approval across Lendi’s lender partners. It aims to give them a level of reassurance due to its tailored nature, compared to more general comparison sites. Ian Rakhit, head of third party banking at Bankwest, says the platform brings a “higher degree of certainty” to customers during their home-buying journey.

BANKWEST

Banks largely moved non-critical workloads to the public cloud

Banks adopted the public cloud for their international operations and new lines of business with limited operations and customer base

Banks will move higher workloads to the public cloud in their home countries with a sizeable customer base

Multi-cloud environments rise to prominence • Banks begin to see multi-cloud environment as a solution to performance, compliance, and cost-optimisation challenges

Multi-cloud environments

• Workload portability and seamless delivery of functions across platforms will drive adoption • Containerisation of legacy applications will be a necessary step in large-scale migration of workloads to public cloud

10

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3/02/2020 2:08:14 PM

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The Real Life Alternative

3/02/2020 2:08:51 PM

NEWS

R E G U L AT O R S

NON-MAJORS GET READY TO OFFER FHLDS LOANS has been taking loan applications from first home buyers for pre-approval in the run-up to 1 February – the start date for select non-major lenders to submit applications under the First Home Loan Deposit Scheme (FHLDS).

The bank has urged brokers to act swiftly and cautiously to ensure the best outcomes for all. CBA and NAB went live with the FHLDS in January and have seen “extremely strong demand”, said Tony MacRae, MyState Bank’s GM of banking.

MYSTATE BANK

PRESSURE ON FINANCIAL SECTOR ‘LIKELY TO INTENSIFY’, SAYS REGULATOR APRA has released its first Year in Review publication, summarising the regulator’s activities over 2019 and forecasting continued turbulence in the financial sector year saw a “significant recalibration of APRA’s focus and breadth of responsibilities”, said Wayne Byres, chairman of the regulator, its inaugural Year in Review report.

Within the financial system, this was manifested through: LAST

• More “intense scrutiny” of the institutions APRA regulates • An expansion of its risk-based supervision into new areas • Putting data to better use for decision-making • Greater resolution capability preparedness • Enhancing the leadership, people and culture within APRA itself • An overview of the operating environment

APRA SPEAKS UP FOR FINTECH SECTOR has formally “recognise[d] APRA the important contribution” the fintech and regtech sectors lend to the financial system and explained the ways in which it will support their development. Its submission to the Senate committee conducting an inquiry into these sectors acknowledged that actively supporting innovation was crucial to achieve an “efficient, competitive and stable financial system”. The committee has scheduled its final report to be released on or before the first sitting day in October this year.

12

Subdued economic growth was a dominant feature of the last

year, the report said. Housing credit crept up at the lowest rate since the data series began in the 1970s – with all progress occurring within the owneroccupier space and none in the investor category. Yet household debt continued to grow faster than household income.

“Very low-interest rates, while appropriate for the economy as a whole, added challenges for the financial sector … [which] will likely remain under pressure in 2020,” the report said.

In such an environment, with pressure “likely to intensify” in the year ahead, the report said “there is no room for complacency” regarding the safety and stability of the financial system, which is APRA’s primary mandate.

According to APRA, over 2019, ADIs were well capitalised, had strong asset quality and funding,

and were profitable, despite the banking sector being “exposed to a number of headwinds and vulnerabilities”.

Those weaknesses included high and rising household debt, ongoing reliance on foreign wholesale funding, historically low interest rates, and low rates of economic growth.

Further, operational risks for ADIs were heightened, with evidence of underinvestment in compliance, IT systems and data management.

As of 30 June 2019, there were 148 ADIs operating in Australia, up from 145 the year before – the first net increase in sector participants in nearly 15 years.

The the total number of ADIs comprised 93 banks, 47 credit unions and building societies, seven ‘uncategorised’ ADIs, and one restricted ADI. Total ADI industry assets stood at $4.54trn, up from $4.32trn in the year prior. The industry remained concentrated, with the four major banks holding around 75% of industry assets, only a marginal reduction in concentration compared to previous years.

VV BUDGET ALLOCATION BY INTENDED ACTIVITY 2019-20 ASIC’S Education

11%

Source: ASIC

1%

Enforcement Licensing

9%

Guidance Policy advice

43%

Supervision and surveillance Engagement with stakeholders Registry

29% 2% 2% 3%

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FE AT URES

SPECIAL REPORT

BROKERS ENCOURAGED TO THINK ‘FUTURE SMART’ Brendan O’Donnell, managing director of Liberty Network Services, talks to Australian Broker about its key theme for the year, what it means to be a ‘FutureSmart’ business in 2020, and what the future of broking could look like in Australia

First of all, what is Liberty Network Services and how does it support brokers?

Liberty Network Services (LNS) is a high-touch distribution alternative to traditional aggregators. It offers a range of benefits, solutions and opportunities for brokers to help more customers get financial and grow their businesses. Whether you’re an experienced broker or only recently joined the industry, LNS also provides high-quality training, coaching and development tailored to your business and individual requirements.

Our unique distribution model recognises the importance of brand and the rapidly evolving digital and connected world we live in. We aim to give our advisers extensive support from our agile technology and specialist marketing teams – these are the areas that are rapidly changing and require constant review.

For LNS, smart technology is an essential part of our business and plays a vital role in how we support advisers so that they can succeed. And so, throughout 2020, we are investing in some exciting, relevant and practical applications that will ensure Spark, our in-house loan application portal, continues to be an industryleading broker platform.

All too often, we hear that many of the platforms offered by larger aggregators are overly complex and difficult to navigate.

But Spark has been built to offer fast, streamlined functionality.

Consistent training and support ensures that LNS advisers have the latest skills and know-how to

Q

14

leverage our significant investment in technology and marketing.

Utilising new technology to grow business will be a key theme for LNS throughout 2020. Why? ‘FutureSmart’ business is a key theme for LNS because we recognise the value it can bring to

Q

What does it mean to ‘FutureSmart’ your business, and how does this apply to brokers?

Following last year’s royal commission, the scrutiny and regulation of our industry will remain top of mind. With the expectations of customers everincreasing and finance options

Q

“Successful brokers don’t look at customers as one-time transactions” Brendan O’Donnell, Liberty Network Services our advisers and the many ways it can help them to grow their business. At LNS, we recognise the importance of future-proofing broker businesses – so this will be a key theme guiding many of our initiatives in the new year.

expanding, it is more important than ever for brokers to be smart about building their businesses.

But being FutureSmart is not only going to be about technology and digital marketing; it is also about making sure that brokers

are better equipped to meet the changing needs and expectations of customers. It’s about going beyond the traditional home loan and engaging in finance solutions that meet the customer’s short-, medium- and long-term needs. This also includes the dynamic smallto-medium business market where customers have blended business and personal needs.

We have long touted the benefits of diversification, and in this climate we continue to encourage advisers to look beyond just home loans and expand their ability to help more customers across commercial, motor, SMSF, personal loans and business finance.

But it also means being adaptable, prepared and freethinking in your approach to your business and providing for the needs and best interests of more customers. There are endless ways that we help brokers improve their businesses, providing benefits for time management, information gathering and customer communication. In particular, the ability to track and measure customer data with ease and efficiency has been a huge advancement – and it is something I believe will continue to unfold

LNS ADVISERS’ PREDICTIONS FOR THE YEAR AHEAD Source: Liberty Network Services

How do you think your business will fare in 2020?

60% 2019

50%

2020

40% 30% 20% 10% 0% Extremely well

Well

Average

Below average

Poorly

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In partnership with

2019 PERFORMANCE HIGHLIGHTS

91%

Genuine LNS/Adviser Partnership score

24%

Year-on-year settlement growth

89%

Percentage of advisers who diversified into motor loans, personal loans, commercial loans and business finance

77%

Year-on-year growth in commercial settlements Brendan O’Donnell, managing director, Liberty Network Services

over the years to come.

Already, this new development is changing the way we support our advisers in building their businesses and vastly improving the outcomes of their marketing efforts. In partnership with our in-house marketing and data science teams, we can drill down into customer data to create effective strategies for our advisers’ digital marketing campaigns.

By reviewing our results in real time, we can make any necessary adjustments in order to quickly obtain better outcomes for the adviser and customer.

How are the expectations of customers and brokers changing in 2020, and what should brokers be wary of this year?

Broking has always been a people business, and I can’t see this changing any time soon. However, the way brokers communicate will continue to evolve, as customers’ expectations will shift from consumption to connection. Brokers who recognise and embrace this shift will avoid the trap of focusing only on the transaction and will be able to build enduring customer relationships.

Successful brokers don’t look at

Q

customers as one-time transactions.

Instead, they recognise the value of nurturing them into lifelong customers. LNS advisers achieve this by maintaining consistent, considered communication through targeted EDMs, social media marketing and more. Brokers can keep in regular contact with past customers with ease and simplicity.

The power of a phone call and meeting customers face-to-face remains key to the future of broking and requires a new set of skills. At LNS, we encourage our advisers to be active in their local communities and build real

connections with customers.

Brand, and the need to set yourself apart from the competition, has also never been more important.

For this reason, we encourage our advisers to be free-thinking in their approach to customers, and we support them with differentiated local area marketing.

From multilingual print and digital advertising to roadside billboards and personalised social campaigns, there is no cookie-cutter approach when engaging with customers and potential prospects.

By targeting, automating and scheduling, brokers can dramatically www.brokernews.com.au

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reduce the amount of time spent on marketing and administration, freeing up more time to nurture leads and make new connections.

What does the future of broking look like in Australia?

Looking to the future, personalised speed of service will be a key factor that set brokers apart from the competition.

Already, customers of today have become accustomed to fast – if not instant – service, and this is only going to become more important.

This is particularly true in the broking industry, where timesensitive deals are commonplace.

At LNS, our advisers understand that fast turnaround times can determine whether a customer’s offer is accepted, and that sometimes we need to act quickly to help advisers achieve the desired outcome.

Understanding this, our advisers utilise a range of tools to help them respond to and action a range of customer enquiries with speed and efficiency. Thanks to Spark and its digital tools, LNS advisers can submit and keep track of loan applications from anywhere.

2020

Q

What other key themes can we expect over the year to come? How might they be addressed?

While speed of service and the growing expectations of consumers will be front of mind for brokers this year, there is an important balance that needs to be made with compliance and regulatory requirements.

Almost one year after the royal commission, the industry is in a

Q

“Brokers need to be conscious of compliance needs at every step” Brendan O’Donnell, Liberty Network Services stronger position – and consumers continue to back the broker channel.

But brokers need to be vigilant and conscious of compliance needs at every step.

At LNS, we offer regular updates, insights, training and guidance to advisers to ensure they provide good customer outcomes to help more people get financial. We constantly monitor applications and the overall process to maintain compliance.

What else is LNS doing to support the industry this year?

At LNS, we take a holistic approach to supporting our advisers to build their businesses. In our recent ‘Mood Barometer’ survey conducted with our adviser network, 81% reported that they believed being an LNS adviser positioned them to succeed and grow their business, with 77% reporting expecting their business to

Q

LNS ADVISERS’ BUSINESS OUTLOOK Source: Liberty Network Services

Does being a Liberty adviser position you well to succeed and grow your business?

100% 90% 80%

2019

2020

70% 60% 50% 40% 30% 20% 10% 0% Yes

16

No

Unsure

fare above average in 2020.

While technology and marketing support, backed by a suite of products and a national brand, are important contributors to their success, we recognise that soft skills and personal development are also vital.

With a diverse and inclusive culture, we are proud to have been involved with the MFAA Opportunities for Women campaign, promoting greater gender equality in the industry.

With almost 30% of our adviser network being female (a growing proportion), we recognise that we still have a long way to go to maximise the opportunity.

Partnering with the Work180 female recruitment platform in our recruiting efforts, as well as targeted digital recruitment and initiatives for International Women’s Day are just some steps being taken.

Wellbeing and mindfulness are other areas that LNS critically focuses on, as strong and healthy relationships with customers can only exist if the adviser is balanced and resilient. In today’s broking environment, providing opportunities for our advisers to learn mindfulness techniques to help them better engage with their business stakeholders and customers is vital.

Our annual conference, with a focus on advisers being FutureSmart, offers opportunities for both professional and personal development. AB

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NE WS ANALYSIS

WHAT AUSSIE BROKERS CAN LEARN FROM THE UK With open banking already established in the UK, and several other key differences between the two markets, Australian Broker talks to uno Homeloans’ Anthony Justice and PLAN Australia’s Anja Pannek to find out what lessons the industry can learn from its friends across the sea

more than three years of Brexit talks, deals and political wrangling, the UK officially left the European Union on 31 January – a move that will no doubt have a long-lasting impact on its economy, financial services, property and lending market.

But alongside Brexit, financial services in the UK have experienced many other significant changes over the last few years, including the start of an open banking regime back in 2018.

Given that there are a number of similarities between the mortgage broking industries in Australia and the UK, there are potentially some lessons to be learnt from that market about what to expect here.

Indeed, according to Anja Pannek, CEO of PLAN Australia, the core product offerings of both mortgage markets are quite similar.

She says, “First-time buyers, home movers, refinancing and buy-to-let are all segments that mirror the different types of borrowers we have in Australia.”

Pannek adds that “UK brokers have a higher market share at approximately 70% plus, compared to around 60% in Australia, and so AFTER

we often look to the UK as a lead indicator of where our market in Australia will go in due course.”

The UK mortgage market While Australia managed to come through the GFC relatively unscathed, the UK was hit hard, and tighter lending standards for the home loan market were subsequently introduced, Pannek explains. This resulted in greater regulatory oversight of the broker channel.

“In the aftermath of the crisis, the UK embarked on a regulatory review of remuneration structures in the financial services sector, including mortgages. A review of the home loan market – known as the MMR – was conducted in 2014 and again in 2019 to see what impact the reforms had.”

The review led to several reforms, but a ban on commissions was not one of them. In April 2014, new responsible lending rules were introduced by the UK Financial Conduct Authority, including requirements for the lender to assess the affordability of a loan and to stress-test it for expected future interest rate rises. www.brokernews.com.au

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“Brokers are now also required to provide information to borrowers about their services and fees. These changes also introduced minimum qualifications requirements for mortgage brokers,” Pannek says.

“UK brokers are obliged to outline all fees in an initial disclosure document and carry out the vast majority of legwork traditionally done by a lender, from affordability checks to regulatory and compliance checks.”

Since these changes, she explains that both lenders and brokers must now consider a customer’s financial situation and assess their ability to afford the loan when suggesting a suitable mortgage.

UK brokers and lenders must also be able to provide evidence that this has occurred.

In Australia, however, responsible lending operates under a ‘not unsuitable’ test; from 1 July 2020, the industry will see the introduction of a best interests duty for brokers only – not lenders.

Pannek adds, “In Australia, I expect the best interest duty to result in greater articulation and documentation by brokers on why the product recommended is in the best interests of their customer.”

UK and Australia: Key differences Regulations covering mortgages in the UK and Australia are fairly similar, with mortgage brokers required to provide borrowers with key facts that compare different

trail commissions.

“Some lenders do remunerate brokers for advising customers to stay in a product rather than refinance at the end of the fixed rate term,” Pannek says.

“That said, it should be noted that brokers in the UK are required to reassess the suitability of the loan before making a recommendation to the client.”

She also points out that ASIC made reference to the UK market in its 2017 Review of Mortgage Broker Remuneration, which noted that the lack of trail commissions had been seen by some as a potential driver of churn in the UK home loan market, where many consumers were in shortterm (often two-year) fixed rate home loans.

Indeed, according to Anthony Justice, CEO at uno Home Loans, who has held management and operations roles at UK-based brokerage Halifax Investment Services, the key difference between the two markets is that in the UK a high proportion of customers are on fixed rate deals, while in Australia the vast majority of borrowers are on variable rates, at around 90%.

He explains, “That means that in the UK there is a natural point at which consumers refinance to avoid the payment shock of reverting to the standard variable rate.”

Justice suggests that this means UK brokers are faced with two

“We often look to the UK as a lead indicator of where our market in Australia will go in due course” Anja Pannek, CEO, PLAN Australia

Anja Pannek, PLAN Australia loan products in terms of interest rates, fees, etc – but there are some notable variations.

According to Pannek, one significant difference between the two markets is the prevalence of short-term fixed rate home loans in the UK market.

She says, “These products account for the majority of loans, as opposed to variable rate home loans, which are the overwhelming preference in Australia.”

And unlike in Australia, UK mortgage brokers do not receive 18

choices: they can move the customer to a new lender, often starting a new fixed rate period – typically two, three or five years – or move them to a new product with the existing lender.

He continues, “Brokers get paid for both – a bit more for moving to a new lender, but the important point is that the lenders see retention as very important and are prepared to pay brokers to place the customer in a new product with them as the existing lender.”

But in Australia, where most borrowers are on a variable rate, there is no natural point at which it is necessary to consider your options. Justice says that, over time, it is likely that a consumer’s loan becomes a lot less competitive “as new rates appear in the market that favour new borrowers over existing ones; equity in the property increases, meaning access to better rates is available or LMI is no longer necessary; or circumstances change – income goes up, for example”.

And while the British government does not have a grant for first home buyers like Australia does, it has schemes such as the Help to Buy program in which it provides loans of up to 20% of the property’s value interest free for five years.

Pannek explains, “The British government offers assistance to first home buyers in the form of the Help to Buy scheme, which features several formats. For example, the Shared Ownership scheme offers first home buyers

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Anthony Justice, CEO, uno Home Loans

the chance to buy a share of their home – between 25% and 75% of the property’s value – and to pay rent on the remaining share. Down the track, the first home buyer can purchase a greater share when they can afford to.

“Another interesting option is the Equity Loan, where the government lends first home buyers up to 20% of the cost of their newly built home so they will only need a 5% cash deposit and a 75% mortgage. First home buyers aren’t charged loan fees on the government loan for the first five years of owning the property.”

Meanwhile, in Australia, the federal and state governments have introduced several different schemes over the years in an effort to improve home affordability.

The latest effort by the Morrison government is the First Home Loan Deposit Scheme that came into effect on 1 January 2020, which aims to support up to 10,000 new homeowners each year in purchasing a home with a deposit of as little as 5%.

The takeaways According to Justice, consumers can often get a better rate than the one they are on, even after the costs associated with switching.

But because there is no natural point at which to evaluate this in Australia, as there is in the UK, clients often go for five years or longer without refinancing or even trying to get a better deal with their lender.

Justice says, “When customers do come to refinance [in Australia], brokers are remunerated with a new upfront commission – typically 65bps – for moving the customer to a new lender. If the customer stays with the existing lender, there is no remuneration other than the existing trail commission.”

This is something that will likely see changes following the adoption of the best interests duty reforms.

In fact, Pannek says one of the key learnings from the UK market is that Australia’s regulatory efforts should be examined, specifically in terms of introducing regular mortgage market reviews.

“We should expect more reviews in Australia, and locally the next mortgage industry review is coming up in 2021. Staying focused on good customer outcomes is critical, and these reviews enable us all to reflect on how we can continue to drive the best possible outcomes for borrowers,” she says.

“The introduction of a best interests duty is likely to be a game changer for our industry. Borrowers will be able to go to a broker and know they are bound by law to act in their best interests – a change we believe will help to build even greater trust in our industry.”

She adds, “The bottom line is that the broker market share has only gone from strength to strength in Australia since the great financial crisis, and I believe our market will continue to evolve positively.”

Finally, Pannek suggests that Australians are traditionally fast adopters of new technology, and so open banking could have a much more transformational impact on provision and access to financial services for Australians, compared

to what it has achieved in the UK. She says, “Open banking will drive innovation in financial services as fintechs and banks come together to overcome the challenges of legacy systems and address customer needs and the customer experience.

“There will also be innovation in the broker channel that will see mortgage professionals better equipped to help their clients, particularly when it comes to the sharing of data that traditionally has been very clunky to share, to ensure customers benefit from the best possible outcome.”

Agreeing, Justice adds, “We are starting to see much more innovation in the financial services sector, and that’s starting to occur here, too, in anticipation of open banking.

“I believe we will see increased transparency and easier access to digital experiences that allow consumers better choice and transparency. We will also see more innovation and disruption in favour of the customer.” AB www.brokernews.com.au

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OPINION

BENEFITS OF BOUTIQUE AGGREGATORS Many brokers will experience growing pains or hit a roadblock when trying to make changes in their business, writes Centrepoint Alliance Lending’s Tracey Najjar. She explains how boutique aggregators can help brokers meet their clients’ needs

may experience challenges in increasing settlement volumes, improving business efficiency and management skills, growing their staff or diversifying their offering.

This is precisely where boutique aggregators can offer support and flexibility to a broker who needs to grow and strengthen their business.

Why? Because you are likely to mean more to a boutique aggregator.

Another great benefit of being with a boutique, from my perspective, is its ability to be flexible with its lender panel and easily add to its suite of lenders because of a lack of bureaucracy.

Every client is different and has their own specific needs and goals, so when it comes to lending panels it’s important to ensure that you have a diverse range of lenders to choose from in order to select the right one for your client.

Every aggregator needs to have first- and second-tier lenders as well as a diverse panel to suit its clients’ varying needs.

A boutique aggregator can be flexible and nimble when it comes to off-panel lenders so that it can support the growth and needs of its credit representatives.

It can also be quick to investigate lenders and add them to its panel when the need can be seen for future lending relationships.

Build strong relationships To be successful as a business consultant when working for any type of aggregator, you need broker engagement and strong relationships. At Centrepoint Alliance, our main focus is to help brokers grow their businesses through honesty, reliability and relationships.

I strive for my brokers to trust in the advice I am providing and immerse

BROKERS

When it comes to choosing the right aggregator, or changing aggregators, one size does not fit all Tracey Najjar, business consultant, Centrepoint Alliance Lending

Tracey Najjar Business consultant, Centrepoint Alliance Lending

themselves in this journey. They need to know that I have their best interest at heart, and together we learn each other’s strengths, weaknesses, likes and dislikes.

We work as business partners; while under separate business names we are on the same roller-coaster ride to achieve common goals and dreams. We celebrate success and work through the pitfalls that come with our industry together.

When it comes to the little things a broker needs to help them through their day-to-day business struggles, a boutique can offer lots

WHAT BOUTIQUE AGGREGATORS CAN DO FOR BROKERS

Boutique aggregators can provide brokers with one-on-one support by: • Setting business plans and working collaboratively with brokers to encourage accountability and assist them in meeting business goals • Helping brokers set up and maintain referral partnerships • Helping them work more effectively with their current client base by setting up efficiencies in their business • Assisting with succession planning • Conducting business builder workshops – small peer groups that help each other in a bid to take the loneliness out of being a small business owner • Supporting business health by running a business diagnostic that will compare the broker’s business against hundreds of similar companies across the country • Consulting with brokers on the results of all of the above and planning to build a stronger business • Assisting with recruitment, staffing, position descriptions, KPIs and most office processes

20

of flexibility too. This means commissions are paid promptly, for example the day after they are received by the bank, which could even equate to daily commission payments, depending on your spread of lenders.

Compliance support is another service boutique aggregators offer all brokers, both credit reps and Australian credit licence (ACL) holders (because ACL holders need compliance help too).

The customer relationship management (CRM) system can create a compliance document straight from your data entry and help with efficiencies through client management tools, which boutique aggregators can assist with.

Boutique aggregators can also help with audits, pre-vetting options and training.

They can provide brokers with access through the CRM to bankstatements.com and Equifax without monthly subscriptions, as well as access to other providers through application program interfaces.

One size does not fit all Being with a small group means you’re more than just a number; you are a very important number. Brokers who use boutique aggregators become part of a small group of like-minded people who all want to make changes to their day-to-day business operations to achieve success.

In a small group, you will be a face, a name and, most importantly, you will be part of a community.

When it comes to choosing the right aggregator, or changing aggregators, one size does not fit all. AB

www.brokernews.com.au

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Debt-Free Finance Rules

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How Fifo Capital partners with you • New and innovative finance options • Responsive 24-48 hour file application reviews • Sales tools and presentations • Personalised training • Solutions-based client proposals

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Invoice Finance | Trade Finance | Supply Chain Finance | Business Loans fifocapital.com.au | Backing business success www.brokernews.com.au

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3/02/2020 2:23:49 PM

PEOPLE

Have an interesting deal?

Had a particularly difficult or interesting deal? Why not share it with us? Email:

victoria.ticha@keymedia.com

BIG DEAL

Aaron Christie-David, managing director and finance broker at Atelier Wealth, learns that taking on a challenging client can be a blessing in disguise THE FACTS

Client Rentvestor in her 20s

Loan term $1.23m for 30 years

Goal To purchase her third investment property

Location Gregory Hills, Sydney

Lender Commonwealth Bank

Aggregator Connective

were able to explain to the vendor that we could settle, and they had renewed confidence about our ability to deliver a result within the fortnight.

We settled this purchase and the two refinances within two weeks – a great result!

THE TAKEAWAY

When we handle purchases, typically we’re organised with a pre-approval, and then every so often a deal like this comes along that is a welcome challenge.

I felt this loan really challenged us as a team to be great problem-solvers, as there were so many variables to the purchase, including: •

• • the purchase further, the loan was in mortgage insurance territory.

THE SCENARIO

We were referred to a client by a trusted conveyancer who was getting nervous about an upcoming settlement, which happened to be an off-the-plan purchase.

The purchaser was a young and ambitious female investor, and this particular investment was her third investment property to date, located in Gregory Hills in Sydney. Her other two properties were in Sydney’s Lane Cove and Ellenbrook in Perth.

This client had actually been working with a different mortgage broker for her purchase, but he had strangely stopped responding to her calls and emails.

As a result of the lack of communication, she had been issued with a notice to complete on her purchase but didn’t have the necessary support.

Luckily, the conveyancer referred her to us to see if we could come up with options for her purchase in order to prevent her from losing her deposit.

This young investor was determined to build her property portfolio, and we wanted to do everything we could to help her out.

The client was working in a few different roles, which meant she had multiple income sources – with PAYG, sole trader and casual income. We needed to prove all her income to get this loan to service and find a lender who would move quickly.

We started ordering valuations with a few lenders we had shortlisted and soon became aware that the property was close to power lines.

This posed a big risk, as most lenders want to have a minimum of 50 metres distance from power lines. To complicate 22

THE SOLUTION

Given that the settlement time frame was short and we were tight on lender options, we started ordering valuations knowing the power line issue may have been a deal-breaker. With some luck on our side, the valuation came back at 51 metres – just enough to be acceptable!

The next challenge we needed to overcome was a serviceability issue, given the client’s various income types that would be acceptable.

• •

•

Serviceability challenges such as shading of rental income and investment property expenses Valuation concerns related to the power lines Mortgage insurance and whether we could avoid this Acceptability of income sources, such as casual and sole trader Timings for settlement, being issued with a notice to complete, and two external refinances Living expenses and making sure we were thorough with investment property commitments, ongoing rent and personal expenses

We felt that by putting our heads together as a team and working through lender policy we delivered an exceptional outcome for our client and referral partner.

We were also very appreciative of the

By putting our heads together as a team and working through lender policy, we delivered an exceptional outcome for our client and referral partner

Aaron ChristieDavid Managing director and finance broker at Atelier Wealth

We then calculated her borrowing capacity based on refinancing her two existing investment property loans as new lending, and drawing available equity out to bring this purchase’s LVR to under 80%.

We approached CommBank and explained the urgency around the settlement. We were then able to complete desktop valuations on her two investment properties, which were favourable.

CommBank’s policy for the client’s casual and sole trader income ensured the loan was serviceable, and the fact that she was an existing customer also helped with visibility over her transaction accounts.

With a clear solution presented, we

support we received from our BDM and state manager at CommBank, and our support team at Connective, in doing everything possible to escalate these files and give priority where they could, based on the settlement date.

This was a true team effort, with everyone laser-focused on ensuring our client was updated throughout the day to reduce stress levels – not overpromising but still seeking to overdeliver.

The thank-you gift to us was a nice gesture from our client, who has since gone on to refer a number of her friends and family (who we’re fortunate aren’t in such tough situations!). AB

www.brokernews.com.au

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THE CHOICE IS YOURS WITH

MAGAZINE The only independent magazine dedicated to mortgage industry news, opinion and analysis

WEBSITE Breaking news, in-depth profiles, features, online forum and Australian Broker TV

ENEWSLETTER Daily news service delivered straight to your inbox every morning

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PEOPLE

Get involved in the discussion Share your thoughts at

brokernews.com.au

FROM THE FORUM

Top comments from trending stories on brokernews.com.au

THE WAR WITH CHOICE WAGES ON The FBAA’s managing director, Peter White, has once again called out consumer group CHOICE, saying the group’s ongoing campaign against mortgage brokers has failed to harm the industry and is instead hurting its own reputation.

This followed on from CHOICE targeting Aussie Home Loans, claiming it was a “prime offender” exemplifying the widespread issue of mortgage broking businesses misleading home loan customers by claiming they could find the best deal. CHOICE CEO Alan Kirkland said Aussie was a “well-disguised sales outpost for the Commonwealth Bank” and “makes claims of finding Australians the ‘perfect loan’ or the ‘best loan’, yet ASIC research found it sent two in five loans straight back to CBA”. But to White, the criticism holds no clout. “These people have no experience or expertise in mortgage broking,” he said.

Ever since their failed Big Switch campaign about five years ago, CHOICE has had it in for our industry. Their arguments and complaints about the broking industry are weak and hollow, yet they continue. I think they are just trying to stay relevant. However, spreading misinformation is just costing them their credibility. Denis Mulcahy Wasn’t the then CHOICE boss found to be involved in the broking firm that refinanced all the Big Switch loans? He then disappeared with his commission share. How can this group be taken seriously? Harrie Swanson CHOICE fails to provide an alternative... A customer can always walk from bank to bank, amassing credit enquiries along the way until they are no longer eligible for lending.

Borrowers rarely understand policies, and certainly CHOICE has no business advising borrowers on policy. If they did they would understand that it is not always about costs; it is not always about the product; and certainly, it’s not about a particular lender. It is about using policy knowledge and negotiation skills to find the borrower the best outcome we can get for them. How is a borrower different from a consumer (CHOICE’s real audience)? With consumer products, a consumer can basically do what CHOICE does, themselves, on their phone. Borrowers can’t. Brendan Jordan CHOICE is so knowledgeable in regard to the mortgage broking industry that their venture into this space is going gangbusters! That’s right – that didn’t work out for them, so now, because they are failures in this space, they want to discredit the whole broking industry. CHOICE CEO Alan Kirkland should follow the lead of former Westpac CEO Brian Hartzer and fall on his sword. I no longer believe in any research or product testing undertaken by CHOICE as they couldn’t be objective about the pros and cons. Cazzie 24

BUSTING MYTHS ABOUT FHLDS SCHEME So far, there have been three predominant concerns voiced by brokers regarding the First Home Loan Deposit Scheme (FHLDS): the long-term affordability of servicing the loan, the seemingly low price caps for properties, and the 10,000 participant limit. But, according to Anita Marshall, managing director of Advanced Finance Solutions – a broker with a client already approved through the initiative – it is crucial that those with lingering concern or criticism regarding the FHLDS should remember who the incentive is aimed at.

She said, “It takes time to read and understand what you’re doing, but once you have your head around it, it’s actually a really great scheme.”

Well said, Anita. Your experience shows, being in the industry for many years. Dot Hissey I think the major concern has been that FHBs will end up paying more for the property in the long run, with higher interest charges and loan repayments associated with a 95% loan versus an 80% loan... Andrew Have [you] done the sums to compare the costs between taking the grant and, say, taking a loan with NAB, who have a discounted LMI at the moment? Dave There’s a big price differential here on the border – in Albury (NSW) it is $450,000, and over the river in Wodonga (Victoria) it is $375,000! Why, might you ask? Paul Kavanagh Rubbish. CBA has exhausted its initial grant allocation on 8 Jan. TMAC NAB also do not have the systems in place to offer brokers the opportunity to place their clients with NAB under the scheme.

Terry Feduniw

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ondeck ontop Thanks to you.

You’ve come onboard.

Now we’re on top.

We’re proud to be recognised as Fintech Lender of the Year.

Thank you to the brokers who’ve embraced us and the small businesses that inspire us to stay on the front foot.

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3/02/2020 2:27:42 PM

DATA

TASMANIA

NT SPOTLIGHT

Hobart sees positive growth, but prices are still lagging behind other capitals While it began 2019 as the top capital city market in Australia, Hobart ended the year in fifth place.

CoreLogic’s Home Value Index for October 2019 indicated that in the previous three months Hobart fell below Sydney, Melbourne, Canberra and Brisbane in terms of growth, as dwelling values increased by only 1%. However, this figure reflected the strongest quarterly growth since March 2019, and rental vacancies remained tight, though price growth fell behind other capitals.

“Vacancy rates in Hobart and Adelaide remain low, but unemployment is over 6.0% and not showing signs of improvement. While rents are likely to continue increasing, the weak jobs markets may dampen price growth in these cities,” explains OpenCorp director Matthew Lewison.

This viewpoint ties into concerns previously aired that, despite Hobart’s domination of the market in early 2019, its success was not sustainable in the long run.

Area

Type Median value

Quarterly

12-month

growth

growth

Hobart

H

$471,750

2.0%

7.7%

TAS Country

H

$316,000

1.6%

6.3%

Hobart

U

$370,000

2.3%

7.7%

TAS Country

U

$255,000

-0.2%

0.4%

NEW SOUTH WALES

Premium properties bounce back, but Sydney falls to number two nationwide Over the three months to October 2019, Sydney relinquished the distinction of top-performing property market to Melbourne. Nevertheless, it remains a force to be reckoned with, as dwelling prices increased by 5% in this period.

The CoreLogic Home Value Index for October 2019 reports that the best growth conditions within capital cities are still centred around Sydney and Melbourne, which continue to benefit from a thriving job market, population growth, low mortgage rates and better credit availability. In particular, the top quartile of these two markets showed the most rapid increase in capital city dwelling values, with Sydney recording a 5.9% boost. In the middle and lower quartiles, values were up by 4.6% and 3.2%, respectively.

Regional NSW has also been performing remarkably well, with dwelling values rising by 3% in Illawarra over the October 2019 quarter.

Area

Type Median value

Quarterly

12-month

growth

growth

DARWIN STILL IN A SLUMP Despite an improvement in the decline trend, the Top End continues to trail behind the other capital city markets though it escaped being ranked as the weakest-performing capital in the country by CoreLogic’s Home Value Index for October 2019, Darwin remains in a slump despite improving decline rates.

Over the month of October, Darwin increase of 0.3% in property prices was a pleasant surprise. Its low median value has also meant a strong influx of first home buyers who are seeking to capitalise on the affordability of the market while not being limited by negative equity.

However, those looking to achieve capital growth in their investments may have a while to wait before they see the benefits, as after a couple of “reasonably strong” quarters, the volume of house sales in Darwin was back in the red during the three months to September 2019.

“While this is very good news for potential buyers and investors, it is quite a blow to EVEN

POPULATION AND ECONOMY

<250,000

<160,000

Population of NT as at June 2019

Population of Darwin as at June 2019

703 people/sqm

>$1.2bn

Low density means Darwin is the least populated city in Australia

Value of tourism’s contribution to NT economy

SUBURB TO WATCH: STUART PARK

Sydney

H

$885,000

-1.1%

-7.0%

Median price (houses)

NSW Country

H

$472,500

0.8%

-0.2%

$689,900

Sydney

U

$691,000

-0.7%

-4.1%

NSW Country

U

$410,000

0.0%

1.2%

26

those seeking to sell or build capital value in their properties,” says Quentin Kilian, CEO of the Real Estate Institute of the NT in the NT Real Estate Local Market Report for September 2019.

Inner Darwin managed to maintain a positive performance, with sales volumes on the uptick, along with the median price, which increased by 18.5% in that quarter. Alice Springs saw sales volumes plummet by 7.9%, but the median value increased by 2.9%.

While houses were largely down, however, that wasn’t the case across the property market as a whole. Throughout most of the Greater Darwin region, unit and townhouse sales were up by more than 30% compared to the previous year.

Although sales volumes grew, median prices fell substantially. The median value of the market was 16.6% lower compared to September 2018. AB

Median price (units) $345,219

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

-2.5%

-15.1%

-17.9%

5.4%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

-3.4%

-23.4%

-32.3%

6.3%

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QUEENSLAND

Brisbane sees a rise in prices alongside improvements in the larger cities As with smaller capital cities like Hobart and Adelaide, Brisbane saw the performance of its property market improve on the back of the ongoing uptick in Sydney and Melbourne.

According to CoreLogic’s Home Value Index for October 2019, the property price increase of 1.1% in Brisbane over the three months to October was the city’s most positive since December 2015. With improvements happening in the local economy, tenants are also coming back in, and rental rates in Brisbane increased by 0.3% in the same period – the only capital city other than Adelaide to record a boost.

Knight Frank’s Australian Residential Development Review report for the second half of 2019 noted that the Brisbane local government areas had an average vacancy rate of 2.8% overall as of June 2019.

Area

Type Median value

Quarterly

12-month

growth

growth

Brisbane

H

$535,000

0.0%

0.9%

QLD Country

H

$440,000

0.0%

-1.6%

Brisbane

U

$390,000

0.3%

-0.5%

QLD Country

U

$369,000

0.0%

-1.3%

SOUTH AUSTRALIA

Adelaide market continues to rise as affordability leads to positivity all round

HIGHEST-YIELD SUBURBS IN NORTHERN TERRITORY Weekly median

Type

Median price

Quarterly growth

12-month growth

PARAP

U

$230,000

-16%

-32%

$450

10%

TENNANT CREEK

H

$221,000

5%

47%

$395

9%

GILLEN

U

$253,000

-16%

-16%

$380

8%

DARWIN

U

$309,000

-9%

-23%

$450

8%

BAYVIEW

U

$357,000

-4%

-20%

$500

7%

KATHERINE

H

$300,000

-2%

8%

$420

7%

BAKEWELL

U

$235,000

0%

4%

$328

7%

KATHERINE EAST

H

$332,500

5%

11%

$450

7%

THE GAP

H

$349,000

-1%

-4%

$470

7%

Adelaide

H

EAST SIDE

U

$300,000

-6%

-20%

$390

7%

SA Country

BRAITLING

H

$430,250

-1%

-2%

$550

7%

LARAPINTA

H

$393,000

1%

-5%

$500

7%

advertised rent ($)

Gross rental yield

Despite a drop in sales volumes over the September quarter, Adelaide continued to be a market on the rise towards the end of 2019, with affordability shining more light on this capital.

According to the CoreLogic Home Value Index for October 2019, Adelaide reported its strongest rolling quarter since December 2018 and was one of only two capitals to see a growth in rents in that period. Knight Frank’s Australian Residential Development Review report for September 2019 also noted that, as 2018 closed, Greater Adelaide had the most affordable lot price among the capital cities, at $176,000. Moreover, during FY19, sales activity dropped in the majority of states and territories – with the exception of SA, whose sales volumes were fourfold at $77.6m.

Suburb

Quarterly

12-month

growth

growth

$465,000

1.1%

2.9%

H

$275,000

1.9%

5.8%

Adelaide

U

$335,000

0.0%

1.5%

SA Country

U

$226,500

9.7%

10.3%

Area

Type Median value

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3/02/2020 2:29:07 PM

DATA

VICTORIA

New confidence as Melbourne unseats Sydney as best-performing capital city Sydney may have been the first of the two markets to get back on top, but Melbourne closed 2019 as the best-performing capital city. According to the CoreLogic Home Value Index for October 2019, Melbourne recorded its greatest month-on-month gain since November 2009, with property prices soaring by 2.3% between September and October.

“The housing market rebound is gathering pace, both geographically and across the broad valuation cohorts, off the back of lower mortgage rates and improved access to credit, as well as an improvement in affordability relative to the market peak several years ago and consistently high demand via population growth,” says Tim Lawless, head of research at CoreLogic.

He suggests demand for housing is responding to stimulus measures, including mortgage rates being at their lowest level since the 1950s and improved mortgage serviceability tests following APRA adjusting minimum interest rate serviceability rules.

Quarterly

12-month

growth

growth

Melbourne

H

$700,000

-0.7%

-4.8%

VIC Country

H

$370,000

1.8%

4.5%

Melbourne

U

$555,000

2.1%

1.5%

VIC Country

U

$290,000

3.7%

3.7%

AUSTRALIAN CAPITAL TERRITORY

There were 2,750 auctions across the combined capital cities in the week ending 15 December, with volumes down by -5.6% on the previous week’s 2,912 auctions, making it the second-busiest week of 2019.

Preliminary results show a clearance rate of 69.2%, a small drop following the previous week’s rate of 71.1%.

Melbourne saw 1,394 homes taken to auction, returning a preliminary clearance rate of 73.2%. Over the same week last year, a much lower clearance rate of 44.2% was recorded across 1,173 auctions. There were also 846 homes taken to auction across Sydney, down on the week prior when 976 auctions were held, with a preliminary clearance rate of 73.6%. One year ago, 723 auctions were held across Sydney, returning a final clearance rate of only 38.8%.

The smaller capital cities returned varied results, with Adelaide reporting the highest preliminary clearance rate of 60.6%, while only 34.4% of Perth homes sold at auction.

Auction activity isn’t expected to pick up in earnest until early to mid-February.

Quarterly

12-month

growth

growth

Canberra

H

$650,000

-0.5%

2.0%

Canberra

U

$420,000

-1.2%

-0.5%

141

Cleared

43

Uncleared

28

Clearance rate

60.6%

PERTH Total auctions

66

Cleared

11

Uncleared

21

Clearance rate

34.4%

$0

Sydney Melbourne Brisbane

Perth

Units

Darwin

$451,500

$670,000

$490,000

$543,000

Hobart

$325,000

$100,000

$378,500

$200,000

$371,000

$300,000

$439,000

$400,000

$521,000

$500,000

$367,000

$600,000

$700,000

$520,000

Canberra may not be making headlines or influencing the national property market in the way Sydney and Melbourne do, but it remains one of the better performers among the capital cities.

“Canberra’s property market is a quiet achiever, with dwelling values slowly but consistently growing,” says Metropole Property Strategists national director Kate Forbes. She expects growth to remain strong, supporting underlying demand for dwellings.

CoreLogic’s Home Value Index for October 2019 indicates that, over the previous three months, Canberra had its greatest quarterly increase since May 2017, off the back of the recovery in the national property market.

“Focusing on housing market conditions across the broad value-based cohorts highlights that the market recovery is being led by the most expensive quarter of the market,” says CoreLogic head of research Tim Lawless.

The findings of Knight Frank’s Australian Residential Development Review suggest Canberra is one of the markets helping to lead this charge.

Canberra units in high-density sites reported the highest indicative rate of $92,500 per apartment.

$635,000

$800,000

Type Median value

Total auctions

Houses

It may not be on top, but Australia’s capital is holding on for the long haul

Area

ADELAIDE

MEDIAN HOUSE AND UNIT PRICES

$595,000

Type Median value

WEEK ENDING 15 DECEMBER 2019

$760,000

Area

CAPITAL CITY AUCTION CLEARANCE RATES

Canberra

Note: Data not available for Adelaide

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

0.2%

1.0%

0.6%

6.8%

Melbourne

0.2%

1.0%

0.7%

7.1%

Brisbane

0.0%

0.4%

0.2%

0.9%

Adelaide

0.0%

0.3%

0.2%

0.3%

Perth

0.1%

-0.4%

0.0%

-6.1%

Combined 5 capitals

0.2%

0.7%

0.5%

4.4%

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

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BRISBANE CANBERRA Total auctions

118

Cleared

53

Uncleared

39

Clearance rate

Total auctions

180

Cleared

38

Uncleared

45

Clearance rate

45.8%

57.6%

SYDNEY Total auctions

846

Cleared

466

Uncleared

167

Clearance rate

TASMANIA

MELBOURNE Total auctions

73.6%

1,394

Total auctions

5

Cleared

804

Cleared

0

Uncleared

294

Uncleared

0

Clearance rate

Clearance rate

73.2%

WESTERN AUSTRALIA

Area

Perth is still a weak performer despite better market conditions For yet another quarter, Perth maintained its place as the lowest capital city on the totem pole. It was the only capital to record negative growth, alongside Darwin, in the three months to October 2019.

The continuous downhill progression of prices has meant that housing has become more and more accessible for buyers â&#x20AC;&#x201C; especially first home buyers.

As of October, Perth had the lowest median house value of all the capital cities.

Knight Frankâ&#x20AC;&#x2122;s Australian Residential Development Review for the second half of 2019 indicated that while the average value of a unit in a high-density site (excluding CBDs across cities) in Australia was $84,300, in Greater Perth it was just $50,200. The value of a standard new apartment was $8,200 per square metre as of June 2019, while in the inner suburbs of Perth, buyers can get units for as low as $6,000/sqm.

N/A

Type

Median value

Quarterly growth

12-month growth

Perth

H

$470,000

-1.0%

-3.0%

WA Country

H

$315,000

-1.5%

-1.5%

Perth

U

$370,000

-0.9%

-6.4%

WA Country

U

$195,000

-4.5%

-5.0%

All data sourced from CoreLogic.com.au

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PEOPLE

IN THE HOT SEAT

Up Loans co-founder and mortgage broker Kirsty Dunphey reveals her biggest inspirations. From her segue into broking from property management to co-founding a firm, she says it’s all about helping others, having a good mentor, and representation

Who or what inspired you to become a broker?

My biggest inspiration has been wanting to help people. I grew up in a A household with pretty unstable financial circumstances, and I wanted to help others ensure that didn’t happen to them. Naively, I thought my real estate background would actually give me a bigger head start than it ended up doing. What a learning curve that turned out to be.

Q

What’s one of your recent career highlights?

Making the MPA Top 100 list for the first time in 2019 was a A definite highlight for me. I also felt very proud to finally see a Tassie broker represented on the list. It’s important for new brokers in the Tassie market to see a Tassie name on the list, and especially important for other female brokers to see women being represented. I’d love to see that number increase, not drop, in 2020.

Q

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

I wish I’d worked for a year or two at the feet of someone A amazing doing great volumes in a really responsible and efficient way. While I consider myself very fortunate to have been mentored formally and informally by some wonderful brokers, it was stretched over a number of years rather than at the very beginning.

Q

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

I’ve found the time it takes to process an application from beginning A to end has probably tripled in the last couple of years. A broker writing larger loan numbers like myself cannot do that alone. My greatest challenge has been efficiency, and I’ve manoeuvred that by surrounding myself with a great team.

Q

What’s one thing, personal or professional, that you hope to achieve this year?

In 2020, I’m looking forward to writing loans for some 50 clients in a A single month – that’ll be a new record for me. I also really want to get back to Africa – I was blown away by Kenya and Rwanda last year, and I’m keen to return to this amazing continent. AB

Q

30

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