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MAY 2021 ISSUE 18.09
5-star non-banks recognised Australian Broker unveils its 5-Star Award winners in the category of non-banks /17
Home dream becomes reality Broker Nathaniel Truong helps 57-year-old woman get a loan for her first home /24
SMSF specialist in the hot seat Profiling Hilal Aydemir, experienced broker and director of Blu Belle Finance /30
ALSO IN THIS ISSUE…
CHRIS THOMAS NAB’s nationwide business banking network has the expertise and muscle to help brokers satisfy the growing demand for SME finance /14
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Aggregators Mortgage Choice adds Bank of Queensland to its panel of lenders /06 Technology OnDeck introduces innovative creditscoring mechanism for SME loans /08 Market Vendor’s agent at Melbourne’s Entourage helps property sellers /10
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NEWS
IN THIS SECTION
Lenders Pepper Money’s IP0 of new shares to raise $500m /04
Aggregators BOQ the latest lender to join Mortgage Choice’s panel /06
Market Melbourne’s Entourage eases process of selling property /10
Industry bodies MFAA goes in to bat for brokers on lender turnaround times /12
Technology KOALA technology a game changer for OnDeck /08
www.brokernews.com.au MAY 2021 EDITORIAL
SALES & MARKETING
Editor Antony Field
Publisher/Sales Manager Simon Kerslake
News Editor Mike Wood
Global Head of Media Marketing Lisa Narroway
Production Editor Roslyn Meredith
GLOBAL WATCH
ART & PRODUCTION
What’s happening in the mortgage, broking and banking world in the United States and Canada? Here’s your snapshot of the news that matters most in North America
FEDERAL RESERVE KEEPS U.S. FIXED MORTGAGE RATES BELOW 3% mortgage rates in the US inched up in the last week of April but remained below 3% as a result of the Fed’s decision to keep interest rates low. The rate on a 30-year mortgage loan averaged 2.98%, up one basis point from the previous week, Freddie Mac’s Primary Mortgage Market Survey showed. The 30-year fixed-rate mortgage is down 20 basis points since hitting its highest level in June 2020. The 15-year fixed-rate loan rose from 2.29% to 2.31% week-over-week. The five-year Treasury-indexed hybrid adjustable-rate mortgage dropped from an average of 2.83% to 2.64%. “The good news is that with rates under 3%, refinancing continues to be attractive for many borrowers who financed before 2020,” said Freddie Mac chief economist Sam Khater. FIXED
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RISING VALUATIONS SHOW STRENGTH OF ONTARIO HOUSING MARKET the year since the pandemic took hold, Ontario’s real estate valuations rose by 29.9% on average, according to a new study by HelloSafe. In the 12 months to March 2021, the highest rate of increase in the Canadian province was 47.7%, in the Windsor Essex area. “Despite an unprecedented economic crisis due to the COVID-19 pandemic, Ontario’s housing market is not slowing down,” HelloSafe said in its study. “Ontario’s real estate prices increased faster between March 2020 and March 2021 than in British Colombia (29.9% versus 20.2%) – which proves Ontario’s housing market dynamism despite the gloomy circumstances of the COVID-19.” HelloSafe pointed to record-low interest rates and pent-up demand as the main drivers of the trend. Ontario’s average real estate transaction price ($890,035) is $174,000 above the national level. IN
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BIDEN TO ABOLISH CGT BREAK ON SOME REAL ESTATE INVESTMENTS part of his US$1.8trn spending package for new social programs, President Joe AS Biden is pushing to close a tax loophole that has allowed real estate investors to defer paying capital gains tax on property sales. The Biden Administration said the proposed economic plan would eliminate a tax break achieved through a property swap known as a 1031 exchange, when it comes real estate profits of more than US$500,000. The tax treatment enables property investors to reinvest the proceeds of sales into future purchases without paying capital gains taxes on profits. The tax cut also applies to residential sales. Home sellers can defer capital gains by rolling the sales proceeds into a home other than their primary residence. The proposal would continue to allow 1031 exchanges of less than US$500,000.
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Call your Liberty BDM today
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Finding the right loan isn’t always black and white – but with Liberty’s colourful lending solutions, there are even more ways to help customers get financial. With flexible options across home, car, business, commercial and SMSF lending, Liberty can help you add more colour to your business today. Approved applicants only. Lending criteria apply. Fees and charges are payable. Liberty Financial Pty Ltd ACN 077 248 983 Australian Credit Licence 286596.
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NEWS
LENDERS HOUSING MOULA JOINS BOOM PANEL BOOSTS AT WESTPAC AGGREGATOR PROFIT FAST RESULTS has rebounded from a slump in 2020, posting strong results for the first half of 2021. Shares jumped by 4% on the back of the results announced on 3 May. Westpac recorded a higher profit than expected, with cash earnings of $3.537bn, up 256%, and statutory net profits of $3.443bn, up 189%. Digital transformation, a streamlined head office and the housing boom have all helped, with over $2.6bn added to the mortgage book since the start of 2021. WESTPAC
FIRSTMAC RMBS ISSUE LARGEST BY NON-BANK has announced the largest ever issue of residential mortgage-backed securities completed by an Australian non-bank lender. The Queensland-based bank broke its own 2017 record by chalking up a $2.0bn issue, surpassing the previous high of $1.7bn. Firstmac paid just 73 points above the bank bill rate for the funds, the least since before the GFC. “We’re riding some good volumes now: in April, we settled $500m for the first time,” said CEO James Austin.
Mario Rehayem, CEO, Pepper Money
FIRSTMAC
“We’re extremely humbled with the quality of the investors that have come on board and our ability to showcase what we’ve built over the years” Mario Rehayem CEO, Pepper Money
PEPPER MONEY’S IPO AIMING TO RAISE HALF A BILLION DOLLARS Non-bank lender Pepper Money is set to list on the ASX before the end of the month, with the float expected to raise $500.1m is to float on the stock market on 25 May and is expecting to raise $500.1m with its initial public offering of shares, the biggest to date in 2021. The non-bank lender’s IPO exceeded expectations with a target of $500.1m at $2.89 per share, resulting in a market capitalisation of $1.3bn. “I’m definitely happy on behalf of the wider Pepper team,” said Pepper Money CEO Mario Rehayem. “We’re extremely humbled with the quality of the investors that have come on board and our ability to showcase what PEPPER MONEY
we’ve built over the years.” It marks the beginning of a new era at Pepper, which recently celebrated its 21st birthday. “For us, it’s just another milestone and a part of our new chapter coming into a publicly listed environment,” said Rehayem. “It’s about continuing our ability to help people succeed, continuing to roll out new innovative products onto our extensive distribution platforms through mortgage brokers and introducers and really organically growing this business the way that we have in the past. “The non-bank sector is maturing as a business and as a
sector, and we’re really in a position to be able to grow.” Rehayem paid tribute to the broker community that has delivered billions of dollars’ worth of business to Pepper over the last two decades. “We owe a lot of our growth and success not only to our staff but also to our brokers and introducers. They have been an exceptional business partner and have allowed us to continue to innovate, continue to grow and have represented our brand in a way that we are extremely proud of.” Pepper Money chairman Michael Culhane said he and the board were delighted that investors have the opportunity to become fellow shareholders in Pepper. “Since writing its first loan in 2001, Pepper Money has originated over $32.3bn of loans in Australia and New Zealand,” Culhane said.
Greg O’Neill President and CEO, La Trobe Financial
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NEWS
A G G R E G AT O R S FINSURE PROTECTS BROKERS FROM FRAUD has unveiled new support measures to protect its expanding network of brokers from fraud. Brokers will be given the option to have their loans processed through an in-house broker support service that includes a fraud prevention specialist. The specialists will assess and verify the authenticity of applicants’ details, documents and other supporting material. Finsure Group general manager Simon Bednar said the process was designed to help prevent the risks brokers face in receiving applications from referrers and consumers. FINSURE
BOOMING HOUSE PRICES MEAN LOWER LVRS house prices have contributed to a fall in LVRs, according to AFG’s April quarterly mortgage index. The aggregator’s report reveals the national average LVR is down from 73.3% to 71.9%. The national average mortgage size has increased by 5.9% to $574,948, but rising house prices are outpacing loan sizes and maintaining safety buffers. “Highly competitive fixed rates have seen borrowers locking in their mortgages, with the percentage rising from 29.3% to 34% for the quarter,” said AFG CEO David Bailey. RISING
Emma Dupont-Brown, general manager of product and corporate communications, Mortgage Choice
BOQ JOINS MORTGAGE CHOICE’S GROWING PANEL OF LENDERS Mortgage Choice is expanding its extensive panel of lenders, with the Bank of Queensland the latest financial institution to join the leading aggregator franchise network and aggregator Mortgage Choice has announced a major addition to its lender panel, with Bank of Queensland set to come on board. “The BOQ partnership sees our lender panel grow to more than 30 lenders, which includes the major banks, customerowned institutions and digital offerings,” said Emma DupontBrown, general manager of product and corporate communications at Mortgage Choice. “It is encouraging to see an increasing number of lenders expand their presence and drive BROKER
“For nearly 30 years, Mortgage Choice brokers have been empowering their customers by giving them access to a wide range of lenders” Emma Dupont-Brown General manager of product and corporate communications, Mortgage Choice
Commercial Loans
investment into the broker channel. “We take a considered approach to new partnerships, ensuring that our range of solutions is competitive for customers whilst also delivering a valuable service proposition to our brokers. Brokers are actively looking for more options to meet their customers’ diverse needs, and at Mortgage Choice we believe it is crucial to equip our brokers with quality options. “For nearly 30 years, Mortgage Choice brokers have been empowering their customers by giving them access to a wide range of lenders. This is the fourth new partner Mortgage Choice has
added to its residential panel since August 2020.” In addition to BOQ, HomeStart Finance and 86 400 have also joined the Mortgage Choice panel recently. “As one of Australia’s leading regional banks, BOQ is a welcome addition to our growing lender panel. They’ve invested in their broker service proposition to deliver a streamlined process that both brokers and customers can benefit from. We’re looking forward to partnering with them in this exciting growth phase,” Dupont-Brown added. Kathy Cummings, BOQ general manager of broker, was excited to link up with Mortgage Choice. “We are delighted to join the Mortgage Choice lender panel,” Cummings said. “This partnership with a nationally recognised brand allows us to expand the distribution of our home loans across the country and help more Australians realise their property goals.”
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Better together. Continually improving the experience to make our partnership stronger.
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Solution-focused lending We consider the circumstances of individuals and provide alternative servicing arrangements for customers with non-standard income or liabilities.
Complimentary Home Loan Compassionate Care protection We’ll support eligible Owner Occupied home loan customers by paying their home loan repayments for around 12 months, if the customer, their spouse or dependant passes away or is medically certified with a terminal illness.*
commbroker.com.au Things you should know: *Loan and age eligibility requirements and other limitations and exclusions may apply. Applications are subject to credit approval. Terms, conditions, fees and charges apply. Commonwealth Bank of Australia ABN 48 123 123 124 Australian credit licence 234945.
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10/05/2021 3:01:30 pm
NEWS
TECHNOLOGY AUSSIE HOME LOANS OFFERS DIGITAL LENDING has partnered with fintech Tic:Toc to launch digital lending product Aussie Online. Aussie said it was the first to combine brokers, branded home loans and digital loans. “We have a track record of always choosing best-in-breed partnerships ... Tic:Toc are ahead of the market in this digital space, and by partnering with them we’ve been able to draw on their technology and insights for consumers who want to be self-directed in finding their home loan online,” said Aussie CEO James Symond. AUSSIE
MYLIFE MYFINANCE PIVOTS TO BROKER CHANNEL bank MyLife MyFinance (MLMF) will undergo a digital transformation in partnership with Temenos SaaS. MLMF, which was recently acquired by Challenger, will now be able to streamline customer onboarding and assist brokers in speeding up interactions with the bank. Genevabased Temenos specialises in digital transformation of banks. The project and sale to Challenger shows MLMF moving towards the broker channel. AUSTRALIAN
“KOALA allows OnDeck to deliver more funding to a broader range of SMEs without taking on additional risk” Cameron Poolman CEO, OnDeck Australia
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Cameron Poolman, CEO, OnDeck Australia
ONDECK’S NEW CREDIT TECHNOLOGY HELPS SMALL BUSINESSES A new-to-market technology feature known as KOALA has been introduced by small business non-bank lender OnDeck to revolutionise its approach to SME loans SME lender OnDeck has launched a new credit-scoring innovation that is set to totally reimagine the way it approves small business loans. The Key Online Australian Lending Algorithm, or KOALA, will come into effect as part of the way that OnDeck approves SME credit, and is thought to be a unique offering in commercial lending. It will use big data, predictive analytics and statistics, combined FINTECH
with data from credit reporting agencies such illion and Equifax to make intelligent loan decisions. OnDeck says this will allow SMEs to apply for credit and have outside factors, such as their personal lending history and credit score, taken into account by KOALA. The lender is confident it will create a more rounded view of SMEs than traditional models. The new system has already been trialled and resulted in an 11% rise in loan approvals without
adding to risk, a number that is expected to rise to 20% by the end of the year. “The capabilities of the KOALA Score™ give OnDeck Australia a distinct market advantage and improve our approval rate and average loan offers,” said OnDeck Australia CEO Cameron Poolman. “Also, none of our loans have security due to the confidence we have in the model. This is unlike our competitors that will ask for security at different loan sizes. “Moreover, KOALA allows OnDeck to deliver more funding to a broader range of SMEs without taking on additional risk.” These include new businesses that do not have extensive trading data to draw on, as well as sole traders and partnerships.
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SPECIALIST LOANS UPDATE
HELPING CUSTOMERS SUCCEED WITH SPECIALIST LENDING SOLUTIONS Pepper Money shares how brokers can help their customers who have experienced a life event by offering them a specialist solution Jenny’s marital breakdown had led to financial difficulties and a history of defaults within the last 24 months. She wanted to stay in the family home with the kids (aged 12 and 13), but this meant she had to buy her ex-husband’s share of their home. She had no previous mortgage or rental history; however, her father had gifted the equity for the property when it was originally purchased, so her ex agreed to sell her the property at 80% of the current value. Jenny had maintained a clean credit record during the past year and had a stable job as a manager at a bank. With her family support benefit and her work, she had sufficient income to comfortably afford her mortgage repayments. However, traditional lenders did not accept her child support and family tax benefit payments which were needed to service the loan. She approached a broker for help, and after having her requirements assessed, it became clear that a range of specialist lenders could be offered to Jenny. After the broker presented her with some options, she chose to apply for a Pepper Money home loan. MEET JENNY.
Reading between the blips After reviewing Jenny’s situation, Pepper Money was able to offer her a Pepper Money specialist loan. While she had experienced a real-life event that impacted her credit history, Jenny had turned her life around, held a steady job and maintained a clean credit record for over a year. Pepper Money was willing to accept her family support benefit as income, even though her kids were above the age of 11. Jenny also had enough money coming in to comfortably afford the loan she was after (an 80% LVR loan on the property, which was valued at $480,000). With her broker’s help and
the funds from Pepper Money, Jenny and the kids were able to stay in the family home. Real-life specialist solutions with Pepper Money In real life, a specialist home loan might be an option for your clients for a number of reasons: they may be recently self-employed, have a past bankruptcy, have nontraditional income, or be behind in bill repayments. However, these outcomes are just a part of their story – real life happening to everyday Australians who are capable of moving forward. That’s why at Pepper Money we take a real-life view of their situation. We look at a wide range of factors when assessing a home loan application, and it’s a person who does the work. To help get a better understanding, a Pepper Money credit assessor will ask questions so they can have a more detailed and informed view before they start making decisions.
Common specialist solutions we can assist with include: General purpose
• LVRs up to 95% (up to $650,000) • Minimum 5% deposit for LVR greater than 90% • Loan amounts up to $2.5m (up to 65% LVR) • Cashout up to 85% LVR for personal or business purpose • Non-genuine savings Income from various sources
• Alternative income verification available within six months of ABN registration and six months of GST registration • Child support income and government payments such as Family Tax Benefit Part A and B Missed repayments
• Overdue or overdrawn credit cards/unsecured debts
• One missed repayment on a mortgage facility Adverse credit
• Up to six months of non-mortgage arrears • Up to one month of mortgage arrears (within the last six months) • Unlimited defaults, judgments and writs >$1,000, listed >12 months (paid or unpaid) • Discharged bankruptcy (one day) Debt consolidation
• Consolidate unlimited number of debts • Pay out land tax debt and ATO debt • Pay out private or solicitor debts To find out more about Pepper Money’s specialist solutions, head to pepper.com.au/broker, or reach out to a Pepper Money BDM.
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NEWS
MARKET RISING MARKET DEMAND FOR CAR, HOME LOANS credit demand continues to decline, but the rate of decline is slowing, according to Equifax’s March quarterly consumer credit demand index. Despite credit cards and personal loan demand remaining soft, auto loans applications rose 3.7% and ‘buy now, pay later’ was up 4% compared to last year. Demand for mortgages grew by 23.5%. Equifax general manager advisory and solutions Kevin James said, “The market is showing a shift to assetbased lending, with mortgages and auto loans proving more popular than credit cards and personal loans.” CONSUMER
SMES OPTIMISTIC ABOUT FUTURE — STUDY is returning to the SME sector after the worst of the COVID-19 pandemic, according to a survey by non-bank lender ScotPac. The ScotPac SME Growth Index surveyed 1,253 small business owners about their expectations for growth in 2021; of these, 48% said they anticipated positive revenue growth this year. “I’m not surprised as we’ve seen with our own clients through 2020 and into this year that they are very keen to get back to business as usual,” said ScotPac CEO Jon Sutton. “We know small business owners are resilient, and passionate about business success.” OPTIMISM
Antoinette Sagaria, vendor’s agent, and Damien Roylance, managing director, Entourage
VENDOR’S AGENT TAKES ALL THE HASSLE OUT OF SELLING YOUR PROPERTY Melbourne company Entourage has a point of difference in the property market – a vendor’s agent who helps sellers find the best real estate agent brokers will be aware of buyers’ agents, but one Melbourne real estate agent is offering a unique service to clients: vendors’ agents. Vendor’s agents essentially do the job of buyers’ agents in reverse: helping clients to list, prepare and ultimately sell their homes for a flat fee. Property and finance company Entourage, based in Cremorne, Victoria, has experienced a huge uptick in business as property prices have boomed. Managing director Damien Roylance explained to Australian Broker what Entourage’s vendor’s agent, Antoinette Sagaria, does for the company’s clients. MOST
“The vendor advocacy, which has been huge for the last 12 months, I would compare to a mortgage broker,” he said. “Antoinette, our advocate, gets the brief regarding what the property is and will then interview two or three agents to find the best one to run the campaign in conjunction with them. The client doesn’t really need to do too much; they don’t need to engage with the agent. “Sometimes the agents can do too much and pull tricks even when they’re selling your property, to try and commit to certain prices. But Antoinette is the middleman between the
client and the agent, and that’s a complimentary service. “She takes a cut of the agent’s commission. So that’s a great perk: you get a qualified real estate person working for you and cutting through all the nonsense that the agent can spin you as someone who is 100% on your side.” Entourage includes a mortgage broker section, so offers buying, selling and financing options. “With Entourage, the finance is the engine,” said Roylance. “There’s five brokers in here with a trail book and big existing clients. When we speak to a finance client who is looking to upgrade their homes and has that trigger to sell, we introduce them to Antoinette, which works really well to make sure that everything happens as it should. “We can help our clients out on both sides: to get the most on the sale and the least on the buy.”
“Antoinette, our vendor’s advocate, gets the brief regarding what the property is and will then interview two or three agents to find the best one” Damien Roylance Managing director, Entourage
QUARTERLY CONSUMER CREDIT DEMAND — MARCH 2021* Source: Equifax Quarterly Consumer Credit Demand Index, March 2021
14%
28.9%
14.5%
4%
3.7%
23.5%
Overall consumer credit applications down
Credit card applications down
Personal loan applications down
Buy now, pay later applications trending up
Auto loan applications increased
Mortgage applications up
*Compared to March quarter 2020
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NEWS
INDUSTRY BODIES LONGO TO REPLACE SHIPTON AS ASIC CHAIR government has appointed investment bank lawyer Joe Longo as the new chairperson of the Australian Securities and Investments Commission and Sarah Court as the new deputy chair for a five-year period starting 1 June. Longo was ASIC’s national director of enforcement, worked at Deutsche Bank for 17 years, and is currently a senior adviser at Herbert Smith Freehills. Longo will replace chair James Shipton, who was the subject of an investigation into a $118,000 ASIC payment to Shipton to receive personal tax advice. THE
COBA WANTS GREATER BANKING COMPETITION
Mike Felton, CEO, MFAA
Customer-owned Banking THE Association has come out in favour of greater transparency in capital regulations to increase competitiveness between banks. APRA is moving towards a new capital framework to make Australian banks reach the level of ‘unquestionably strong’, as per the Basel Committee capital ratios. COBA CEO Michael Lawrence said the good news for the consumer was that this would boost competition, with the internal ratings-based (IRB) big four banks needing to rise by 150 basis points and standardised banks having to lift by 50.
“We are calling on lenders to meaningfully and permanently address the differential between branch and broker turnarounds as a matter of urgency” Mike Felton CEO, MFAA
MFAA DEMANDS MAJOR LENDERS EVEN THE PLAYING FIELD FOR BROKERS The MFAA is standing up for brokers after major bank CEOs told the government it was faster to get a loan directly from them than through the broker channel times when most customers applying through brokers – 60% of all Australians seeking a home loan – are experiencing nothing of the sort,” said MFAA CEO Mike Felton. “This is not a level playing field, and the evident prioritising of customers who come through their own branch network is having a massive competitive impact … waiting more than three weeks to be approved is a nightmare for customers who are trying to bid on a home and secure finance.” Big four bank CEOs described the broker channel as taking “slightly longer” than in-branch at “an average of around 12 days” to get loans approved. “Aggregator AFG released its
largest peak body for mortgage brokers has voiced concern about comments made by big four bank CEOs regarding loan approval times. The MFAA spoke out after various bank CEOs told the federal Standing Committee on Economics that bank branches, and not mortgage brokers, were the quickest way to get a loan approved, and that loans through the branches could be approved within hours or a few days. Data from two major aggregators shows that those who apply to the big four banks for loans wait a median of 23 days for approval. “We are obviously concerned that the leaders of major lenders are promoting these turnaround AUSTRALIA’S
mortgage index to the ASX last week,” Felton said. “This showed that turnaround times have spiked to a three-year high for AFG brokers to a median across all lenders of 27.1 days for the quarter ending 31 March.” Aggregator Connective also released data showing the median unconditional approval times for loans approved by the big four via Connective brokers was 23 days, with medians ranging from 19 to 36 days. Felton said the numbers were in stark contrast to the approval times presented by the major banks. “[They] potentially represent a major disadvantage for any customer who wishes to benefit from the experience and choice offered by a broker but does not want to, or is unable to, borrow through the branch network of our four largest banks. “We are calling on lenders to meaningfully and permanently address the differential between branch and broker turnarounds as a matter of urgency.”
STEADY RISE IN LENDER TURNAROUND TIMES Source: AFG Mortgage Index, April 2021
30 Turnaround times to unconditional approval
25.2 23.9
25 Number of days
27.1
19.6
20
20.4
19.7
20.1
21.0
21.2 19.8
22.5
22.7
18.8
16.3 15
Q2 FY18
Q3 FY18
Q4 FY18
Q1 FY19
Q2 FY19
Q3 FY19
Q4 FY19
Q1 FY20
Q2 FY20
Q3 FY20
Q4 FY20
Q1 FY21
Q2 FY21
Q3 FY21
* Average number of days from submission of the loan application by the broker to formal approval by the lender
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TECHNOLOGY UPDATE
DIGITAL SOLUTION LEADS THE WAY FOR LA TROBE FINANCIAL BROKERS continues to enhance and streamline its digital offering to brokers with another market-leading initiative to improve turnaround times and deliver a faster, more seamless customer experience. In an industry first, La Trobe Financial now provides brokers with ‘self-serve’ capability to obtain commercial valuation quotes and instruct commercial property valuers directly through Valocity’s One Smart digital platform. Cory Bannister, Senior Vice President – Chief Lending Officer at La Trobe Financial, said, “Through our broker research we identified a gap in the market where brokers were finding the ordering of commercial valuations extremely labour intensive and lacking any digital process, resulting in delayed valuations. We decided to partner with a proven commercial expert to find an alternative and digital solution for the commercial industry where we could give more ownership to our brokers and improve the turnaround time on valuations.” The partnership provides La Trobe Financial and mortgage brokers with access to Valocity’s commercial valuation platform to automate its commercial lending and property valuation process. La Trobe Financial identified that a centralised commercial valuation platform would create significant workflow and process efficiencies, helping to speed up the instruction and delivery of commercial valuation reports. On the release of the One Smart digital platform, Valocity Founder and Global CEO Carmen Vicelich said, “It’s more important than ever to be agile partners who can rapidly solve our customers’ problems. We’re proud to provide La Trobe Financial with this innovative digital solution to improve business continuity, streamline operations, and deliver best-in-class customer service.” The platform went live for broker users last week, and the early take-up and feedback from
the specific property offered as security.
LA TROBE FINANCIAL
Digital dashboard – Allows for real-time case tracking, eliminating timeconsuming phone calls to follow up valuations, a significant time saver and efficiency-add for brokers. Auto-payment options – Brokers can input or request their clients to input their payment details online, eliminating the need to chase payments from clients. Reassignment of valuations – Ability to reassign to a different valuation firm.
Cory Bannister, Senior Vice President – Chief Lending Officer, La Trobe Financial
“This is game-changing for commercial brokers ... It puts them in the driver’s seat much earlier in the process” Petro Trianta, Podium Financial brokers has been extremely positive. Award-winning commercial broker Petro Trianta from Podium Financial endorsed the platform, saying, “This is game-changing for commercial brokers. Not only does it significantly reduce wait times, it puts brokers in the driver’s seat much earlier in the process and helps provide more certainty for our clients. Commercial valuations have never been so easy to order.” Chris Meaker, La Trobe Financial’s Head of Origination Channels, added, “Being a first mover in the industry with this technology, we were keen to receive broker feedback. Whilst we were extremely confident it would be well received, the proof is always in the pudding, and so
we were delighted to receive an overwhelmingly positive response from our early users. We trust you will be excited about the flexibility this offers both you and your clients, facilitating a seamless digital valuation ordering process through Valocity.” Some of the exciting features of the platform include: Self-serve valuation quoting and ordering via the Valocity online portal – Brokers are able to log on via their desktop, or access it via La Trobe Financial’s Broker Portal right in front of their client. Postcode look-up tool – Instant access to determine maximum LVR available for
Supporting documentation upload – No more lost documents causing delays; brokers can reduce valuer turnaround times by uploading the documents directly to the valuer via the portal for easy and secure sharing. Australian-based local support team on hand to assist – No offshore customer service centre; Valocity has local staff standing by for any queries or requests for assistance. Auto-quote functionality – Speeding up the quoting process and time to yes (functionality available in June 2021). Brokers can take advantage of this industry-first technology immediately by registering for access via La Trobe Financial’s Broker Portal at https://online.latrobefinancial. com.au/Login.aspx. The Broker Portal also includes a residential valuation ordering and quoting tool, live loan case tracking, product term sheets and all loan documents. Looking forward and continuing its theme of innovation, La Trobe Financial is set to launch a new quote function for brokers in the second half of the year and further upgrade the Broker Portal so that brokers can upload documents via mobile and smart devices.
www.brokernews.com.au
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FE AT URES
COVER STORY
BROKERS URGED TO NAB BEST DEAL FOR BUSINESS Confidence is returning to the economy and with it the need for small businesses to access finance. NAB boasts one of the largest business bank networks and wants to help commercial brokers service the SME market
executive for commercial broker Chris Thomas is excited by what he’s seeing across Australia. “The resilience of the Australian business community is remarkable,” he says. “Once again it’s risen to the challenge and found new ways of overcoming obstacles.” Thomas says businesses are gaining pace with gusto in their recovery from COVID. “We’re seeing good levels of growth in most industries. It’s wonderful to see. Many Australian businesses are now roaring back to life, and the level of business confidence is now above average at plus 15 based on our March NAB business survey. Business conditions also rose eight points to a record high of plus 25 index points in the March survey.” NAB
to relocate, which is having a knock-on effect of land sales, housing development and new retail businesses. “You can start to see businesses actively employing more Australians – you’ve got the unemployment rate falling to 5.6% in March, and there’s confidence we can get to the other side of the pandemic in good shape.” Increasing opportunities for commercial brokers Thomas says with growth across most industries and “so many ideas floating in the heads of SME owners”, it is the right time for commercial brokers to turn their clients’ ideas into reality. “We’re seeing significant demand for agri-equipment at our regional locations; the current instant asset write-off concessions in light of
“Relationships with our valued brokers are of paramount importance. The most powerful thing we can do is be the best partner for those brokers” Chris Thomas, executive for commercial broker, NAB Thomas says COVID-19 was an opportunity for Australia’s 2.1 million business owners to rethink their models, and many have adjusted. Retailers switched to a digital and online sales model and performed better than if they had stuck to their previous modes of operation. “You look at the agricultural sector, they’re going very well, with record crop yields, and there’s a bit of resurgence of the popularity of our provincial towns.” Thomas says this is generating interest among people who want 14
really strong profits coming from strong crop yields gives rise to buying new equipment and making those investment choices.” In the cities, NAB is seeing significant demand from supply chain customers buying industrial land, new warehouses and warehouse equipment. “It’s all coming back off the realisation that we can’t be purely reliant on global supply chains in light of the just-in-time concerns we’ve had with international supply,” says Thomas.
NAB BUSINESS BANKING: BY THE NUMBERS
4,000
NAB commercial brokers
135
650
broker-aligned business bankers
160
additional business bankers recruited so far this year
business banking centres
Australian manufacturing is also making a comeback, with demand for trade financing and equipment from Europe for food manufacturing. “There’s a shirt manufacturer that predominantly manufactures in Fiji, and they’ve just announced a line of shirts here in Australia – I don’t think we would have ever thought we would see that again.” Thomas says the construction industry is extremely busy, with record levels of infrastructure projects and building of properties for new home buyers who are being supported by the government.
that meet their customers’ needs. “We have to understand the broker, so we take a lot of time in really trying to get underneath what their business strategy is and what is important to them.” The bank provides value through its BDMs, bankers and specialists who support brokers’ advice to their clients in what Thomas describes as a “powerful partnership”. “We call it providing the ‘best of NAB’ to our brokers so they can feel comfortable that they’ve got a big business bank standing behind them.” NAB has 4,000 accredited commercial brokers supported by 650 broker-aligned bankers. “The strongest part of our value proposition remains that we have more bankers in more places across Australia,” says Thomas. “The broking community is a national one, spread everywhere from regional locations into the capital cities. We have 160 business banking centres across the country. “We like to believe that we can provide brokers with access to the whole of NAB better than any other lender in the market, and with that
Broker relationships, training and development Thomas says the hallmark of NAB is its relationship-led approach to business banking. “Relationships with our valued brokers are of paramount importance to us. It’s a great credit to our brokers that they’ve earnt the title of trusted adviser with their clients … so we see the most powerful thing we can do as a business bank is to be the best partner for those brokers when it comes to forming the right solutions
www.brokernews.com.au
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In partnership with
NAB MONTHLY BUSINESS SURVEY — MARCH 2021 Business conditions rose eight points to a record high of 25 index points Confidence sits at +15 index points despite falling three index points in March
businesses need quick funding for new contracts. “Fortunately we have the muscle in our network – we’ve got over 650 broker-aligned bankers to support quick turnaround times, but we’re always striving to invest in ways to make our responses faster.” Technology goals NAB aspires to move customer documentation from paper to digital if legislative restrictions are removed in the future. Digitising loan applications is also a goal, and the industry should move collectively towards that, says Thomas. Faster applications would allow brokers to spend more time with their clients than on paperwork. “We have a QuickBiz product for funds up to $150,000 which can be applied for digitally, but anything beyond that it’s a more traditional way of applying for that finance.”
Chris Thomas, executive for commercial broker, NAB
they’re tapping into that experience, that understanding of the local markets, and really working those partnerships to the maximum value.” NAB commercial brokers are business owners themselves, and the bank is eager to help them grow their businesses. Thomas says the partnership, when working well, serves both the broker and the bank by fostering mutual understanding of what all parties are trying to achieve. The bank also supports brokers who are looking to diversify their businesses into commercial lending. “Brokers that are curious about diversifying need to invest though. They need to invest in themselves and their businesses, either through upskilling or acquiring the talent that they need to run the commercial sides of the business. “We recommend that they reach out to their aggregator and discuss the potential for NAB
commercial accreditation.” Thomas says that as the finance community strives towards a higher level of professionalism and education, he expects accreditation standards for commercial brokers to rise. “We see the industry bodies, in particular CAFBA, playing a really big part in this evolution. The aggregators are playing a significant part as well.” NAB works alongside aggregators with their PD programs but also conducts its own regular seminars at its business banking centres to “help brokers increase their understanding of complex finance solutions”. Loan products and support Thomas says NAB’s lending proposition is one of the widest in the market. “We have products to fund commercial property, agricultural producers, service-based and
capital-intensive industries. We’ve taken a lot of pride in the fact that we can offer that wide-ranging level of lending solutions, enabling us to be innovative in the way we build our funding solutions.” Employing bankers and credit managers with their own lending authority means that decisions can be made close to the transaction, avoiding extra layers of bureaucracy. NAB can provide specialist advice to brokers and their clients, says Thomas. One example would be a business that wants to export goods and needs funds prior to shipping. “We will bring in a trade specialist to support the business banker with the broker. Having that solution brought to the customer as a team approach is a real strength of what NAB can bring to our partnership with brokers.” Turnaround times can be just as important in commercial finance as in residential, especially when
Support for struggling SMEs The bank has been part of the federal government’s loan schemes for SMEs since the beginning and has also signed up to the latest phase – the SME Recovery Loan Scheme. This provides secured business loans of up to $5m or an unsecured business loan of up to $250,000 to those businesses that were receiving JobKeeper between 4 January and 28 March or were affected by the recent floods. “NAB’s commitment to business customers extends 160 years, so we’ve been doing this a long time. We are there for the good times and the bad,” says Thomas. He says NAB is proud and privileged to participate in the government support programs and provide the necessary support for businesses to recover. “We would encourage our brokers to make enquiries with us if they’ve got customers they feel qualify for that lending. “We’re also seeing unprecedented demand for traditional lending, and that’s reflecting how quickly the economy is recovering, and that’s super exciting.” AB www.brokernews.com.au
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10/05/2021 9:17:52 am
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23/03/2020 10/05/2021 2:47:139:24 pm AM
SPECIAL REPORT
2021
NON-BANKS Australian Broker celebrates the nation’s top non-bank lenders as chosen by brokers for their credit policies, competitive rates, turnaround times and broker support systems
CONTENTS
PAGE
Feature article .............................................. 18 Methodology ................................................ 19 2021 winners list ........................................
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Profiles .......................................................... 22 Summary: Winners by category ................ 23
www.brokernews.com.au
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SPECIAL REPORT
5-STAR AWARDS: NON-BANKS
NON-BANKS WIN BROKER SUPPORT AFTER A DIFFICULT YEAR brought on by COVID-19, brokers and their non-bank counterparts showed remarkable resilience. They worked together to assist their clients in riding out the pandemic, putting in place loan deferrals and other support to ensure homeowners and businesses could recover. That high-level focus on customer support and the cooperation between non-banks and their broker partners is paying off. Non-bank lenders are increasing their market share, and more brokers are attracted to their competitive rates, flexible credit policies, fast turnaround times, innovative technology, and ability to offer alternative solutions for those clients who don’t fit the ideal of vanilla or prime loans such as self-employed business owners whose incomes can often fluctuate. Non-banks also offer a diversity of products, covering residential, commercial, asset and equipment finance and loans for self-managed superannuation funds. These points of difference from their major bank competitors will serve the non-banks well as the property market across the country grows at a
“As non-banks boost their market share, so, too, do brokers. Together we can offer service and solutions that the majors simply can’t match” John Mohnacheff, group sales manager, Liberty rapid pace, employment levels rise and confidence returns to small businesses, signifying an economy in full COVID recovery mode. Australian Broker recently launched its inaugural 5-Star Awards series, starting with the non-banks. And who knows non-banks better than brokers, who make up the majority of their customer base? More than 400 brokers across the country from Australian Broker’s extensive audience database were surveyed through in-depth telephone interviews and asked to select their top 5-Star-rated
WHAT’S MOST IMPORTANT TO BROKERS WHEN CHOOSING A NON-BANK Customer service
Processing and approval speed
Fees
Interest rates
Online banking 87%
66%
How important is this feature?
62% 76% 48%
What % of brokers thought this was most important or important
91% 70% 53% 83% 30%
What % of brokers thought this was not important
2% 28% 28% 7% 55% 0%
18
20%
40%
60%
80%
100%
non-banks. Brokers were asked to determine the features most important to them when it came to non-banks, including loan processing and approval speeds, customer service, fees and rates and online banking. The brokers were then asked to rate nonbanks across nine criteria – their ability to communicate with brokers, training and development of brokers, BDM support, products and interest rates, commissions, credit policies, technology, and turnaround times. Brokers picked seven high-profile non-bank lenders as the best in the industry from a shortlist of more than 20 non-banks.
Survey insights The non-bank 5-Star Award winners performed universally well in two areas: credit policy and BDM support. All seven winning non-banks were recognised for their excellence when judged on these criteria. The next categories in which six non-banks scored highly were broker communications and turnaround times. Four winners were recognised for their good commissions and interest rates, while three scored highly in the brand recognition category. Brokers rated two non-banks highly for their broker training and development, as well as for digital experience. The survey elicited some great broker feedback on the top non-banks. “Our BDM is very good and they have a good product selection,” said one broker about Pepper Money. Other comments about Pepper included that the non-bank was “solutions-oriented and they have good turnaround times”.
www.brokernews.com.au
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METHODOLOGY
“In my opinion, Pepper is even better than the big four. They have great service and competitive rates,” was one response. Brokers praised La Trobe Financial for having flexible credit policies, along with great BDMs and commissions. “They know their products and they are very easy to deal with.” Another said, “Great people … and they look outside the box.” Liberty’s broad product range, good credit policies and interest rates were rated highly, as well as their BDMs. “Their accessibility is great as they are easy to get hold of,” said one broker. Another said, “Their interest rates are very good for a non-bank lender.”
Review, says non-banks’ home loan lending has grown since late last year. As funding conditions have improved, issuance of RMBS by non-bank lenders has risen to high levels, and spreads have declined to the lowest levels since 2007. Credit quality at the non-bank lenders has remained sound, in both the residential and commercial lending sectors.
Non-bank winners’ views Cory Bannister, chief lending officer at La Trobe Financial, says the company is delighted and honoured to receive such positive feedback from its customers – brokers. “Brokers are the lifeblood of our lending business, so we would like to take the opportunity to
“Brokers are the lifeblood of our lending business, so we would like to thank them for their ongoing support over many decades. Together we have made a difference to many” Cory Bannister, chief lending officer, La Trobe Financial Referring to Resimac, one broker said, “They give us the tools we require, like upfront valuations, and they have a solution-based mentality.” Firstmac was praised for having “really good policies and good serviceability”.
Non-bank trends According to the Reserve Bank of Australia, nonbank residential mortgage lending has grown by 15% per annum in recent years, up until COVID-19 hit – well above growth in lending by banks. Almost all non-bank mortgage lending is funded by issuing residential mortgage-backed securities (RMBS), and non-bank issuance of these securities trebled from 2016 to 2019. While COVID-19 put a pause on growth last year, the RBA, in its April 2021 Financial Stability
thank them for their ongoing support over many decades. Together we have made a difference to many,” he says. Bannister says the major banks are pursuing a narrower and borrower-specific segment of the market: the ‘super prime’ home loan. “This focus is likely to intensify should the responsible lending guidelines be repealed as per the recent government announcements, a positive for that specific cohort; however, it leaves a large segment of the mortgage market overlooked and underserved.” Bannister says non-banks are “terrifically positioned” to cater for this underserved segment affected by the pandemic, because they can understand customers’ unique positions and provide appropriate tailored solutions to meet
‘Market-leading’ is a phrase many non-banks like to use when describing their products and services and trying to stand out in the increasingly competitive residential and commercial loans industry. Now, seven Australian companies can claim that title on the back of hard market research results from a survey of the people who matter most: mortgage and finance brokers. To select the best non-banks in 2021, Australian Broker conducted in-depth phone interviews with more than 400 brokers across Australia between January and March to gain a keen understanding of what brokers think of current market offerings and the lenders’ depth of relationship with their brokers. Brokers were quizzed on their most preferred nonbank and were then asked how the lender rated across nine attributes. Non-banks were measured on the strength of their communication with brokers, training and development of brokers, business development manager support, product range, interest rates, credit policy, turnaround times, digital experience and commissions. The 5-Star Non-Bank Awards are presented to the non-banks that achieved over 80% ratings across all criteria.
76% 76% of all non-banks received a top rating of excellent for BDM support
67% were rated excellent for broker communication
66% were rated excellent for turnaround times
www.brokernews.com.au
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SPECIAL REPORT
5-STAR AWARDS: NON-BANKS
NUMBER OF WINNERS PER CATEGORY Award-winning non-banks 7 BDM support 7 Brand recognition 3 Broker communication 6 Broker training and development 2 Credit policy 7 Commissions 4 Digital experience 2 Interest rates 4 Turnaround time 5
“Customer needs and perceptions have changed; they now view non-banks and other innovative lenders as credible alternatives for their financial needs” Daniel Carde, general manager of distribution, Resimac their objectives and requirements. “We expect to see broker share holding above 60% and retargeting the 70% milestone, and we hope to see the non-bank financial institution market share heading back to 10% and beyond.” Liberty group sales manager John Mohnacheff says it’s always reaffirming to receive recognition from business partners, and the 5-Star Non-Bank Award validates the diligent work of Liberty’s BDMs, underwriters and settlements team. “Knowing the award is based on direct feedback from brokers is something we’re incredibly proud of, and there is no greater testament to the value
20
of our work,” Mohnacheff says. “We’re incredibly grateful to all who took time out of their schedules to share their experiences, as surveys like this are important to help us learn how to best serve our business partners and clients.” When it comes to growth of the non-banks, Mohnacheff says the partnership between brokers and non-banks has always been a fruitful one, because both groups understand just how vital it is for customers to have access to flexible options. “As non-banks boost their market share, so, too, do brokers. Together we can offer service and solutions that the majors simply can’t match.”
Resimac general manager of distribution Daniel Carde says it’s an exciting time for the non-banks. “Customer needs and perceptions have changed; they now view non-banks and other innovative lenders as credible alternatives for their financial needs,” says Carde. “This has been a hard-won battle against the incumbents, with non-banks proving they’re able to be agile and adapt to changing consumer demands.” Carde says the non-bank sector can expect “growth, growth, growth” in the next 12 months. “As the Australian economy continues to make a strong recovery and consumer confidence increases, we expect to see a surge in demand for lenders who can offer compelling financial products, including competitive rates in the prime space and real solutions in the non-prime space, enabling our sector to grab a bigger piece of the pie,” he says. Bluestone chief customer officer James Angus says brokers provide the only distribution channel for the majority of non-banks, so they demonstrate their respect for the channel in several ways. “Non-banks don’t just rely on a credit score; they offer a more personalised service and take the time to understand each customer’s unique circumstances,” he says. Angus says non-banks have maintained marketleading turnaround times and competitive products and “have really got behind their brands in a way that has generated a connection for consumers and brokers”. He predicts that non-banks will continue to take a bigger market share because of their strong service proposition and because brokers now want to use non-banks. Chris Calvert is RedZed’s executive general manager of distribution, lending solutions. He says non-banks market share continues to increase in line with the sector’s growing reputation for understanding its target market, being nimble in changing conditions, taking an innovative approach and leading technology advancements, having a strong customer experience focus and providing strong competition. “We obviously predict and expect the non-bank sector to continue to flourish,” Calvert says. “All the fundamentals and foundations are strong, access to capital and pricing of it is better than ever, and technology advancements and challenger support services continue to come to the table. This, coupled with our flexibility and nimbleness, will be a catalyst to continued strong results in a post-pandemic industry.”
www.brokernews.com.au
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2021 5-STAR NON-BANKS 2021
NON-BANKS
CREDIT POLICY
Bluestone
Bluestone
Firstmac
Firstmac
La Trobe Financial
La Trobe Financial
Liberty
Liberty
Pepper Money
Pepper Money
RedZed
RedZed
Resimac
Resimac
INTEREST RATES RedZed Resimac Firstmac La Trobe Financial
BROKER TRAINING AND DEVELOPMENT Pepper Money La Trobe Financial
BDM SUPPORT Bluestone Firstmac La Trobe Financial Liberty Pepper Money RedZed Resimac
BROKER COMMUNICATION Bluestone Firstmac
COMMISSIONS La Trobe Financial RedZed
La Trobe Financial Pepper Money RedZed Resimac
Resimac Firstmac
BRAND RECOGNITION La Trobe Financial
TURNAROUND TIME Bluestone
RedZed Firstmac
Firstmac Pepper Money
DIGITAL EXPERIENCE
RedZed
Firstmac
Resimac
La Trobe Financial
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SPECIAL REPORT
5-STAR AWARDS: NON-BANKS
PEPPER MONEY
P
epper Money is thrilled to be recognised as an inaugural Australian Broker 5-Star Non-Bank Award winner. The award is based on surveys of hundreds of brokers who rated non-banks on credit policy, broker training and development, communication, commissions, interest rates, turnaround times, BDM support, digital experience and brand recognition. “It’s so gratifying to receive an award like this, particularly since the products and services we offer, and the credit policy we have today, originally came from broker feedback,” says Pepper Money general manager of mortgages and commercial lending Aaron Milburn. “Receiving this award really demonstrates that it is a team effort. We couldn’t do it without the support and trust that the broker channel has for Pepper Money. That’s why we are always open to hearing from brokers about the way we can improve our products and services.” Milburn says brokers will always remain a priority for Pepper Money – the vast majority of its customers take out a home loan on the recommendation of a mortgage broker. “So our focus will be on those things that brokers and their customers prioritise – marketleading turnaround times for customers needing
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Telephone: 1800 737 737 Email: origination@pepper.com.au Website: pepper.com.au/broker
a fast solution, a flexible offering for customers needing a purpose-led loan, and innovative technology, education and first-class support for brokers.” Brokers highlighted Pepper’s great BDMs, wide product range, flexible credit policy and good turnaround times. “It’s great to hear that we are hitting the mark for brokers with our service and products,” says Milburn. “We see our relationship as a partnership – it is not an ‘us and them’ thing. By bringing a win-win approach to market, for the broker and their customer, everyone succeeds. Despite COVID-19, Milburn says it’s no surprise that brokers have maintained strong market share. “Brokers play a vital role in helping those customers who may need alternative solutions, otherwise many customers could go without if they relied solely on the offerings from a traditional lender. “We’ll continue to educate brokers on the need for non-bank lending in a changing landscape, and on how they can help more customers and confidently adopt upcoming regulatory requirements.” Milburn says the next 12 months will bring further innovation in Pepper’s broker-focused
technologies and customer-led products and policy. “We want to make it easier for brokers and their customers by reducing the effort required to get a loan. That’s why you’ll see us introduce new products that customers need and technology that supports the journey, through our highly valued distribution networks.”
NON-BANKS’ PERFORMANCE Non-banks have grown housing lending since late last year, after curtailing it during the pandemic Issuance of residential mortgage-backed securities (RMBS) by non-bank lenders has risen to high levels and spreads have declined to the lowest levels since 2007 Credit quality at the non-bank lenders has remained sound, in lending to both households and businesses Source: Financial Stability Review, April 2021, RBA
www.brokernews.com.au
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F
FIRSTMAC LIMITED Telephone: 13 12 20 Email: accreditations@firstmac.com.au Website: firstmac.com.au
irstmac is a family-owned non-bank lender with more than 40 years of history. Headquartered in Brisbane, Firstmac has a strong family culture that sees its people empathising with brokers and collaborating with them to grow their businesses. This culture also inspires Firstmac to prioritise long-term relationships over profits. This results in remarkable staff retention, with most employees staying with the company for three to 20 years. Their experience allows Firstmac to provide consistent, top-quality service with turnaround times a fraction of its competitors. “The people at Firstmac are what make it really great,” says Jake Sanders, head of third party sales. “You are not just a number, and your voice is heard. The executives know most people by their first name and are happy to talk to anyone. Everyone is a contributor and feels a part of the overall success of the business. We have a very strong and positive culture across all areas of the business. Everyone works hard and we have fun while doing it.” When COVID-19 hit, the company switched to a work-from-home set-up while providing uninterrupted service and maintaining service levels. It also became the first lender to raise funding through an RMBS issue after the international bond markets froze due to the pandemic. The crisis also didn’t deter Firstmac from shaking up the SMSF lending market when it launched a simple low-fee product with both variable and fixed-rate options. Firstmac now plans to expand its team by hiring new BDMs and broker support staff and aims to become the employer of choice in the market. It’s also set on further improving its technology, particularly its Broker Tools app, to ensure that it remains the easiest lender in the market for brokers to deal with. Commenting on Firstmac’s win, Kim Cannon, managing director, says, “We are very proud that brokers have recognised our efforts to provide a market-leading service across all areas. It’s very good for the morale of our team to know that their work is appreciated. I would like to thank all of the brokers involved for their support.”
www.brokernews.com.au
23
PEOPLE
Have an interesting deal? Have a particularly difficult or interesting deal? Why not share it with us? Email:
antony.field@keymedia.com
BIG DEAL Nathaniel Truong is the director of The Loan Lounge brokerage in Sydney. By delving into the detail of his client’s financial position, he helped structure a home loan for a woman in her late 50s who thought the dream of homeownership could never become a reality because of her age THE FACTS
Client 57-year-old single female
Loan size Goal Location $321,048 To purchase Belmont North, over 18 years first owner-occupier NSW home and stop paying rent
The Loan Lounge had recently assisted a client with refinancing a home loan to a lower and more competitive rate. After completing this transaction, the client had a conversation with her sister about buying her first home. The sister believed the client could never own her own home due to her age. However, she suggested she speak to someone at The Loan Lounge and give it a go. The client approached us and asked whether she was eligible to obtain a loan. She was 57 and working three jobs (one full-time job and two casual jobs) as a registered nurse. Her children had all grown up and moved out of home, and she was waiting for a payment related to her leave entitlements from a full-time role she had finished up. She had been working for this employer for over 26 years. At the time, the client did not have the required three months of genuine savings to support a loan application, so we put together a strategy that would set her up to obtain a loan and purchase her first property over the following four to five months.
THE TAKEAWAYS
We believe that taking time out to care about the client and understand their position makes a broker’s job so much easier. This can be achieved through a good fact-find. We ensure that we cover any potential risk the lender may see in the transaction. I feel that in the current environment, stating what the risks are and then addressing these risks avoids rework in the future. Someone once told me that if you receive a request for rework, you have failed.
We believe that taking time out to care about the client and understand their position makes a broker’s job so much easier
THE SOLUTION
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Aggregator Finsure
from October to January to help her save up the necessary 5% deposit over a three-month period to show genuine savings. We tackled the second concern by undertaking a detailed fact-find on the
THE SCENARIO
Over the next few months, we worked with the client to address two main concerns the lender would have: her genuine savings and an exit strategy. The initial concern was easy to meet as we worked with the client
Lender Westpac
a conservative figure assuming 9.5% of superannuation contributions, which showed that she would accumulate an additional $106,000, and we did not add any investment returns.) We proposed a loan term of 18 years. The client would pay down the loan over that period and have access to superannuation funds of $286,000 and $80,000 through an inheritance at retirement age. This was a clear and coherent exit strategy. By providing clear notes around the exit strategy and meeting all the bank’s concerns, we were able to help the client purchase her first home at 57. The application went through with barely any rework.
Nathaniel Truong Director, The Loan Lounge
client’s income, expenses, assets and liabilities, with a special emphasis on her exit strategy. We asked about her health and her parents’ wellbeing – they were still alive and currently 86 years old. Her grandparents had five children who were still alive, and she expected to receive a small inheritance. We added this to the notes to the lender. We spoke to the client about her retirement plans and when she wanted to stop working and retire. Most clients say they’ll continue to work indefinitely; however, the realistic retirement age in her role was 75 years old, which meant she had 18 years left to work. We found out she had $180,000 in superannuation, which meant that she still had 18 years of superannuation contributions and earnings. We then used an online superannuation model to work out what her superannuation balance would be in 18 years, and this amount came to $286,000. (We used
That has always stuck with me. By taking this approach, we assisted the client in purchasing their own home when they thought they were too old. We turned a limiting belief into a possibility. It was a win-win deal because the client had been paying $700 in rent per week, and the new loan repayments at that time were $689.68 per week. This meant that the repayments were lower and in 18 years she would own her own home. The retirement income report released last year mentions “the importance of home ownership to the financial security and wellbeing of Australians in retirement”. I was reminded that what we do as brokers matters, as we assist Australians in owning their own homes. A home for this woman means she can be empowered in her life and have security in retirement. AB
www.brokernews.com.au
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02-13_
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DATA
i
VICTORIA
QLD SPOTLIGHT
Median house prices in metro Melbourne have crossed the million-dollar mark House values in metro Melbourne have, for the first time, surpassed a median of $1m during the quarter after growth of 8.8%, clocking the region’s highest quarterly increase since 2009, according to the Real Estate Institute of Victoria (REIV). House prices in middle Melbourne also reached their highest level at $1.15m, representing a 6.9% quarterly increase. Regional house prices hit a new record as well, increasing by 4.1% to $510,500. This was also the first time that median house prices in regional Victoria surpassed $500,000. Unit prices also increased, rising by 4.8% in metro Melbourne and 5.9% in regional Victoria. REIV president Leah Calnan said this price growth reflected unprecedented levels of buyer interest across Victoria. “House prices have been boosted by incentives for first home buyers, mortgage repayment holidays, and low interest rates,” Calnan said. “High demand across the state has also been fuelled by an increase in activity following Victoria’s lockdowns, which saw thousands of auctions cancelled.” Area
Metro (H)
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
2.0%
$800,000
rent
yield
6.3%
$430
2.9%
Metro (U)
$607,000
1.3%
5.3%
$400
3.5%
Country (H)
$460,000
5.0%
11.5%
$360
4.5%
Country (U)
$350,000
4.2%
9.5%
$300
4.8%
TASMANIA
Hobart’s rental market continues to tighten and rents are at record highs Vacancy rates in Hobart have tightened to 0.4%, falling to levels reported in 2019 when rents saw double-digit gains. The number of vacant rental properties in the city dropped by 38% during the first quarter of 2021. The tight rental conditions in the Tas capital have boosted weekly rents. Average house rents in Hobart have reached a record high, increasing by 2.1% to $480. Unit rents have also gone up by 5% to $420 – taking them back to the level first achieved one year ago. “It was only roughly five years ago Hobart was the most affordable capital city to rent, it is now the fourth most expensive to rent a house and unit,” said the latest report from Domain. However, the movement of rental rates in the city depends on location. For instance, while house rents in Sorell-Dodges Ferry have soared 12.4% higher than last year, house rents in inner Hobart declined by 2.7% and by 5.6% for units. Area
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
rent
yield
Metro (H)
$595,000
2.9%
9.7%
$460
4.4%
Metro (U)
$430,000
3.7%
7.7%
$400
5.0%
Country (H)
$390,000
3.4%
10.8%
$340
4.9%
Country (U)
$308,500
0.9%
5.6%
$280
5.1%
26
RENTAL MARKET AT ITS TIGHTEST As vacancy rates across most of Queensland’s rental markets drop to extreme lows, REIQ warns of a ‘rental crisis’ 70% of Queensland’s rental markets are reporting vacancy rates under 1%, with Brisbane’s inner city recording the tightest rate of 0.5%, according to the latest report from the Real Estate Institute of Queensland (REIQ). Over the past year, vacancies dropped to 1.1% across the Brisbane LGA and 0.9% in Greater Brisbane. “Our capital has seen rental markets across the entire metropolitan [area] tighten quarteron-quarter for the last four consecutive reporting periods, from Brisbane’s CBD out to the city’s outer rim,” said REIQ CEO Antonia Mercorella. Suburbs with the tightest vacancy rates include Anstead (0.5%), Birkdale (0.3%), Capalaba (0.2%), Ferny Hill (0.3%), Gumdale (0.4%), Manly West (0.5%), Rothwell (0.2%), Sandgate (0.5%), Shailer Park (0.4%), Thornside (0.3%) and Wakerley (0.4%). A separate report from Domain showed that Brisbane rents are at record highs, with houses ABOUT
up $15 a week over the March quarter to $440. “This is the steepest annual increase in house rents since 2008 following three strong consecutive quarters of rent gains. For the first time in five years, it is now more expensive to rent a house and unit in Brisbane than Melbourne,” the report said. However, the regional markets showed the highest rental demand. The tightest vacancy rates can be found in the Fraser Coast’s Maryborough (0.2%) and Southern Downs (0.3%). “Meanwhile, the Gold Coast has tightened a further 0.3% to reach a record low of 0.6% in the last 15 years of data records,” Mercorella said. The southern suburbs saw the lowest average vacancies at 0.4%, followed by the western region (0.5%) and the northern suburbs (0.7%). Mercorella said the tight rental conditions of are a signal for the state government to provide a solution to the “rental crisis” by supporting property investor activity.
BRISBANE HOUSING MARKET INDICATORS Source: CoreLogic, April 2021
Property stats for the week ending 25 April 2021
New listings:
4,108
Total listings:
14,890
Houses
932
$550,000
37 days
Number of sales
Median price
Median Days on Market
296
$412,000
49 days
Number of sales
Median price
Median Days on Market
Units
SUBURB TO WATCH: MORAYFIELD Median price (houses) $380,000
Median price (units) $250,000
12-month growth
3-year growth
Average annual growth
Gross rental yield
6%
9%
0.9%
5%
12-month growth
Average annual growth
Weekly advertised rent
Gross rental yield
14%
1.9%
$330
7%
www.brokernews.com.au
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10/05/2021 11:54:29 am
AUSTRALIAN CAPITAL TERRITORY
House prices in Canberra record the steepest annual increase in 17 years Canberra’s house prices increased by 9.7% to $927,577 during the first quarter of 2021, the fastest growth rate reported since Domain records began in 1993. This was also the first time that house prices crossed the $900,000 mark. On an annual basis, house prices have grown by 19.5%, the steepest annual increase in 17 years. Houses at the upper end of the market are leading, with the strongest quarterly gains recorded in North Canberra, South Canberra and Woden Valley – all have a median price above $1m. “A higher average wage, job security and low mortgage rates have spurred buyers to upsize,” the report said. Domain predicts that a similar quarterly growth rate could push the median house price across Canberra up to $1m. This is unlikely to be sustained in the following quarters. The record-low interest rate, high household savings, low stock volumes and government incentives are fuelling strong demand in the overall dwelling market, the report said. Area
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
rent
yield
Metro (H)
$777,500
2.1%
8.2%
$600
4.2%
Metro (U)
$480,000
2.2%
5.7%
$480
5.4%
SOUTH AUSTRALIA
Demand continues to overwhelm the limited supply of homes in Adelaide
HIGHEST-YIELD SUBURBS IN QUEENSLAND Suburb
House
Gross rental yield
Median price
Quarterly growth
12-month growth
Average annual growth
PIONEER
H
14%
$140,000
N.A.
-31%
-6.6%
BLACKALL
H
12%
$112,500
18%
N.A.
7.3%
POINT LOOKOUT
U
11%
$827,500
-1%
-5%
8.3%
BLACKWATER
H
11%
$137,500
4%
-7%
6.1%
CRANBROOK
U
10%
$132,500
-2%
-1%
-4%
HOLLOWAYS BEACH
U
10%
$160,000
-1%
24%
-1.2%
MANUNDA
U
10%
$132,500
-7%
-9%
-2.1%
WHITE ROCK
U
9%
$222,000
-8%
1%
-1.2%
TULLY
H
9%
$179,850
-5%
-5%
-1.2%
BEENLEIGH
U
8%
$193,750
-1%
1%
-1.1%
Strong demand for housing in Adelaide has resulted in the steepest annual growth in house prices since mid-2010. Over the quarter, median house values increased to $599,706, according to Domain. However, “Adelaide is the third most affordable city to purchase a house, behind Perth and Darwin. For the first time on record, it is now more affordable to purchase a house in Adelaide than Hobart,” said Domain senior research analyst Nicola Powell. Units in Adelaide’s south had the strongest rates of price growth. Powell said transactions for houses and units are at the highest level since 2007. The supply of homes hasn’t kept pace with buyer demand, creating a competitive environment. “Adelaide has always largely been an owneroccupier-driven market, therefore less exposed to the retreat of investors. That said, investors are starting to return, and the lower purchasing price, tight rental market and ending of the rental moratorium could draw more investment activity to South Australia,” Powell said. Area
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
Metro (H)
$520,000
2.2%
rent
yield
3.9%
$395
4.1%
Metro (U)
$380,000
2.0%
7.2%
$340
4.6%
Country (H)
$297,000
0.4%
2.1%
$280
5.1%
Country (U)
$230,000
2.4%
0.0%
$220
5.4%
www.brokernews.com.au
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DATA
WESTERN AUSTRALIA
Homebuyers and investors demonstrate strong appetite for units Western Australia’s unit market posted a 58% increase in sales during the first quarter of 2021, according to the Real Estate Institute of Western Australia (REIWA). REIWA president Damian Collins said the annual growth in unit sales had exceeded growth in house sales during the quarter, with the latter’s sales up by only 35%. “Unit sales are the highest they have been since 2013. Several factors are contributing to this. With the shortage of houses for sale, more people are considering a unit as a place to live. We have started to see investors return to the market, and many prefer to buy units,” Collins said. The median selling time for units has fallen to 32 days during the first quarter, 25 days less than it was last year. The affordability of Perth’s units was a major driver of buyer demand. The median price of units in the WA capital was $381,750, almost $120,000 less than the median house price of $499,000. Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
rent
yield
Metro (H)
$518,000
2.0%
2.5%
$390
4.1%
Metro (U)
$395,000
1.4%
-0.8%
$350
4.9%
Country (H)
$385,000
2.8%
10.6%
$365
5.2%
Country (U)
$255,000
5.0%
6.5%
$320
7.4%
NEW SOUTH WALES
ADELAIDE Total auctions
201
Cleared
118
Uncleared
19
Clearance rate
86.1%
PERTH Total auctions
22
Cleared
12
Uncleared
1
Clearance rate
92.3%
Houses
Units
Quarterly
12-month
Weekly
Gross
growth
growth
median
rental
rent
yield
$513,000
$850,000 $415,000
$590,000
$453,495
$605,000
$407,000
$515,000
$353,500
$100,000
$500,000
$200,000
$405,000
$300,000
$550,000
$500,000 $400,000
$565,000
$700,000 $600,000
$725,000
$800,000
$653,250
$900,000
Overall vacancies in Sydney rose to 4% in March, significantly higher than the 0.9% recorded in February, according to the Real Estate Institute of NSW (REINSW). “This rise brings vacancies in Sydney to their highest level since October 2020. Many REINSW members are reporting that the residential rental market has slowed again across Sydney,” said REINSW CEO Tim McKibbin. Vacancies across Sydney increased, with the middle-ring region hitting the highest level at 5.8%, followed by the inner ring’s 4.5% and the outer ring’s 2.5%. “Property managers are telling us that there are fewer properties coming onto the market and those that do are taking longer to rent. Older properties in need of upgrading are problematic, as tenants are becoming more and more discerning about where they choose to live,” McKibbin said. Outside Sydney, vacancy rates dropped in Newcastle and Wollongong, to 0.7% and 1.6% respectively. Rental conditions across the rest of regional NSW remained “extremely tight”. Median price
There were 2,876 homes taken to auction across the combined capital cities during this period – of the 2,425 results collected, 80.4% reported a successful result. In the previous week 2,087 homes went to auction, recording a preliminary auction clearance rate of 78.5%, which revised down to a final clearance rate of 77.2%. One year ago, 612 auctions were held, with just 47.5% of the 531 reported auctions returning a successful result. In Melbourne, auction activity rose significantly, with 1,277 homes taken to auction, up from 957 the previous week and 217 in the same week last year. Of the 1,128 results collected, 77.1% were successful, up from 76.1%. Sydney also had a significant increase in auction activity, with 1,121 homes taken to auction, up from 794 over the previous week and 283 last year. Sydney had an 83.5% preliminary success rate. Perth had a clearance rate of 92.3%, although volumes were low. In Canberra, 90.6% of auctions were successful, while Adelaide had an 86.1% success rate and Brisbane 64.9%.
MEDIAN HOUSE AND UNIT PRICES
Sydney’s rental market appears to be slowing as vacancies rise again
Area
WEEK ENDING 2 MAY 2021
$870,000
Area
CAPITAL CITY AUCTION CLEARANCE RATES
$0 Sydney Melbourne Brisbane
Adelaide
Perth
Hobart
Darwin
Canberra
CAPITAL CITY HOME VALUE CHANGES Capital city
Weekly change
Monthly change
Year-to-date change
12-month change
Sydney
0.7%
2.3%
9.4%
7.6%
Melbourne
0.2%
1.2%
6.4%
2.3%
Brisbane
0.3%
1.6%
6.6%
8.3%
Adelaide
0.4%
1.9%
5.3%
10.4%
Metro (H)
$1,000,000
1.6%
7.8%
$550
2.9%
Metro (U)
$722,000
0.0%
3.6%
$499
3.6%
Perth
0.1%
0.7%
5.9%
6.7%
Combined 5 capitals
0.4%
1.7%
7.6%
6.2%
Country (H)
$540,000
3.0%
7.3%
$420
4.2%
Country (U)
$460,000
2.3%
7.1%
$360
4.2%
28
*The monthly change is the change over the past 28 days
www.brokernews.com.au
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10/05/2021 11:54:46 am
BRISBANE CANBERRA Total auctions
120
Cleared
96
Uncleared
10
Clearance rate
Total auctions
133
Cleared
61
Uncleared
33
Clearance rate
64.9%
90.6%
SYDNEY Total auctions
913
Cleared
655
Uncleared
117
Clearance rate
TASMANIA
MELBOURNE Total auctions
84.8%
1,277
Total auctions
2
Cleared
870
Cleared
1
Uncleared
258
Uncleared
0
Clearance rate
Clearance rate
77.1%
n.a.
Note: A minimum sample size of 10 results is required to report a clearance rate.
NORTHERN TERRITORY
Area
Median
Quarterly
12-month
Weekly
Gross
price
growth
growth
median
rental
rent
yield
Weekly rental rates in Darwin are rising faster than sales prices The increase in weekly rents in Darwin continues to put upwards pressure on rental yields, according to Domain. Rental yields hit 5.63% for houses and 7.3% for units. House rental yields reached their highest level since 2004, while unit rental yields are at their strongest since Domain records began. “Rents are rising at a greater pace than sale prices. The sustainability of Darwin’s rental rebound is questionable, considering short-term factors could be driving the revival in rental demand,” said Domain senior research analyst Nicola Powell. Darwin’s rental market posted its steepest annual gain in rents since 2013. Weekly house rents jumped by 14.6% to $550, while weekly unit rents rose 13.2% to $430. “Tenants are forking out $70 more a week renting a house and $50 more for a unit than they were one year ago,” Powell said. “It costs the same to rent a house in Darwin and Sydney – rents have not been on par in these two cities since 2017.”
Metro (H)
$522,500
4.2%
6.4%
$470
4.9%
Metro (U)
$322,000
3.6%
0.0%
$370
6.4%
Country (H)
$415,500
0.8%
2.9%
$500
6.2%
Country (U)
$354,000
6.7%
6.7%
$380
6.2%
Source: Except where otherwise stated, all data sourced from CoreLogic, April 2021
NICK YOUNG: TRAIL BOOK SALE EXPERT Smart succession planning starts early Maximise the sale of your trail book and business as a whole 03 8508 6666 | 0417 392 132 | nyoung@trailhomes.com.au | trailhomes.com.au www.brokernews.com.au
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10/05/2021 11:55:15 am
PEOPLE
Aggregator Connective
IN THE HOT SEAT
Hilal Aydemir is the director of Sydney brokerage Blu Belle Finance. Aydemir specialises in SMSF loans and has more than 30 years’ experience in the finance industry, including BDM roles at Macquarie and Citibank You had a long career in banking. What made you decide to become a broker, and how did your previous BDM roles help your transition? My BDM roles at Macquarie and Citibank gave me extensive A experience in credit and mortgage insurance policies. This knowledge, along with my love of helping people, led me to grow my business as a single operator. My customer service ethics and credibility and being honest and open with my clients has earned their trust and helped me become a successful broker. By winning the audience in the first five minutes, you connect with a client. The skills I learnt as a BDM were easily transferable, which led me to build my business organically.
Q
What do you enjoy most about being a broker? A I love educating my clients and coaching them. Brokering is about understanding the client’s needs and wants and giving them the best solution, whilst being an extended family to them. I love meeting new people and the challenge of the next deal. Winning motivates me as I can see that I can help people. I enjoy being my own boss but also love working with my lender BDM as it makes the job more exciting and memorable.
Q
What are the most important skills needed for the role? These are simple – have a strong work ethic, customerA centred ethos, a healthy dose of business planning, and know your lender policies.
Q
The number of female brokers is growing but is still low compared to the number of men in the role. What should be done to encourage more women to become brokers? We should defi nitely encourage more women to become A brokers as women are taking more control over their fi nances. Women generally have a more nurturing personality, so others fi nd that comforting in what can be a very stressful process of applying for a mortgage. Most of my male clients start the enquiry process, then their female partner follows through with the paperwork, which tells you women juggle multiple things at once. Women are queens of multitasking, and brokering is just that. Brokering can you give you a work-life balance.
Q
30
Hilal Aydemir, director and finance specialist, Blu Belle Finance
You also offer personal, business and SMSF loans. How hard is it to diversify? My specialty is SMSF. I love this with a passion, and I thank A Macquarie Bank for offering this to our brokers. I gained extensive knowledge of the process and how credit assessors view an application. Along with an understanding of the product, it makes it super easy to offer to our clients and creates stronger relationships with referral partners. I am very fortunate to have amazing accountants who specialise in the SIS Act and are truly my go-to for advice on SMSFs. If you assist a client with their SMSF, you will become their fi nance broker for all their other fi nance needs. AB
Q
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10/05/2021 9:21:32 am
T b t 2 a O L In p P W s a
SWITCHING PAYS Refinance cashback
3000
$
Switch your client’s home loan to Westpac and they could get $3000
Max LVR 80%. Min loan $250k. Excludes Portfolio Loans, switches, owner occupier with interest only repayments and refinances of home loans within Westpac group. First refinance applications, apply by 30/06/2021. T&Cs, exclusions, fees apply.
westpac.com.au/brokers
Things you should know: Credit criteria, fees and charges apply. Terms and conditions available at Westpac. $2000 Refinance Cashback per property for new refinance applications received between 23 September 2019 to 30 June 2021 and settled by 30 September 2021. Offer current as at 23 September 2019. Only 1 cashback per property refinance will be paid regardless of the number of loans involved. One $1,000 Bonus Refinance Cashback for a new refinance application received between 18 September 2020 to 30 June 2021 and settled by 30 September 2021 with maximum LVR of 80%. Offer current as at 18 September 2020. Only 1 bonus cashback will be paid for the initial application regardless of the numbers of customers, properties or applications involved. Offers available for Owner Occupier with Principal and Interest repayments and investment loans. Offers available on the Premier Advantage Package and Flexi First Option Loans. Offers may be varied or withdrawn at any time. $250K min loan per property refinanced applies for the $2000 and $1000 bonus Refinance Cashback. Excludes Equity Access Loans, switches and refinances of home loans within the Westpac Group which include St.George, Westpac, Bank of Melbourne, BankSA and RAMS. Offer not available for Owner Occupier Interest Only loans or residential lending originated under family or company trusts. Premier Advantage Package Terms and Conditions apply. A $395 annual package fee applies and is payable from an eligible Westpac Choice transaction account. You must hold a Westpac Choice transaction account to qualify and continue to receive the benefits of the Premier Advantage Package. Read the Westpac Choice transaction account terms and conditions and consider whether the product is right for you. Refer to Westpac.com.au. The cashback will be paid into a Westpac Choice transaction account within 60 days of settlement. The transaction account must be in the same name as the home loan account and linked to the home loan at the time of settlement. This account must be kept open for 60 days after settlement. Tax consequences may arise from this promotion for investors and customers should seek independent advice on any taxation matters. © Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714. 21052/0121
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10/05/2021 9:21:40 am
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Published on May 12, 2021