Australian Broker 18.14

JULY 2021 ISSUE 18.14

JULIAN FADINI End-to-end property acquisition service Prpty360 helps brokers’ clients build their property portfolios based on well-researched, high-growth investments that deliver real results /14 ALSO IN THIS ISSUE… Lenders Resimac expands into the equipment finance market /04 Aggregators AFG celebrates record home loan lodgements in FY21 /06 Lender improves broker technology Virgin Money enhances digital broker portal, expands staff /12

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Cyberattacks threaten businesses Firms need to do more to meet security standards, argues PwC’s Peter Malan /24

In the hot seat This week, the spotlight is on Sunshine Coast broker Kylie Meredith /30

Commercial funding on the rise Non-banks urge brokers to diversify into commercial loans /18

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NEWS

IN THIS SECTION

Lenders Resimac boosts equipment finance offering to brokers /04

Aggregators AFG celebrates record loan lodgement growth /06

Market RBA looks at mechanisms to cool property market /08

www.brokernews.com.au JULY 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

Designer Cess Rodriguez Production Manager Alicia Chin

MONTREAL PROPERTY SALES FALL AS HOME PRICES SHOOT UP accelerating housing market growth even outside Canada’s urban hotspots, soaring prices have weakened sales in Montreal, according to the Quebec Professional Association of Real Estate Brokers (QPAREB). It said that more than half of all sales transactions in Montreal in June closed above the asking price. Median sale prices were $508,000 for single-family homes (up by 29% annually), $365,000 for condos (up by 20%) and $703,000 for duplexes (up by 16%). There was a total of 4,619 home sales in June, a decline of 7% on a year-over-year basis. “Residential sales in the Montreal area fell significantly … due to a historic shortage of single-family homes available for sale and a sharp increase in prices that also extended to the condominium segment,” said QPAREB director of market analysis Charles Brant.

WITH

U.S. MORTGAGE APPLICATIONS AT LOWEST SINCE START OF COVID mortgage application activity declined for the second consecutive week on 8 July, hitting its lowest level since the start of 2020. Even though mortgage rates edged down from the last week of June, mortgage apps fell 1.8% on a seasonally adjusted basis, according to the Mortgage Bankers Association (MBA). Both purchase and refinance applications also decreased. MBA’s refinance index dropped 2% week over week, while the purchase index dipped 1% from the week prior. “Treasury yields have been volatile despite mostly positive economic news, including last week’s June jobs report, which showed ongoing improvements in the labour market,” said Joel Kan, AVP of economic and industry forecasting at MBA. Kan said accelerated home price growth, fuelled by low housing supply, is pushing average loan amounts higher.

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

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PANDEMIC LEADS TO THOUSANDS OF NEW YORKERS LEAVING STATE crippling economic impact on New York – resulting in billions in lost tax revenue and the loss of 631,000 jobs – has also led to thousands of people leaving the Big Apple. US Census Bureau figures show that between July 2019 and July 2020, 126,335 people moved out, with New York state experiencing a 0.65% drop in population – more than any other state. Guaranteed Rate’s vice president of mortgage lending, Tim Martin, said there was a similar trend following the September 11 attacks.

“We still don’t know how much of it is temporary. Some people who left and moved in with family left their apartment empty back in the city with the intention of coming back. And some of them, after living up here (Connecticut) for six months, decided to buy.”

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19/07/2021 9:46:32 am

NEWS

LENDERS REDZED MOULA JOINS OFFERS PANEL BROKERS AT NEW AGGREGATOR VALUATION FAST TOOL self-employed lender RedZed has partnered with fintech Valocity to create a new proposition for the broker channel.

Brokers can now access a new online valuation tool to speed up payments through an auto-payment feature, as well as other offerings to track orders with RedZed. “We identified an opportunity to provide a more streamlined and simplified valuation process for our customers,” said RedZed EGM distribution Chris Calvert.

SPECIALIST

BROKER-ORIGINATED LOANS UP 175% AT ONDECK SME lender OnDeck has reported stunning numbers for the first half of 2021, with a 175% increase in broker-originated loans.

OnDeck also increased its average loan by 20%, from $52,000 to $62,000, with its new software, the KOALA score, speeding up approval times.

KOALA is an assessment software that allows OnDeck to approve loans in as little as two hours. It analyses bank statements and uses risk management tech to fast-track decisions.

FINTECH

“Equipment finance is an important segment, with many SMEs needing to utilise business-critical assets that [they] don’t have the cash flow to purchase” Michael Moloney General manager, Resimac Asset Finance

Michael Moloney, general manager, Resimac Asset Finance

RESIMAC EXPANDS FOOTPRINT INTO EQUIPMENT FINANCE SPACE Leading non-bank lender Resimac has bought an interest in an equipment finance firm, providing greater loan options for brokers working with small businesses lender Resimac has strengthened its proposition to SME brokers by acquiring an interest in Sonder Equipment Finance.

Resimac has bought a substantial part of the existing business, and it is expected that share will increase in the coming years, with the end goal of owning it outright.

The tie-in with Sonder improves Resimac’s offering to the commercial and asset broker channel, as brokers will now be able to route their equipment finance deals through Resimac NON-BANK

and thus streamline their options for borrowers and SME clients.

“Equipment finance is an important segment in Australia, with many SMEs needing to utilise business-critical assets that don’t have the cash flow to purchase that equipment outright,” said Resimac Asset Finance general manager Michael Moloney. “It’s these businesscritical assets that lenders like Resimac Asset Finance and Sonder want to assist with.”

Resimac Asset Finance is a key part of the wider Resimac Group offering that has gone from

strength to strength in 2021, largely buoyed by the ongoing boom in the housing market.

On the mortgage lending side of the business, Resimac announced a $1bn RMBS deal in May, fresh off the back of a $1.5bn deal struck in March.

“Resimac Asset Finance provides loans for various asset classes across both commercial and consumer sectors,” Moloney said. “With Sonder’s expertise in equipment finance within the commercial sector, this deal broadens Resimac Asset Finance’s footprint in that space.

“Additionally, Resimac Asset Finance’s existing BDM network means we provide deeper coverage to more commercial brokers across Australia, with quicker decision-making ensuring that customers can get their hands on business-critical assets faster.”

Greg O’Neill President and CEO, La Trobe Financial

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16/7/21 8:45 am 19/07/2021 9:53:42 am

NEWS

A G G R E G AT O R S 86 400 JOINS LENDER PANEL AT PLAN AUSTRALIA has been added to the lender panel at aggregator PLAN Australia. It is the 15th such partnership that 86 400 has announced, with eight of Australia’s biggest aggregators now on board the smartbank’s panel. The latest addition means 86 400 is now a lender option for 85% of brokers. “It’s a great step forward in terms of having coverage for brokers,” said 86 400 head of broker distribution George Srbinovski. “We’re very excited with the continued momentum that we’re having in the broker channel.”

86 400

ACQUISITION OF MORTGAGE CHOICE FINALISED has successfully completed its acquisition of aggregator Mortgage Choice. The combined businesses (REA Group already owned Smartline Personal Mortgage Advisors) will have a significant national broker footprint in Australia’s $400bn-plus annual home loan market, with more than 940 brokers, over 720 franchises, more than 40 lending partners and a loan book worth over $84bn. REA Group CEO Owen Wilson said he was delighted to welcome the Mortgage Choice team to REA. REA GROUP

“Upgraders remain [AFG’s] main source of lodgements at 42%; refinancers also drove activity, jumping by 4% to be 27% of the market”

David Bailey CEO, AFG

Commercial Loans

David Bailey, CEO, AFG

AFG CELEBRATES RECORD GROWTH IN LOAN LODGEMENTS IN FY21 Homeowners upgrading their properties and people refinancing their home loans are driving record growth at leading broker aggregator Australian Finance Group has ended the 2021 financial year with record results in the fourth quarter, with the broker channel delivering $22.6bn in home loan lodgements for the aggregator.

That number is 10% up on the January–March period and a full 34% up on the equivalent part of 2020.

Every area of the country experienced huge growth.

NSW led the way with almost $8bn in lodgements, while Victoria recorded $7.5bn.

It has been nothing but good times of late at AFG. The aggregator was recently included in The Motley Fool’s AFG

top five performing financial institutions on the ASX in FY21, while last month it brought top broker Ruan Burger on board to help boost education and partnerships with the broker channel.

AFG CEO David Bailey said the bulk of the business was built on those upgrading their properties based on lender offers.

“Whilst upgraders remain the main source of lodgements at 42%, refinancers fuelled by cash-back offers from some lenders also drove activity, jumping by 4% to be 27% of the market. Continuing the increasing trend observed in the third quarter, investor activity increased a further 2% to 25%,” Bailey said.

“Despite hitting highs of 23% of application flow during the year on the back of support of state and federal government assistance packages, first home buyer activity dropped back to 14% of total activity for the final quarter of the year.

“The national average mortgage size has also increased to $593,250, up from $573,767 last quarter,” he said. “Loan-to-value ratios, however, were down across the board, meaning valuations are outpacing the growth in loan sizes.

“With speculation that the market is overheated, it is reassuring customers are not drawing up to the full value of their properties and are instead retaining equity.”

Turnaround times remain a concern for brokers, but according to Bailey they are beginning to improve, with the average number of days from submission to formal approval dropping back to 25 from a high of 27 days in the prior quarter.

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NEWS

MARKET INVESTORS DRIVING BOOM IN HOME LOANS lending has recorded a substantial increase driven by property investors, according to the latest ABS figures. New housing loan commitments rose by 4.9% in May to a new high of $32.6bn. The value of investor loan commitments rose by 116% in the year to May 2021. The monthly value of investor housing loans rose by 13.3% to $9.1bn, the highest since April 2015. “Investors and first home buyers alike are diving into the market,” said Adrian Kelly, president of the Real Estate Institute of Australia.

HOME

HOME LOAN ISSUES AMONG TOP COMPLAINTS — AFCA

RBA CONSIDERS MECHANISMS TO COOL HOT PROPERTY MARKET Australia’s central bank has left interest rates on hold but is monitoring property debt levels closely and will look at using various policy measures if the situation continues has called time on the era of low interest rates, setting the stage for an interest rate rise.

The initial statement from the RBA’s 6 July meeting that the cash rate would not rise from 0.1% was no surprise, but Governor Philip Lowe later gave a rare press conference to explain that the RBA would be taking other measures to stem the current spiralling housing market.

Lowe said the Reserve Bank “will be monitoring trends in housing borrowing carefully” in order to inject an element of control into the exploding property market, especially with the rising spectre of household THE RESERVE BANK

says home loans were the subject of 9% of the consumer complaints it received in the last financial year, in second place behind credit cards, which accounted for 14% of complaints.

Total complaints were down 12% on the 2019/20 financial year – which included the early days of the pandemic – with the total number of complaints lodged at just over 70,000 in 2020/21. “Significantly, complaints involving financial difficulty were down nearly 40% from the numbers we saw the previous year,” said AFCA chief ombudsman David Locke.

AFCA

Philip Lowe, governor, Reserve Bank of Australia

debt that goes hand in hand with increased property buying.

“What neither APRA nor the Reserve Bank want to see is credit growing too quickly relative to people’s incomes,” said Lowe.

“It’s not in the country’s long-term interests to have debt increasing at a much higher rate than people’s income.

“If we saw a large and sustained gap in household credit growth relative to income growth, then we would be looking at various policy responses.”

But while the Commonwealth Bank believes the RBA will lift the cash rate next year, the RBA said it would not shift on the rate ahead of schedule and was

employing other means to change market conditions.

“For the cash rate guidance to fundamentally shift from 2024 to 2023 we would need to see strong, unequivocal evidence that the pick-up in the economy is translating into wages growth and inflation more quickly than we had expected,” said Lowe.

“There are these really fundamental factors that have kept wages growth low for a decade, so we would need to be convinced that those factors have gone away and been replaced by a new set of factors.”

The RBA has announced a program of bond buying by the government that it hopes will lift wages growth and inflation.

YourMortgageBroker mortgage specialist Jay Ahluwalia said the RBA was performing a fine balancing act in response to an economy that is soaring but buffeted by lockdowns and border closures.

“If we saw a large and sustained gap in household credit growth relative to income growth, then we would be looking at various policy responses” Philip Lowe Governor, Reserve Bank of Australia

NEW BORROWER-ACCEPTED LOAN COMMITMENTS (SEASONALLY ADJUSTED) Source: ABS Lending Indicators, May 2021

May 2021

Monthly per cent change

Annual per cent change

$32.56bn

4.9%

95.4%

$23.44bn

1.9%

88.4%

$9.13bn

13.3%

116.0%

$1.99bn

5.6%

42.2%

Construction

$2.36bn

-0.5%

16.5%

Purchase of property

$4.80bn

-27.0%

13.1%

Households Housing Owner-occupier* Investor* Personal Fixed term loans* Businesses

* Loan commitments for owner-occupier and investor housing and personal fixed term loans exclude refinancing

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TECHNOLOGY UPDATE

VIRGIN MONEY INVESTS IN DIGITAL PROCESSES AND PEOPLE TO SUPPORT BROKER PARTNERS the start of the COVID-19 pandemic, Virgin Money has focused on improving the digital offerings we provide our broker partners, along with enhancing our secure broker portal to provide you with the tools you need to do business, your way.

The broker channel is an important part of the Virgin Money ethos, with the majority of new customer acquisition coming through this avenue.

Since the launch of our secure broker portal in 2020, we have seen more than half our partners actively engage with and use the tool, and with the recent digital enhancements we have made, there has never been a better time to take advantage.

We understand that time is money; that’s why we have listened to our broker partners and implemented a real-time digital acceptance portal for all home loan documents, helping finalise your deals easier, and faster. We have also made enhancements to our loan status tracking and online pricing tool, ensuring you have all the information you need for your customer, from loan application to settlement.

We have also created a streamlined process for our brokers to access our online Home Lending policy, giving them the ability to search policy questions on the go, wherever they are, strengthening the Virgin Money proposition with their customers.

Along with the enhancements we have made to our secure broker portal, Virgin Money has made an investment into staffing and internal processes which has resulted in improved turnaround and loan decisioning times.

We understand turnaround times are a continuous challenge for all lenders; however, with our heavy investments in this area we have been able to provide a true service from our BDMs to our credit assessors, which gives brokers full transparency over their loan process. We are SINCE

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Christian York, head of distribution, Virgin Money Australia

We have implemented a real-time digital acceptance portal for all home loan documents, helping finalise your deals easier, and faster proudly owned by the Bank of Queensland (BOQ) Group, which provides fantastic stability and investment into our business.

We have reshaped our mortgage processing sequencing, bringing to life essential digital enhancements, whilst empowering our people within the value chain to own and deliver the right customer outcomes.

We understand that you

can’t have a great product if you don’t follow it up with great people. Virgin Money has invested heavily in broker support, and has appointed four state managers, three new relationship managers and lending capability support, which includes access to a dedicated credit coach.

Our aim is to help more Australians achieve their

homeownership dreams with beautifully simple and rewarding home loans. We want to set a standard and stand out from the pack because we’re Virgin Money – we’re always looking for ways to improve and deliver better experiences for our broker partners and their customers.

Find out more about Virgin Money’s latest news and offers at virginmoney.com.au.

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FE AT URES

COVER STORY

PROPERTY SERVICE HELPS BOOST BROKER BUSINESSES Prpty360 offers brokers and their clients a market-leading property acquisition service delivering well-researched, high-performing investment opportunities. The focus is on building property portfolios in regional areas that are about to take off

PRPTY360'S KEY PROPERTY INVESTMENT FUNDAMENTALS Large-scale infrastructure spending Vacancy rates below 3% Limited land supply Value-add opportunities Buying below market value Buying in owner-occupier-driven markets Examples of infrastructure projects on Sunshine Coast Oceanside Kawana Health Hub $5bn health and residential precinct; 3,000 jobs per year for 15 years Sunshine Coast Airport upgrade $347m project; 2,200 jobs; economic benefit $4.1bn Sunshine Coast light rail $2bn project; 9,000 jobs; economic benefit $3.6bn

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has 20 years’ experience in the finance world, having worked at major banks, including Commonwealth Bank and Westpac, and as a mortgage broker for a large financial services firm.

But it wasn’t until he discovered his passion for property and built his knowledge of the market that he developed the successful end-to-end property acquisition service that is Prpty360 today.

The director of Prpty360 and his team in Sydney have built up a strong customer base across the country. High-profile clients include a number of Wallabies and rugby league players and Wests Tigers NRL coach Michael Maguire, who has given a client testimonial for the company.

“I started off in the wealth divisions of the major banks in sales and admin roles for super and managed funds in customer service, providing balances and returns for clients and their financial planners,” Fadini says.

“I saw a lot of mediocre returns in these products, and at the same time property was performing well with lower fees.”

After becoming disillusioned with the products and “poor customer outcomes”, Fadini decided to become a broker and was later appointed head of property relationships.

“I met a very successful buyer’s agent in the eastern suburbs. At this time buyers’ agents were extremely rare,” says Fadini. “We struck up a relationship, and I began working for him on some big transactions for high net worth clients. I learnt a lot of key fundamentals about selecting JULIAN FADINI

property and property markets and learning the behaviours of markets that were about to rise.”

Armed with his knowledge of finance, broking and property, Fadini saw an opportunity to work with brokers and their clients to achieve successful results and help clients build property portfolios, leading to the establishment of Prpty360.

Its target market is property investors, sourced mainly through word-of-mouth customer referrals and mortgage broking, financial planning and accounting networks.

Prpty360 operates quite differently to property buyers’ agencies, Fadini explains.

“A buyer's agent can be engaged by somebody to go buy them a house.

They might say, listen, I'm too busy; I want you to go buy me a house in Leichhardt, and it has to be close to schools and transport,” he says.

“That’s not our service; the markets we recommend are the markets we’ve researched, and it’s purely to get a return.”

Prpty360 starts by developing a property investment strategy tailor-made for the individual and their financial circumstances, focusing on the outcome the client requires – for example, meeting retirement goals.

Fadini says clients vary from first home buyers to rentvesters and sophisticated investors. Some clients want to buy a single property, while others want to build a portfolio.

“Our investment philosophy is all about value in the transaction from day one for the purchaser. We focus on an early result in capital uplift, as well as long-term growth.

“We work within the markets we

know and understand thoroughly to execute for our clients. We aim to get a 20% uplift in capital value in 12 to 24 months.

“We tailor every purchase with the view to supporting the next purchase. Our clients on average buy three properties within the first 12 to 18 months. Some clients have bought as many as seven in this time.”

Prpty360 also uses experienced property managers, accountants and conveyancers to provide high-quality services to its clients.

Fadini says Prpty360 has focused mostly on regional areas since 2015, such as Ballarat, Ballina, Kingscliff, Cudgen, Port Macquarie, Ocean Grove, Torquay and the Sunshine Coast.

These have large-scale infrastructure projects worth billions of dollars planned or underway in sectors such as health, transport, commercial and residential development.

“These markets have well and truly outperformed capital cities over this time, and there is still growth to come,” says Fadini.

“We saw that in the Geelong region, the state and federal governments were spending $8bn on infrastructure projects in the area. In the Sunshine Coast it was $20bn. We knew that these areas would be changed forever – now you have jobs there, and people will also be living closer to some of the greatest lifestyle locations ever.

“Almost all the suburbs we have invested in have been rated in the top-performing suburbs of their respective states. In the last 18 months our predictions have been realised, with property

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In partnership with

Julian Fadini, director, Prpty360

value increases of 58%, 100%, 47% and 48%.”

Prpty360’s desire to “look outside the box” is partly born out of the need to support its referral partners and clients.

Fadini says if a financial planner or mortgage broker is discussing investment property with their clients and refers them to a property group aligned to developers focused on a particular product, there is a risk of not achieving the highest outcomes.

“Because our business is focused on referrals from third-party advisers such as brokers and financial planners, we’re going to recommend something that our research shows can support high returns, and this is our track record that we’ve done it previously.

“You can buy anywhere, but have

“In the last 18 months our predictions have been realised, with property value increases of 58%, 100%, 47% and 48%” Julian Fadini, director, Prpty360 you checked how much land supply there is? Have you checked the future infrastructure spending from state, federal and local governments and which suburbs, blocks and streets are going to perform better than others? It’s not throwing a dart at a dartboard. What we do is detailed; it’s thorough, and it works.”

Prpty360 spends thousands of dollars every year sourcing the latest property data from CoreLogic and other data analytics companies,

as well as infrastructure data from local councils and state and federal governments.

“That’s your hard data, but the huge difference is we actually go to the location which we’re going to invest in, and we look at the streets, the blocks; we talk to the local agents, and we talk to locals as well.

We share this with clients, their brokers and referral partners.”

The company has worked with aggregator Finsure and many

brokers. Fadini encourages brokers to get in contact so Prpty360 can share its philosophy and detailed market reports for locations.

“Proactively, brokers work with us by providing to their clients educational resources we prepare and create that assist their clients by keeping them informed of the market and its direction,” he says.

“Brokers also get us involved by sharing their pre-approvals for clients that are looking to invest.

“Some brokers may be approached by a client looking to invest in a particular property, and they may suggest to the client that Prpty360 is a service that can be used to provide a detailed second opinion and/or comparison to the property they are considering.”

Prpty360 also conducts webinars and masterclasses for brokers and www.brokernews.com.au

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FE AT URES

Sean Wroe, finance broker, Sakura Finance

does joint marketing with brokers to their clients.

The benefits for brokers of using Prpty360 are tangible: their clients will only be recommended properties that fit the investment criteria, that show early uplift and ongoing capital growth potential.

“Once a client has three or more loans with a broker, it's very rare that they will go anywhere else for additional lending if the client has profited from the sale,” says Fadini.

“The feedback from brokers is overwhelmingly positive. They trust us, and they know that we get it right, and we got those clients the uplift they require in their portfolio.”

Prpty360 is able to refer clients to brokers as well.

“At the moment, a broker refers 10 clients. On average we’re giving them back another three clients.”

Low interest rates, HomeBuilder and the First Home Owner Grant, as well as a limited supply of land, are driving the market, says Fadini. He predicts “upward pressure on house prices for at least the next 12 months”.

“Investors are back in a big way.

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“Brokers should use Prpty360 as they are a solid business sourcing good-quality properties. They are great to deal with” Sean Wroe, finance broker, Sakura Finance In this competitive market the brokers will benefit from using a service like ours because we can help the client transact and get them a good result.”

One broker who has achieved great results for his clients using Prpty360 is finance broker Sean Wroe, a former 4 x 400m relay runner who won gold at the Melbourne and Delhi Commonwealth Games and competed at the Beijing Olympics.

Wroe runs Byron Bay brokerage Sakura Finance. He started his broking career four years ago in Melbourne and moved his brokerage to Byron Bay in July 2019.

“I specifically target millennials, as I am a millennial myself, and as a result of that I get a lot of first

home buyers,” Wroe says.

He has been working with Prpty360 for two years, after being introduced by Finsure, and has had positive feedback from all his clients who used the service.

“Prpty360 are very professional, and they’re great to deal with.

I’ve had really good success with clients,” he says.

“For me it’s about providing opportunities for clients – to say, not only am I a mortgage broker, I do have a property group that are on my panel that specialise in sourcing very sound and good-quality properties.

“If they’re interested, I set up a time to have a chat with Prpty360, or if they want a couple of examples of properties, I touch base with Julian and the team.”

Wroe provides examples of two clients who have used Prpty360.

“The first property deal was with my first home buyer millennial in the eastern suburbs of Melbourne,” says Wroe.

“She was living at home and was looking to purchase an owner-occupier property.

“She had a pre-approval and kept going to properties and was getting outbid. Her pre-approval had expired, and she was wanting to potentially wait until her income was greater to borrow more.”

Wroe suggested a rentvesting property instead. Prpty360 presented a house and land package option on the Sunshine Coast, and it was settled towards the end of 2020.

“She is currently in the build stage of the property, and already she has created significant equity in the property … a value-add was they had a property manager and guaranteed rent.”

Wroe says another of his clients was a couple in Byron Bay. “I met these clients at a local open for inspection in the area. They were looking for an owner-occupied established property. I explained that due to their budget they couldn’t afford anything in the immediate area and suggested they go for house and land.”

He referred them to Prpty360, which sourced a property in the Ballina development Banyan Hill.

“They secured the property towards the end of 2020, and we are still waiting for the land to title, but we have had other blocks in the area that are now selling for $100,000 to $150,000 more than what the clients paid.”

Wroe says he introduces Prpty360 to his clients as the professionals for sourcing property, while he is the loans and finance expert.

“We have very good synergy in the way we work together … they differ [from other property companies] in the sense that they pick good-quality property for the clients.”

Partnering with Prpty360 has benefited his brokerage through diversification and more referrals, says Wroe.

“It allows you to give a complete package or value offering to your clients and make your clients stickier.

“Brokers should use Prpty360 as they are a solid business sourcing good-quality properties. They can integrate into your business the way you want them to.” AB

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Australia's most flexible non-bank lender

FAS T FL E XIB L E PR OFE S S ION AL www. m illb r o o k gr o u p . c o m . a u

( 0 3) 8 6 6 3 18 0 0

ABN 81 123 219 732 / Australian Financial Services Licence No. 335001 / A.R.S.N. 125 042 480

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BUSINESS SECTOR

WORLD OF OPPORTUNITIES IN COMMERCIAL LENDING Brokers are being encouraged to expand into commercial loans, with non-bank lenders offering flexible products designed for SMEs. Benefits for brokers include higher commissions, stronger client relationships and diversified income

funding for small to medium enterprises remains an underserviced sector, with businesses increasingly looking outside the major banks to non-banks for access to finance.

Non-bank lenders Liberty, Pepper Money, Thinktank, Equity-One, Moula, Semper and Lend have the specialist expertise to help brokers and their SME clients.

They are also urging brokers not operating in this space to diversify, boost their income streams and client relationships and take advantage of an expanding market.

While SMEs in some areas are struggling due to pandemic lockdowns, others have been able to pivot to an online model and capitalise on government stimulus and support, and some are seeking funding for warehouse space.

COMMERCIAL

Commercial lending products John Mohnacheff, group sales manager at Liberty, says the non-bank has been a leader in the third party commercial lending space for more than 15 years.

“Our continued product innovation ensures brokers can help a broader range of customers, including the underserved SMEs. As customer demand grows, Liberty will continue to refine our product suite to ensure we support both brokers and customers’ changing needs,” says Mohnacheff.

He says Liberty has a comprehensive range of commercial loan products, demonstrating its commitment to helping more kinds of business customers.

“As a specialist lender, our solutions are highly flexible and can be tailored to suit an extensive 18

range of commercial lending needs.

We have prime, non-prime, SMSF and low-doc options on offer for business customers, as well as secured and unsecured loan options.

“Our suite of lending products also includes competitive commercial loans which can help customers to invest in commercial property.”

Pepper Money head of commercial Malcolm Withers says Pepper launched its commercial property loan product in 2019 following strong demand from “our broker partners to bring the customer-centric approach we are known for to the commercial property space”.

“It forms an integral part of our

Withers says Pepper Money can provide customers with more access to equity through higher LVRs as well as cash flow flexibility and longer loan terms, a 100% offset sub-account, free redraw, and online banking tools.

Its Near Prime product supports customers who have gone through a life event but have come out the other side and are looking for a new loan. Withers says Pepper Money is one of the few lenders with this offering.

“Everyone’s situation is unique, and we work to understand each individual customer’s story when assessing an application.”

Thinktank general manager

“Everyone’s situation is unique, and we work to understand each individual customer’s story” Malcolm Withers, head of commercial, Pepper Money offering to brokers and customers today,” says Withers.

He says Pepper Money’s commercial offering was built with customers’ needs in mind.

“Our prime and near prime commercial property loans include full-doc and alt-doc options for customers who need commercial lending solutions up to $3m in loan size. Whether they want to buy an investment property or commercial property to operate their business out of, or access equity and cash flow to support them in growing their business, we have solutions to help them achieve their goals.”

partnerships and distribution Peter Vala says the company was formed in 2006 with the goal of simplifying commercial property lending for brokers and customers by providing flexible solutions to improve a borrower’s business and personal cash flow.

“Although commercial lending still represents the majority of business we write, we are becoming more balanced across a range of products and security types,” he says.

“This can be associated with progressive product diversification and extension into the residential owner-occupied and investment

market, in addition to our presence in residential and commercial SMSF.” Thinktank offers a full range of loan alternatives, including full-doc, mid-doc (alternative income verification), quick-doc, commercial SMSF, residential and residential SMSF. “All of our products are straightforward set-and forget facilities with no annual reviews, no regular revaluation requirements and no ongoing fees.

“Our extended 30-year loan term is a good example of the flexibility we can offer, which can greatly assist a borrower’s monthly cash flow. We also have an in-depth understanding of SMSF LRBA lending that supports a range of borrowing structures not available through other lenders,” Vala says.

Andrew Way is director of established non-bank provider Semper, which he describes as a “pure-play” commercial lender.

“Since 2001, the company has provided bespoke solutions to address funding challenges or support growth,” says Way. “Semper has a reputation for facilitating opportunity and enabling business growth through the provision of highly competitive rates that are weighted fairly against risk, backed by a robust warehouse funding facility.”

Way says Semper is renowned for structuring complex $2m-plus commercial deals that often require a blended product or collaborative approach – for example, a mix of first and second mortgages or additional third-party participation, such as equipment or factoring finance, with business adviser/accountant input.

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Malcolm Withers, head of commercial, Pepper Money

Semper’s points of difference include providing structured debt solutions for complex commercial transactions worth $2m and over, with the average calendar year transaction size in 2021 being $8m; competitive rates from 5.99% per annum; and collaboration with other specialist lenders’ complementary products (ie invoice finance) in conjunction with a business client’s accountant and/or lawyer.

The lender also has a robust warehouse funding facility and loans written exclusively through professional services.

Equity-One managing director Dean Koutsoumidis says commercial lending is in the company’s DNA. “Our focus is to provide a relevancy to borrowers who are not accommodated by the majors. It is all we do, quite frankly,” he says.

“Since we began operations over 20 years ago, our offerings have remained relatively unchanged; that is, interest-only loans for terms of one to five years.

“Our customers’ needs have not changed in all that time as the majors, unfortunately, cannot cater for everyone. That’s where we come in. Whilst we offer the security of fixed rates, we also do not have any

break costs or early termination costs, so it provides borrowers with a short-term commercial solution whilst they are getting all their ducks in a row.”

Sam Sfeir, head of strategic partnerships at Moula, says

Peter Vala, general manager partnerships and distribution, Thinktank

that know what they want and where they’re going.

“We’re focused on delivering credit decisions as fast as possible, at the speed of business, which generally means same-day, and often within two hours for loan

“All our products are straightforward set-and-forget facilities with no annual reviews and no ongoing fees” Peter Vala, general manager partnerships and distribution, Thinktank SMEs are the engine room of the nation’s economy.

“We’re entirely focused on backing good business, and commercial lending is still at the heart of our business,” he says. “We launched with unsecured business loans back in 2013, which remain core to our total offering to this day, alongside our business payments product and new products in development.”

Moula offers unsecured business loans for $5,000 to $250,000, with 12- to 24-month terms and no early repayment penalty.

Sfeir says Moula wants to deal with outcome-oriented businesses

applications under $50,000.

“Commonly, businesses come to us for funding to help seize opportunities. Perhaps they have an opportunity to buy stock or supplies at a discounted rate, or have landed a new contract and need capital to put on more staff. Businesses love that we give them the ability to repay funds early, at any stage, without any fees or penalties.”

Lend head of third party Donelle Brooks says Lend is solely focused on the commercial lending sector, providing brokers real-time access to a comprehensive portfolio of business funding solutions via its custom-built

platform, which acts as an alternative commercial finance hub.

“The most aligned products are delivered seamlessly through Lend’s predictive modelling software, which assesses a business’s future performance as the key metric for accessing credit,” says Brooks. “As such, Lend ‘removes the gap’ between borrowers and lenders, and supports brokers universally, independently of their commercial finance maturity and financial literacy levels.

“Lend enables brokers to access a centralised stable of commercial finance solutions and receive aligned funding solutions in real time. This includes a full portfolio of unsecured business loans, secured business loans, asset finance, line of credit, supply chain finance, debtor/invoice finance and private lending.”

Brooks says Lend’s main point of difference is its use of technology to provide greater access to business funding. Its custom-built predictive software determines the borrower’s serviceability and capability to pay the loan.

“This enables a clear view of the business’s potential – ‘what this business looks like today’ versus an incumbent model of only measuring previous performance – ‘what this business looked like yesterday’.” www.brokernews.com.au

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Andrew Way, director, Semper

Opportunities for brokers Commercial lending offers brokers an additional avenue for income, enhanced client retention, and greater network expansion, says Vala.

“It also opens up new opportunities through meeting broader customer needs and developing deeper relationships with them and their advisers. Financially, potential income is higher in terms of upfront and trail commission outcomes when compared to residential, while the duration of commercial and SMSF loans tends to be much longer than residential, so the loan and the client stay on the books for longer.”

Vala says access to alternative loans can improve cash flow for brokers’ clients and remove unwanted and onerous covenant reporting requirements and risks associated with annual reviews or shorter-duration loans.

“Many commercial borrowers have been caught out over the years when their loan of one to five years came up to maturity and conditions at the time made it difficult to extend, refinance or even sell.

Access to products without regular revaluations or intervention by the lender provides peace of mind and greater confidence, particularly when property markets and 20

Dean Koutsoumidis, managing director, Equity-One

“Semper has a reputation for enabling business growth through highly competitive rates” Andrew Way, director, Semper business conditions fluctuate.”

Mohnacheff says as a largely underserviced industry, commercial lending offers ample opportunity and a great way for brokers to broaden their customer base.

“We know that customers seek convenience, and being able to offer a broad suite of services is likely to be a key drawcard to get new customers in the door, ” he says.

“Diversifying into this space can help brokers not only attract new customers but also service existing customers who may require commercial lending support.

Commercial borrowers need guidance now more than ever before, and brokers can take advantage of this untapped potential.”

Withers says diversifying ultimately gives mortgage brokers more opportunities to help their customers succeed, allowing them to build stronger relationships with

customers and become their go-to person, not just for their home loans but also for business solutions.

“There are three main advantages for brokers who offer Pepper Money commercial products to their customers – quick and in-depth assessment of applications, seamless settlement, and an easy commercial lending process.”

Withers says Pepper Money can provide a credit decision for commercial property applications within three days and complete a seamless settlement process in as little as four weeks, giving businesses “the cash they need, when they need it”.

“Pepper Money’s loan process is easy for brokers to understand and use. Brokers can submit commercial applications online into the credit queue and can speak directly to the team handling the application.”

Koutsoumidis says like many professions, mortgage broking has

become more specialised than ever.

“This also, however, provides a wonderful opportunity to focus on your relationships,” he says. “The key, we believe, is to be able to offer your clients a cache of offerings from the best lenders in their field. This should include commercial lending and, naturally, Equity-One.” Way says diversifying into commercial is essential to “evolve a broker’s business” by increasing revenue streams and creating “stickier” client relationships.

“We strongly encourage brokers to move beyond a basic ‘tick and flick’ environment and invest in both enhancing their financial literacy as well as becoming familiar with the different types of commercial lending available and associated lenders/lending criteria,” he says.

Commercial lending is the way forward, says Brooks.

“The upside of diversification is tremendous and is undisputed in its capacity to future-proof a broker’s business via generating different, and greater, revenue streams, plus creating deeper relationships.”

Brooks says the broking community is motivated to diversify into commercial lending, but there are barriers to entry that Lend can resolve, and it can help “increase

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brokers’ confidence and ability to diversify”.

“The founding premise of Lend’s platform is to do the ‘heavy lifting’ through its sophisticated productlender matching technology. This supports brokers universally.”

At Moula, Sfeir says commercial lending, particularly unsecured finance, opens up many opportunities for brokers and their clients.

“With the housing market experiencing another upturn, many mortgage brokers have turned their

he says. “Via our ‘Do More’ training program, we work closely with brokers to help them explore new areas of lending and gain the knowledge they need to succeed.

With highly skilled Liberty BDMs across Australia, our team will guide brokers through the entire process.

We also have scenario teams who are ready to help workshop that next deal, whether that’s over the phone or online.”

Koutsoumidis says apart from some advertising in great

“Equity-One’s focus is to provide a relevancy to borrowers not accommodated by the majors” Dean Koutsoumidis, managing director, Equity-One focus inward to their core product.

However, that means missing out on the business bounce-back, as well as missing the fact that, as we neared the new financial year, business confidence kept hitting seven-year highs.”

Broker education Withers says Pepper Money is a long-term advocate for the education of brokers, and actively supports brokers and aggregator partners with regular training.

“Our current training program aims to develop brokers’ confidence by giving them the tools they need to identify an opportunity and have a quality customer conversation.

Alongside this we provide technical training around our products and policies, assessing customers’ income and servicing.”

Withers says diversification is about providing more solutions to the customer, and it’s easier to get started than brokers think.

“For example, the next time they help a self-employed customer with a home loan application, by fully understanding their customer’s goals, growth plans, where they want to be in five years’ time, brokers can help them navigate the path to achieve growth through additional solutions like commercial property loans,” he says.

Mohnacheff says Liberty is committed to its broker network and strives to provide the guidance brokers need, when they need it.

“Liberty provides tailored training and development sessions with one-on-one support as required,”

publications such as Australian Broker, all of Equity-One’s work is referred by word of mouth.

“We believe this is the best form of business,” he says. “We are very fortunate to have developed a large network of brokers all across the country and focus on our communication with them. This, in a sense, has not changed since we started operations.”

Way says Semper actively communicates with the broker industry via sophisticated campaigns, including advertising, sponsorships, events, publicity, social media and, importantly, industry collaborations.

“These campaigns are curated to support brokers overcome barriers to entry to commercial finance and support diversification,” he says.

Semper’s current campaign is focused on the “Future of Commercial Finance”, which unpacks the macroeconomic drivers affecting the commercial lending landscape in a weekly panel commentary.

“We strongly believe that it’s important to keep across the broader macroeconomic and political narrative to stay ahead of the game, as the ‘macro’ moulds the ‘micro’.

For the financial services industry, it will dictate the amount and type of finance available to whom. It will open up and close opportunities.

And, most importantly, it will shape consumer sentiment, which is arguably the most profound driver.”

The panel includes Way and Nick Samios (Hermes Capital), asset finance specialist Andrew Moulds (Lend), non-bank strategist Alex Brgudac, and commercial

John Mohnacheff, group sales manager, Liberty

broker Nick Harper (Fuzion Capital). To find out more, go to sempercapital.com.au/broker.

Vala says most brokers know about Thinktank due to its association with aggregator partners, PD days, regular newsletters and media coverage.

“Our dedicated relationship manager [RM] model allows a broker to workshop transactions across commercial, residential or SMSF, identifying the best way to assist a customer and structure the

“This can be highly appealing as Thinktank operates a pure third party distribution model, which eliminates any possibility of channel conflict and sees brokers as business partners and borrowers as clients of the broker.”

Brooks says Lend consistently executes disruptive education initiatives designed to help brokers upskill their commercial finance industry knowledge.

This is achieved through the successful CPD-accredited

“Our solutions are highly flexible and can be tailored to suit an extensive range of needs” John Mohnacheff, group sales manager, Liberty finance solution to meet their needs.

This is in addition to our regular workshops and product updates we offer all brokers.”

Thinktank regularly assists with marketing activities and contributes to the education of referral partners, such as accountants and financial planners, helping to create and convert opportunities in the commercial lending arena.

LendEd webinar education series, which provides on-point content from industry experts, identifying where the corresponding opportunities are, and ‘how to get the conversation started’.

Lend actively communicates with the broking industry via collaborations with aggregators and lenders, supported through social media, publicity, advertising, www.brokernews.com.au

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sponsorship and industry events.

Sfeir says Moula has an experienced national BDM team that is active in the marketplace, attending industry events, hosting broker events, and positioning themselves as the first port of call for brokers.

“Our BDMs come equipped with a suite of educational materials and tools,” he says. “We email weekly Good Business Deals, highlighting key considerations behind recent funding decisions, and produce a Deal Talk video series featuring our BDMs talking through recent scenarios.”

Sfeir says the initiatives were launched during COVID-19 to encourage more brokers to diversify into commercial finance and maintain a connection to the community.

“These materials have become key broker training resources, complementing our Business Loan Calculator, a pricing tool that brokers can use to download a sample repayment schedule.”

Technology Vala says Thinktank’s main area of digital transformation has occurred in the back office, where enhanced capacity for smarter processing of transactions is supporting the lender’s long-standing reputation for responsiveness.

“However, our RM model still remains the most important feature of how we do business by providing a level of personal and professional interaction that is required in commercial property lending so as to genuinely help structure and produce the right solution for brokers and their customers,” says Vala.

Mohnacheff says Liberty continues to receive positive feedback on its fast response times and free-thinking approach.

“Our loan-tracking facility, Liberty IQ, allows brokers to monitor deals in real time and empowers them to be the customer’s hero,” he says.

“Additionally, brokers have direct phone and email access to the Liberty credit analyst assigned to their application. This enables efficient communication, which is particularly important for brokers assisting customers with unique circumstances.”

Equity-One has adopted a level of digitisation in order to keep its relevancy to anyone it deals with, says Koutsoumidis.

“Whether using an app, electronic signatures, social media or other newisms of the current business world, digitisation doesn’t offer 22

an advantage per se, but rather is a necessity to stay on the same playing field.”

Sfeir says Moula continues to innovate and speed up loan turnarounds through its credit decisioning engine, HECTOR. “Built in-house, HECTOR has been specifically trained and tailored to understanding Australian SMEs, which helps us make more accurate lending decisions, faster,” he says.

“Our model represents a step change in credit and underwriting, where we not only empower businesses to use their data as an asset, but through artificial intelligence and machine learning we rapidly accelerate access to capital.”

Sfeir says Moula was delivering credit decisions to brokers and their clients in 48 hours, but now, through automation, decisions for most loan applications under $50,000 are provided within two hours.

Brooks says the founding principle of Lend’s platform is to provide aligned commercial funding solutions in real time.

“It’s intuitive, seamless, automated and delivers real-time results via predictive AI modelling,” she says.

“Lend continuously applies software enhancements to further refine the loan application process and product-lender match parameters.”

Turnaround times The non-bank sector is renowned for more flexible loan criteria and speed of access to funding, says Way. He says the best way for brokers to support a quick turnaround is to make sure they’re across the lending criteria prior to presenting a deal, and do thorough due diligence to ensure they give the lender the full story. They must have a very clear understanding of the loan amount required and its purpose, as well as the business’s security and serviceability, and, finally, they must supply the corresponding paperwork in one hit.

Withers says Pepper Money’s offering aims to make commercial property more accessible to brokers through seamless accreditation and application processes.

“Because of this, Pepper Money has not followed the same trend on turnaround times that some other lenders have,” says Withers.

“Like our residential mortgages application process, we have upheld our quick turnaround times and can provide a credit decision for a commercial loan within three days.

This can be attributed to our ease of online applications, which allows

Sam Sfeir, head of strategic partnerships, Moula

“Through artificial intelligence and machine learning we rapidly accelerate access to capital” Sam Sfeir, head of strategic partnerships, Moula a broker to lodge directly to credit and speak to credit managers for inflight deals.”

Mohnacheff says Liberty places high importance on fast turnaround times for loan applications and understands how critical it is to the success of broker businesses.

“To maintain our speedy response times across both residential and commercial loans, we continually measure and adjust where needed.

“We also give direct access to our underwriting team so that our business partners can get quick updates. By opening our lines of communication with our business partners, we have been able to significantly improve our turnaround times, which benefits brokers and customers alike.”

Koutsoumidis says loan turnarounds with the majors have become problematic.

“I can say that the turnaround times for Equity-One have not

changed,” he says. “We still provide terms/quotes and offers in the same day. Mortgage documents are issued in 24 hours and issued electronically.

“The delays, from what we see, are in valuations. Most of the valuers we deal with are very busy, so turnaround times have been affected.

Most brokers understand this, though, and the key is to prepare the application as early as possible.”

Vala says Thinktank’s commercial lending SLA turnarounds have actually improved when compared to previous years.

“This is through continued investment in experienced staff and integrating digital technologies to improve processes and service levels.

An intentional side benefit of this is the time returned to a RM to invest in supporting our relationships with brokers and aggregator partners.”

Brooks says Lend is renowned for alleviating the pain point of long turnaround times by providing real-

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Donelle Brooks, head of third party, Lend

“Lend’s platform is intuitive, seamless, automated and delivers real-time results via AI modelling” Donelle Brooks, head of third party, Lend time commercial finance solutions via its superior product-lender matching ability, facilitated through its predictive modelling software.

Market trends, COVID-19 Customers want faster decisions, on-demand service, and more flexible ways to access capital to grow their businesses, says Sfeir.

“Over the next 12 months, we’ll see more commercial lenders rising to this challenge, enhancing and expanding their offering, and a proliferation of hypertargeted, point-in-time funding solutions,” he says.

Sfeir says until there is widespread vaccination, Australia will continue to experience labour market dislocations and even then potentially protracted readjustments.

“This is a consequence of closed borders, which make it more challenging for businesses to fill skills shortages. Some groups will

be harder hit than others, and as we saw through 2020, much of this is difficult to predict.”

Moula welcomed the news in June that another 22 occupations were added to the Priority Migration Skilled Occupation List amid international border closures.

“This is a positive development for SMEs, who will often access finance to put on new staff, including skilled immigrants,” Sfeir says.

Mohnacheff says government stimulus programs have helped many businesses keep their doors open and responded to the need for more businesses to access capital.

“Liberty has supported many Australian businesses under the SME Guarantee Scheme, and we look forward to … helping more business owners to recover and invest in the future. As more customers become aware of the advantages that specialist commercial loans can offer, we can expect to see their popularity soar.”

While the pandemic continues to challenge the commercial sector, Mohnacheff says the trend is transformation and resilience.

“As more Australians turn to online retail, demand for warehousing is on the rise. Record-low interest rates have also encouraged investors to enter the commercial property market,” Mohnacheff says.

“And, with economic growth forecast throughout 2021 and beyond, the commercial lending market is anticipated to strengthen over the next 12 months.”

Withers agrees that government stimulus has had a positive effect, with growing demand for new local businesses to serve new housing estates, giving investors and business owners the confidence to leverage local commercial spaces to operate businesses.

“I believe the market will continue to strengthen over the next 12 months as we see more investors turn to commercial property lending, taking advantage of well-priced property values and positive rental yields, while residential market yields may be softening due to the current strong growth in residential property prices.”

Withers says labour shortages have meant businesses have had to get creative with employment.

“We recently financed a large business which has historically relied on fruit pickers – a job traditionally favoured by travelling backpackers.

“With fewer international arrivals, their solution to a shortage of pickers on their farms was to employ the entire town. This has had a huge impact on the local unemployment rate and a wider knock-on effect of driving up local business confidence.”

Vala says all indications point to a commercial property market that is continuing to stabilise if not improve.

“Borrowers have adapted remarkably well to the challenges raised by COVID, as well as dealing with the ongoing uncertainties by putting mitigation plans in place when they are looking to buy a property, including the factoring in of alternative exit strategies,” he says.

“We’ve observed that borrowers have generally positioned themselves very constructively for the removal of government support.”

Despite COVID, demand for industrial property has steadily risen, says Vala, and indications are that this will continue strongly into 2022.

Retail and office space has been affected by work-from-home arrangements and fewer staff frequenting CBDs, impacting some

property values, while suburban office and retail have benefited from decentralised working.

“Australians are spending their income at home, the economy is tracking well, and property market conditions are likely to remain positive.”

Way says Semper is not seeing any drip-down benefit in the SME space from tax breaks or QE-funded bank loans. “It would appear much of this funding is going on residential home loans and investment property mortgages,” he says.

Way expects demand for non-bank funding to grow, driven by developers seeking to extract as much equity as possible from dormant assets, and COVID-affected businesses raising debt to fund an attempt to trade out.

“COVID will continue to disrupt world travel through 2022, and supply chains will strain to breaking point, adding an inflationary burden to world markets,” Way says.

“Lenders will have to differentiate between failing businesses for which debt will only add a further burden (zombie businesses) and companies with a viable capacity to trade back to sustainable growth.”

Koutsoumidis says any government stimulus contributes to confidence.

“If there is confidence, then commercial property transactions are directly impacted positively. So, in that sense, there is a correlation, but not one that can be accurately measured per se.”

He expects a steady level of commercial activity in the next year.

“Without a doubt, we need to get the COVID strategy moving along.

Be it vaccinations, or some sort of unified approach between all states, we need these matters dealt with, and dealt with fast. We are in the best country, but people are fatigued by the stop-start effects the governments are having on businesses. If we can iron these issues out, then I think it’s full steam ahead for commercial lending.”

Brooks says government incentive schemes have significantly increased the appetite for start-up finance.

“This has been compounded by personal and professional lifestyle adjustments, including the progressive shift to subregional areas from metro locations to support work-from-home models,” she says.

“We expect a significant upsurge to occur in the requirement for commercial finance in general, as well as specific product classes that correlate with increasing demand and acceptance for alternative funding solutions.” AB www.brokernews.com.au

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19/07/2021 1:41:46 pm

FE AT URES

OPINION

TIME TO RAMP UP YOUR CYBERSECURITY Almost every day we hear about another cyberattack on businesses. Peter Malan, who runs PwC’s Cybersecurity and Digital Trust, is urging financial institutions to do more to meet APRA’s information security regulation, CPS 234 have not yet fully complied with CPS 234.

Even those organisations that feel confident in their efforts should look again at their security posture. As the cyber landscape shifts and evolves daily, our experience is consistent with APRA in that some organisations that may consider themselves compliant with CPS 234 may not actually pass the assessment.

Punishments for oversights may be strict.

Australia as in every other country, cybercriminals have taken advantage of the wholesale move online to ramp up their efforts, with a particular focus on financial entities.

And it’s working. The federal government has estimated cyberattacks cost Australian businesses approximately $29bn – a figure that is only likely to rise. More than half of businesses (56%) say statesponsored attacks on critical infrastructure are likely, while even more (58%) say data breaches reported to the Office of the Australian Information Commissioner were due to malicious or criminal attacks.

It’s a problem that demands a robust response from the government.

IN

Setting standards for cybersecurity In November 2020, outgoing APRA executive board member Geoff Summerhayes said the regulator was seeing “too many basic cyber-hygiene issues across the industry” at a time when threats were increasing exponentially. As a result, APRA has embarked on a Tripartite Reviews program to gauge the level of compliance with CPS 234, commencing with independent pilot assessments for selected regulated entities in the first half of 2021.

Applying to all APRA-regulated entities, CPS 234 introduced new requirements around identification and classification of information assets, the definition of roles and responsibilities for cybersecurity, and the implementation and testing of security controls, incident management, internal audits and assurance, and breach notification processes. Importantly, it also includes requirements around how businesses manage third-party risks.

While many banks, superannuation funds and insurers, as well as non-bank lenders and aggregators, have been working towards compliance since CPS 234 came into effect in 2019, it’s clear there’s more work to be done. APRA is now warning of action against those companies that don’t take rising security threats seriously, and is beginning its next stage of enforcement against organisations that 24

Checking your security blind spots Once the Tripartite Reviews are completed, APRA will then determine the scope of its

of its effectiveness. That’s why the CPS 234 mandates a systematic testing program that regularly tests your infrastructure and processes for weaknesses. It’s high time to consider a structured assessment program for information security controls and security incident management.

Identifying and classifying information assets One of the central tenets of the regulation is creating an understanding of what your information assets are, their criticality and sensitivity, and where they are located.

3

When it comes to CPS 234, every company you work with that manages your data or assets must adhere to the standards future enforcement. But expectations are that further assessments and audits will begin sooner rather than later.

Now is the time for all regulated entities to get their houses in order.

We’ve identified three key areas where organisations need to focus their attention: Securing your supply chain The biggest area of focus for organisations is third parties meeting the standards of organisations. When it comes to CPS 234, every company you work with that manages your data or assets must also adhere to the regulation’s standards – and you need to document how those processes work and what assets are being used. It’s critical that you expand the visibility of the security and digital asset management processes and controls your suppliers and vendors use across your ecosystem.

1

Putting your controls testing program into practice Secondly, while it’s clear that a lot of time and effort has been invested into CPS 234 compliance processes to this point, it could all be for naught without stringent testing

2

Peter Malan Partner, Cybersecurity and Digital Trust, PwC Australia

Regulated entities need to put a greater focus on ensuring there is sufficiently comprehensive evidence not only of the data and assets themselves but of the processes and controls that manage them.

Organisations need to consider improving their CPS 234 compliance as part of their wider IT and cybersecurity strategy.

So, what’s next?

There are a range of additional activities regulated entities can – and should – be exploring to meet the security standard.

Investment won’t be wasted. Future regulations will use similar best practice processes and programs.

We recommend businesses review their compliance efforts to ensure alignment with the intent and word of the standard, including completing gap analysis of their existing security practices and operating model against the standard; asset identification and categorisation; establishing and operating third-party security assessment programs; executing independent security control testing; and augmenting existing internal audit capabilities. AB

www.brokernews.com.au

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19/07/2021 8:53:00 am

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19/07/2021 8:53:20 am

DATA

i

SOUTH AUSTRALIA

WA SPOTLIGHT

The state commits to building more affordable homes in the next few years The SA government has completed the sale of 100 new and affordable homes built specifically for low-and-moderate-income South Australians.

The homes were part of the government’s $21.4m commitment to boost the supply of houses. Sale prices of the dwellings, 71 of which are classed as affordable, ranged from as little as $250,000, up to $418,000. Minister for Human Services Michelle Lesink said first home buyers had snapped up the homes.

“Our strong plan to increase the supply of affordable housing in South Australia is hitting the mark when it comes to helping people on lower-and-moderate incomes get into homeownership as well as supporting vital jobs during the COVID-19 pandemic,” she said.

The government has started a $400m initiative to deliver 1,000 homes by 2025. “[This] is creating a steady pipeline of work for our building and construction industry, guaranteeing jobs and certainty for hundreds of tradespeople and their families for the next five years,” Lesink said.

Area

Metro (H)

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

6.9%

rent

yield

$400

4.1%

$530,000

3.0%

Metro (U)

$367,000

-0.5%

6.4%

$350

4.8%

Country (H)

$300,000

1.8%

3.6%

$280

5.0%

Country (U)

$235,000

6.9%

4.8%

$220

5.2%

VICTORIA

Dwellings are selling fast across regional markets in Victoria Victoria’s regional housing market continues to be red hot, with May recording the shortest days on market for listed properties since 2010, according to the Real Estate Institute of Victoria (REIV).

Its latest report shows that the average number of days before properties in regional Victoria get sold has hit 40, with the median going down to 35.

“Real Estate Institute of Victoria May 2021 statistics show that buyer activity is strong, with days on market for outer Melbourne and regional Victoria listings recorded as some the shortest in over a decade,” the report said.

It also revealed that the days-on-market average in outer Melbourne has shrunk to 22, or 10 days below the median for metropolitan Melbourne.

“The data gives us a good indicator that more and more Victorians are making the move to outer Melbourne and the regional areas beyond,” REIV said.

Over the first quarter of 2021, regional Victoria’s median price surpassed $500,000 for the first time.

Area

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Metro (H)

$840,500

3.3%

7.5%

$430

2.8%

Metro (U)

$620,000

0.7%

3.4%

$400

3.5%

Country (H)

$475,000

4.7%

17.1%

$370

4.3%

Country (U)

$349,725

4.0%

12.7%

$300

4.6%

28

PRICES, SALES ON THE RISE IN PERTH The WA state capital continues to record robust growth across key housing market indicators housing market recorded 7% growth in the first half of 2021, according to the latest report from CoreLogic and the Real Estate Institute of WA (REIWA).

While values only grew by 0.2% over the month of June, cumulative growth for the past six months has been substantial.

REIWA president Damian Collins said the smaller growth rate in June was not surprising given the traditional winter slowdown, and he believed the growth was encouraging.

“This will hold Perth in good stead as we transition out of winter and into the spring selling season in the coming months,” he said.

Data from REIWA showed that the median sale price for houses in Perth was $510,000 in June, with 84 suburbs showing significant median house sale price gains.

Parkwood (up 4.8% to $450,000), Booragoon (up 4.1% to $825,000), Merriwa (up 3.9% to $335,000), Quinns Rock (up 3.9% to $499,000) and Joondalup (up 3.2% to PERTH’S

$525,500) were the top-performing suburbs.

This growth in prices came despite the slight increase in median selling days to 15, which was still close to the lowest number of days on market recorded in the last 15 years.

In terms of listings, 8,933 new properties were added to Reiwa.com at the end of June – 1% lower than at the end of May. “We saw a small decline in listings at the end of June compared to May, but compared to three months ago, listings for sale have increased 8.1%,” Collins said.

“On an annual basis, stock levels remain 13.4% lower than they were at the end of June 2020.”

Over the first week of July, Perth recorded a steady increase in property sales activity, driven by the boost in land sales. Overall sales activity in Perth rose 5%. This was due to the 140% increase in vacant land sales, which offset the sales declines of 3% for houses and 27% for units.

PERTH HOUSING MARKET FUNDAMENTALS Source: CoreLogic, July 2021

Property stats for the week ending 11 July 2021

New listings:

3,454

Total listings:

14,527

Houses

972

$508,000

37

Monthly sales volume

Median price

Median days on market

370

$420,000

44

Monthly sales volume

Median price

Median days on market

Units

SUBURB TO WATCH: DAMPIER Median price (houses) $731,000 Median price (units) $235,500

12-month growth

3-year growth

Average annual growth

Gross rental yield

21%

42%

-0.6%

6%

12-month growth

Average annual growth

Weekly advertised rent

Gross rental yield

n.a.

n.a.

$400

9%

www.brokernews.com.au

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19/07/2021 8:54:35 am

QUEENSLAND

Southern Redland Bay has been marked as new growth area for infrastructure Thea state government urged to support

HIGHEST-YIELD SUBURBS IN WESTERN AUSTRALIA Suburb

House

Gross rental yield

Median price

Quarterly growth

12-month growth

Average annual growth

COOLGARDIE

H

15%

$90,000

0%

N.A.

-1.6%

SOUTH HEDLAND

U

14%

$155,000

3%

15%

5.4%

PORT HEDLAND

U

14%

$180,000

5%

-15%

Area

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

-2.2%

TOM PRICE

H

12%

$430,000

N.A.

43%

13.6%

WITHERS

U

11%

$105,000

11%

-19%

-16.4%

BULGARRA

H

10%

$440,000

0%

14%

-3.0%

Area

NEW SOUTH WALES

tenants andDeputy landlords Queensland’s Premier and Minister for State Development Steven Miles has said the government will invest in infrastructure to unlock over 5,000 lots, improving land supply and housing affordability in the southeast region of Southern Redland Bay. “Our strong health response to the COVID-19 pandemic has people moving to Queensland in droves,” he said. “This has put pressure on available land supply. “ The infrastructure project at Southern Redland Bay is expected to accelerate land supply in the region, which will help boost housing and affordability. Stage 1 of construction is expected to start later this year.

The project will start with the staged delivery of the $30m wastewater treatment plant, in partnership with Lendlease. “Initial works at the plant will support around 30 direct jobs and 49 indirect construction jobs, helping with our region’s economic recovery. Investing in essential infrastructure is part of Queensland’s COVID-19 Economic Recovery Plan,” Miles said.

yield

Metro (H)

$610,000

2.7%

6.5%

$430

3.9%

Metro (U)

$415,000

1.8%

3.8%

$390

5.0%

Country (H)

$482,000

2.2%

4.5%

$420

4.7%

Country (U)

$420,000

2.5%

7.3%

$360

4.7%

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

The NSW government is urged to support tenants and landlords The Real Estate Institute of NSW (REINSW) wants the state government to support tenants and landlords amid the recent COVID-19 restrictions.

REINSW CEO Tim McKibbin said the government’s request to landlords to work with tenants was not enough to support the rental market. He said the government could extend the same level of support it has offered to small businesses to landlords and tenants, such as the grants of up to $10,000 provided to small businesses affected by lockdowns.

“When the Treasurer said that landlords should work with their tenants, he is actually asking landlords to provide tenants with financial assistance,” McKibbin said.

“It’s a situation that took many landlords to the brink through the rental moratorium previously put in place. Then, just as now, landlords were asked to provide financial support to tenants in need.”

rent

Metro (H)

$1,160,000

3.6%

8.6%

$560

2.9%

Metro (U)

$749,000

0.4%

2.5%

$490

3.5%

Country (H)

$568,000

3.9%

10.8%

$425

4.1%

Country (U)

$485,000

2.8%

8.8%

$365

4.1%

NICK YOUNG: TRAIL BOOK SALE EXPERT Sell your book. Keep your clients.

Release working capital or start succession planning.

03 8508 6666 | 0417 392 132 | nyoung@trailhomes.com.au | trailhomes.com.au www.brokernews.com.au

28-29_AB1814_Housing_Market_Data_SUBBED.indd 29

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19/07/2021 8:56:13 am

PEOPLE

Aggregator Finsure

IN THE HOT SEAT

Kylie Meredith is a mortgage broker at The Savings Centre on Queensland’s Sunshine Coast. She became a broker five years ago, after working as a settlements officer and in customer service roles at ASIC and Telstra

Tell us how you became a mortgage broker. Did your customer service roles at Telstra and ASIC help your transition into broking?

Becoming a broker for me was a natural transition. I began my A journey in the broking industry as a settlements officer working in a busy broking office on the Sunshine Coast. I then moved up and educated myself on all stages of the finance process, managing the finance administration team and finally broking. It was fantastic learning from the bottom up, which gave me a deep insight into how the finance process works in the background and has allowed me to deliver knowledgeable information and provide support for clients.

Working at ASIC gave me an extensive background in compliance regulations involved in the broking industry, which has in turn allowed me to manage compliance at The Savings Centre. Further to this, my role at Telstra was in technical support and customer service, which helped me grow into a customer-focused and solution-driven broker to get the best outcomes efficiently for clients.

Q

What do you enjoy most about being a mortgage broker?

I love the ability to help and teach people to take control of their A finances and make it work for them. Finance is such a scary and overwhelming thing for a lot of people, and they don’t always have the opportunity to learn. We are in a unique situation where we can assist and educate, and make finance a pleasant experience for people.

Kylie Meredith, mortgage broker, The Savings Centre

Q

What are the challenges of the role?

Broking is a very competitive market, and it can sometimes be A hard balancing clients’ expectations with our compliance obligations, but I have found that building trusting relationships with our clients and explaining the ‘whys’ to them overcomes this. We have implemented a rock-solid procedure to ensure that we are servicing our clients efficiently and ticking all our boxes along the way. I’m a sucker for a procedure!

Q

30

Who inspires you and why? wonderful team make it such a great job to do, and I actually look A Our forward to going to work each day! We all love helping our clients reach their goals (and reaching our own), and we continue to build a strong and trusted reputation on the Sunshine Coast and nationally.

Q

What do you do to unwind?

I try to take advantage of any down time to escape the hustle and bustle A of life and go on camping trips. We have such an amazing country, and so there’s much to see. It gives me a chance to relax and regroup and allows me to come back on board fresh and motivated. If I don’t get the chance to take off, you will generally find me making a mess in the kitchen or playing music and singing loudly (sorry, neighbours). AB

Q

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19/07/2021 8:59:26 am

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