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ISSUE 6.16 August 2009
Norris backs brokers CBA executive
team delivers upbeat broker forecast
Ralph Norris, the chief executive officer of Commonwealth Bank, told a gathering of the industry’s top executives that brokers are a key distribution channel for the bank, while making reassurances about current commission rates. Members of a select industry group who were invited to the gathering included PLAN CEO Ray Hair, Mortgage Choice chief Michael Russell, Smartline executive director Joe Sirianni, Challenger’s general manager Steve Weston and AFG’s executive director Kevin Matthews. The executives lunched with Norris and CBA’s executive team, which included executive GM for third party distribution, Kathy Cummings, and the heads of the bank’s treasury, credit risk, retail banking, commercial and corporate banking departments. Mortgage Choice’s Russell told Australian Broker that Norris’s comments on mortgage brokers “were very encouraging” and were very well received. “Essentially, he said that brokers are doing a very good job introducing new customers to the
Professional requirements will challenge dual roles New licensing, regulation and accreditation changes will make it harder for financial planners to act as brokers Page 14
Replacing trail: strategic partnerships Tips on setting up worthwhile and profitable referral relationships with other professionals Page 25
CBA and freely admitted that he would not be surprised if its share of new mortgage flows topped 50% from brokers in the near future.” Russell said Norris gave as his reasons that “brokers were more willing to work outside of normal business hours to accommodate customers, were more willing to meet customers at venues convenient to [them] and are basically more successful at finding new customers”. PLAN’s Ray Hair said Norris articulated
a “very clear view that with the return of growth in the economy and funding, there would be significant growth in broker activity, and the Commonwealth Bank would seek to participate.” “The flexibility and responsiveness of the broker market was cited as the very reason the broker channel would grow faster than proprietary channels, as the economy turns,” Hair said. Page 28 cont.
Property market: state by state roundups Find out how Australian state property markets are faring and what trends are developing across our state borders Page 26
News Early indications point to economic recovery
According to the chief economist at AMP Capital Investors, Shane Oliver, the housing recovery was initially seen in low to middle housing, but has broadened to the middle and top end. His comments came as reports of renewed interest in topend homes are backed up by increased housing credit statistics suggesting the first signs of an economic recovery are upon us. According to RBA stats, housing credit was up 0.6% in June 2009, and over the year to June it was up by more than 7%. Oliver confirmed that these occurrences in the housing space
Brokers divided on house price outlook A new survey suggests brokers remain undecided about which way residential property prices will go over the next year. Of the 329 mortgage brokers who took part in the CoreData survey, 44% forecast Australian residential house prices to rise over the next year, while 37% said prices would fall. And almost one in five brokers said they expected prices to remain flat for the same period. However, there was a clear division in expectations on property prices in the eastern states compared to the west coast. The strongest price growth predictions from brokers were in Victoria (48%), Queensland (44%)
and NSW (43%). Around a third of mortgage brokers forecast the eastern states to record modest price increases of less than 5%, while 11% forecast Queensland and Victoria’s prices to increase by between 5% and 10%.
Brokers predicting state residential prices to increase 60% 50% 44%
Things to watch: • housing finance • building approvals • retail sales • business/consumer confidence • labour market activity hinted at recovery, but added that they should be viewed along with “a whole bunch” of other factors. The Ray White real estate group said there has been a revival in the prestige sector nationwide, after a long lull induced by the economic downturn. And Sarah Dougan, principal at LJ Hooker Financial Services in Sydney’s Double Bay area, confirmed Ray White’s assessment. “I think this is due to people seeing good value in this area if they choose well,” she said. Western Australia has the most pessimistic outlook with only 22% of brokers forecasting residential property to rise, and more than half (53%) expecting values to fall in the next 12 months. Perth-based broker and director of Mortgage Solutions Australia, Colin Lamb, expected modest house price growth. “Property prices have undergone a major market correction over the past two years and buyers now realise that the market represents very good value for money. Growing activity by buyers has resulted in a major decline in the number of properties listed for sale over the last six months which is a forward indication of future price rises.” In other states, 40% of brokers forecast NSW values to fall, 36% anticipating Queensland prices to decrease and 34% expect a drop in house prices in Victoria.
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finconnect objects to RTOs offering fasttrack planner courses
Aggregator finconnect’s general manager Tanya Sale’s attack on training groups that provide fast-track financial planning conversion courses for brokers has stirred up a hornet’s nest of angry responses from registered training organisations. The controversy was sparked when Sale told AB she could not believe there were “so called RTOS out there offering a nine day course and whammo, you are a financial planner”. She said the courses were being offered at a time when the industry was moving onto a professional platform, and mentioned the Storm Financial saga as an example of the havoc that bad financial advice can wreak. To add salt to the wounds, Sale questioned who would go to someone who just did a nine-day course, and ask for advice on their life savings? Her comments were “wholeheartedly” supported by Paul Eldridge, the chief executive
officer of Australian training and development group Intellitrain, who claimed only the RTOs benefited from fast-track diploma programs. “One of the main costs for any RTO in delivering a program is the trainer costs and venue costs,” he said. “Less actual training days, means more profit for the RTO. The RTO also gets more students who are only looking for the tick in the box as opposed to getting the actual knowledge. Dealer groups, aggregators and firms must not condone these types of rubber-stamp courses. If companies send a message that they don’t value the qualification, they can’t expect their people to,” Eldridge said. Brokers who want to diversify should be encouraged to do so. “However, I would not want my mum getting complex financial advice from someone who had achieved their qualification via an eight or nine-day course.
In response to the criticisms, two registered training providers – Wealth Today and AAMC – hit back. Tony Pennells, managing director of the Today Group of companies, which offers brokers a five-day limited advice course, agreed that “offering a qualification in nine days and cutting people loose on the market isn’t smart”. But he said there was nonetheless “a very real need for brokers to diversify” and that “upskilling” needed to be made available to brokers in a form that is “affordable, delivered in a timely fashion and practical to implement, without creating any significant downtime away from their business”. Pennells said the key issue for training organisations was to provide “ongoing support and mentoring to ensure quality advice and service to the client,” something he said the Wealth Today Academy provides. Jeff Mazzini, who is the managing director of the global AAMC Training Group, called Sale’s comments “ill-informed” and an attack against “many reputable training organisations that are doing a fantastic job”. AAMC Training Group offers a Diploma of Financial Planning course in Australia by blended learning, delivered via six days of face-to-face training, online and correspondence. There is a six-month time frame for the students to complete their assessments and assignments, Mazzini said. Besides the training, Mazzini said AAMC
supported their students via a “very experienced team of trainers and mentors”. Furthermore, to undertake the role of a financial adviser, he said a qualified person must then apply to work under a dealer group that holds an Australian Securities and Investmentsapproved licence. Mandy Kilgore is a brokerturned-financial planner who spent six months of full-time study to get her diploma. She said there was no way in the world you could “know it all” in such a short period of time. “I studied day and night for six months ... besides completing the four modules, there are all the assignments you have to do as well,” she said.
Ex-Save Finance chief fined $183k The former chief executive officer of Save Finance, Armond Shoostovian, has been fined $183,600 after pleading guilty to 108 offences relating to breaches of the state’s Consumer Credit Administration Act 1995. Shoostovian was fined $1,700 per offence and his case was discharged on condition that he enter into a good behaviour bond for two years, from 28 July 2009. The case against Shoostovian was brought by the Commissioner for Fair Trading, in relation to offences committed between 1 August 2004 and 1 March 2005, and 1 September 2005 and 1 March 2007. Eighty three consumers were affected.
In his judgement, Justice Howie said that the misconduct related to “failures by Save Finance … to disclose prescribed matters to consumers and to keep records of its dealings. The defendant’s liability for the offences arises in his capacity as the sole director and secretary of the company.” “It is alleged that the defendant knowingly authorised or permitted the company to contravene the Act.” Justice Howie said Shoostovian’s company had a “history of breaching legislation in relation to its broking agreements. Over a five year period, the Office of Fair Trading received a number of complaints against the
company from consumers, specifically in the areas of disclosing commissions; drafting broking agreements that complied with the relevant laws; and providing copies of the agreements to consumers,” the judgement read. It was also revealed that Save Finance was reprimanded by the Commissioner for Fair Trading for “engaging in unjust practices”. It had ordered the company to rectify the consequences of its unjust conduct, by paying each of the consumers affected, the commissions it charged for its broking services that were contrary to the Act, within 60 days from 12 June 2008.
The average commission paid by a consumer to the company was $8,000. Save Finance failed to comply with this order. On 25 October 2008 the company was ordered “not to be involved in providing consumer credit or finance broking in any way until it had been notified that the Commissioner was satisfied that it had complied with the order of 12 June 2008”. Yet on 4 December 2008 Save Finance was placed into liquidation. The hearing into the failed business began on 9 February and ended on 18 March 2009. Judgement was delivered on 28 July 2009.
White said the initiative behind the commission’s proposed IDR and EDR process was to enable a more consumer-friendly capability to allow borrowers to access potential recourse if required. “It is not a matter that we are joyful at the thought of, but it is also one that we cannot escape,” White said. Mortgage and Finance Association Australia’s chief executive officer, Phil Naylor,
said the association would reserve comment on the paper until it had worked through all the details. He added that it was comfortable with the requirement for membership of an ASIC-approved EDR scheme. “That has always been an MFAA membership requirement,” Naylor said. The two EDR schemes are either the Financial Ombudsman Service (FOS) or the Credit Ombudsman Service Ltd (COSL).
FBAA committee to aid in IDR process The FBAA is preparing to help its brokers comply with dispute resolution requirements proposed by the Australian Securities and Investments Commission (ASIC). Typically a one-person broker’s internal dispute resolution (IDR) process would be only “partially impartial”, since the individual broker would always be too close to the business, according to FBAA’s chief, Peter White.
Key points individual brokers to remain partially impartial FBAA committee of peers an extension of broker for IDR EDR/ IDR required for ACL – ASIC MFAA comfortable with requirements
“But with the FBAA individual brokers have access to a committee of peers that sit as an extension of the broker to try and mediate resolutions for an IDR positioning,” he said. White’s comments followed on the back of dispute resolution requirements being published by ASIC in its Consultation Paper 112, released in July. According to the paper, titled “Dispute resolution requirements for consumer credit and margin lending”, when credit licensing commences on 1 January 2010 (with applications from registered brokers required by 30 June 2010) licensees will be required to have dispute resolution arrangements. These will include an IDR process that meets ASIC’s approved requirements, and membership with an ASICapproved EDR scheme.
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Credit checks added to broker’s toolboxes
Brokers at aggregators Finance and Systems Technology (FAST) and National Mortgage Brokers (nMB) will be able to check their clients’ creditworthiness before submitting a mortgage application, after both groups signed agreements with credit bureau, Veda Advantage. David O’Toole, national sales manager
at FAST, said credit reports, along with subsidised property reports provided by Residex and RP Data, would help its brokers deal with two issues coming up when banks assess mortgage applications. These are the credit history of applicants and the property valuation. O’Toole said that in the past, credit checks had mainly been used by mortgage managers or ex-banker brokers. “Both groups understand how credit checks can be used to profile a client for the purposes of providing credit,” he said. He added that they had mainly been used for new clients. O’Toole said a credit check will help brokers satisfy the first two of the three Cs required by lenders and mortgage insurers: character and credit history (the third is capacity to pay). “For example if a person claims to be living at the same address for four years and has minimal
credit, Veda will show any prior addresses plus all credit inquiries,” O’Toole said. “Our intention as an aggregator is to assist our brokers [to] work with and better understand factors that may affect a credit decision, other than what the market has been using in recent strong markets,” he said. “Our view is that a professional broker will need to be a strong client-relationship manager, sales-focused, business-focused and sometimes a realist – because sometimes you need to say ‘no’ to some clients,” he added. nMB said the subsidised Veda Advantage service would give members the opportunity to address any credit defaults or irregularities prior to the lender making inquiries. Director of sales and marketing at nMB, Sal Cinque, said early feedback from brokers has been extremely positive. “Our brokers
Key points nMB and FAST sign up to Veda Advantage credit checks FAST says brokers will be better client-relationship managers brokers need permission from borrowers to run check will make it possible to identify issues prior to submission
view this initiative as a positive step in improving their day-to-day efficiency and acknowledge nMB’s commitment to further improving submission quality,” he said. Cinque said brokers broached the subject of credit checks with their clients as part of the standard nMB “fact-find and interview process”. He said the credit checks offer many benefits, including brokers being better positioned to recommend an appropriate solution to the client and that any reporting errors can be addressed and corrected in advance. Both FAST and nMB brokers will also have to obtain the consent of their clients before ordering any credit checks from Veda Advantage.
New direction: MFAA calls in consultants The MFAA has called in consultants to help craft its future direction. CEO Phil Naylor said the consultants had been charged with “reviewing every aspect of the MFAA’s operations, representation, structure and governance”. It also includes a “detailed survey of members’ attitudes”. The MFAA undertakes a review every two years, but Naylor said that on this occasion “because of the massive changes in external economic and financial forces plus changes in the industry” it was decided that an “independent external strategic review to ensure MFAA was structured appropriately to meet the new environment” was necessary. Naylor said the review had commenced a few weeks ago, with a report expected in early September. It comes at a time when brokers are questioning the role of industry bodies. This is because ASIC will soon become the industry regulator. Peter King, managing director of Lifestyle Mortgages and an MFAA member, said there are too many industry bodies and aggregators “all competing for funding from sponsorships and membership fees”. King called for the MFAA and FBAA to merge and focus on being an “industry lobbyist” with membership comprising of aggregators, lenders and ASIC. Individual broker membership, he said, should not be compulsory. He added that a
merged industry body should become the forum for change and monitoring of industry issues. “[Industry bodies should] cease all activities that are duplicated by the aggregators such as awards and conferences. This will reduce the costs of resources and sponsorships,” he said. But he said they should continue to develop and operate education courses. Asked whether the review would result in major or more subtle changes to how the MFAA operates, Naylor said this would depend on the consultants recommendations, the board’s consideration and whether the members recommended any constitutional changes. He said members will be advised about the results of the review when it is completed. “At this stage until we see the recommendations I can’t comment when any new strategy will commence,” he said. Speaking recently at a media lunch, Kathy Cummings, executive GM for third party banking at the CBA, and an MFAA board member, said the industry body needed to develop into a ‘CPA-type role’.
Key points MFAA undertaking independent strategic review consultants examining every aspect of organisation results of review expected in September review includes survey of member attitudes
CBA opposed to ‘us verses them’ approach The Commonwealth Bank is working hard to break down any feelings of ill-will between the bank and brokers. This was one of the key messages delivered by the bank’s executive GM for third party banking, Kathy Cummings, at a recent media lunch in Sydney. “We have tried to break down the adversarial approach. It is not beneficial to the bank or to brokers. We want to build a sustainable industry,” she said. “Brokers are a very important part of our business – they are big introducers of new business,” Cummings added. She said the bank had demonstrated its commitment to the industry over the last 12 to 18 months, and had invested heavily in platforms to deal with the demand. “It’s been a torrid time for everyone. None of the majors expected the volume of business they received.” In addition, she said the bank was making a big push in broker training, with the focus being on explaining the importance of quality mortgage applications. “Brokers need to lift their standards. We have been working with brokers to get them to understand that…to get them ready for regulation,” she said. During the lunch Cummings also shared her thoughts on a current industry hot topic, part-time brokers. She said there was a place for part-timer brokers – the working mothers, financial planners and accountants – but the major complaints the bank receives come from brokers who were only writing a few loans a month across all lenders. “Poor quality deals are blocking up the system for other professional brokers,” she said.
Volume requirement “not unrealistic” The CBA has backed its new accreditation policy, following criticism from the FBAA which said forcing brokers to submit a minimum number of loans to remain accredited was a “flawed approach”. Kathy Cummings said the minimum criteria broke down into one loan every six and a half weeks. “We believe this provides professional brokers with ample opportunity to maintain their full accreditation with us and other lenders,” she said. Given the bank’s total market share (22% of mortgages) and broker channel market share (greater than 40%), she said it was “not unrealistic to expect that one in, at least, every five customers is a potential CBA client”. Speaking further on the topic at the Sydney media lunch, Cummings said the bank needed to see a “significant sample” from brokers. “It’s like servicing a car: models change, and you need to show you have stayed relevant.”
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Aggregators activate diversification strategies Key points FAST’s broker support program produces $2m in July alone three products per client secures their loyalty Simon Dehne appointed national manager for non-core products at Mortgage Choice risk insurance and asset finance and commercial loans are his key responsibilities Equipment financing and car leasing offers brokers the ability to finance deals for their existing clients rather than needing to automatically find new clients, according to FAST’s national sales manager David O’Toole. His comments came as the aggregator’s recently launched support program (for brokers branching out into the equipment finance sphere) produced an estimated $2m in settlements
during the month of July alone. “Brokers’ existing clients provide the opportunity to finance both consumer and business facilities. Every client they have financed homes for will have one or two cars, and most people will change cars every two to three years,” he said. Self-employed clients provide an immediate opportunity to finance larger equipment items such as trucks, trailers and industrial plants. Furthermore, cross selling to existing clients makes them less likely to leave the broker. “If you sell three products to your client base, they will generally never leave you. And you have locked in trail revenue on home loans – hence, your business is more valuable as an asset,” he said. Meanwhile, franchise group Mortgage Choice has sent out its own clear signal of just how
Big turnaround in housing from 2011 2010 will be another tough year, but according to BIS Shrapnel brokers should expect housing to lead a strong turnaround in 2011. Strong pent-up demand in combination with low interest rates, high rents and high rental yields is set to drive a strong phase of construction from 2010/11, which will strengthen over 2011/12 and 2012/13, BIS Shrapnel reported in its Long Term Forecasts, 2009– 2024 report. The group predicted that the Australian economy’s most
an important a role it sees diversification playing with the appointment of its first national manager of nonresidential business. Simon Dehne, previously head of sales and marketing at aggregator Choice, has taken on the new role of Mortgage Choice’s national manager for non-core products. “All of our non-core products will be important focuses for Simon, but risk insurance, asset finance and commercial loans are three key non-core offerings,” said Mortgage Choice’s corporate affairs manager Kristy Sheppard. She added that while diversification remained a major part of the company’s strategic plan, it came with a “transition period” that would need to be carefully managed. However, she said that Mortgage Choice’s new CEO, difficult phase would occur over the next year, though it would avoid a recession with 0.1% growth in calendar year 2009 and 0.5% in 2009/10. But report author and senior economist, Richard Robinson, said he would not rule out another negative quarter of growth occurring at some stage. For the next 12 months, BIS Shrapnel has forecast a 17% decline in business investment, falling household incomes and weak consumer spending, which will result in a fall in employment. And despite government economic stimulus efforts such as the First Home Owner Boost, it forecast a 7.7% cent decline in total investment (public and
The three most important benefits of diversification: 1. It broadens your offering, making your services more attractive to more customers. 2. It mitigates lost revenue streams and allows continued involvement in business. 3. It creates annuity streams and provides brokers with an asset to capitalise on when selling their business. Source: Mortgage Choice
Michael Russell, had “brought in the commerciality regarding diversification” and that its franchisees were savvy enough business people to understand the benefits. “Early adopters enthusiastically jumped onboard, while others take a more cautious approach until they can clearly see how their business will improve thanks to the change. Most of the feedback we have received from the network is positive. Our franchisees are excited about expanding their customer service proposition,” she said. private) – a major drag on growth throughout 2009/10. It also ruled out a recovery in employment before 2010/11. On the positive side, 2010 is forecast to be year of solid recovery, led by housing construction. Economic growth will strengthen over 2011/12 as consumer demand recovers, and subsequently, business investment and employment regain momentum, BIS Shrapnel said. Robinson said housing construction, which has been constrained by a lack of affordability since the cycle turned down in 2003/04, was poised for a strong upswing once economic conditions have sufficiently stabilised.
Professional requirements will challenge dual roles
There appears to be broad industry support for financial planners, accountants and lawyers offering mortgage broking services, but minimum volume hurdles and new licensing requirements could make it harder for them. Andrew Clouston, managing director of Club Financial
Services, said financial planners and accountants faced the same challenges that part-time brokers faced. “It’s good that mortgage broking is becoming more regulated. It makes us offer a more professional service,” he said. As mortgage broking grows as a profession, Clouston said, it would become a specialised industry and
Borrowers want repayment options and redraw Additional repayments options, early repayment options and a redraw facility rank as the most sought after mortgage features by Australian borrowers, according to a new survey comparing the Australian mortgage market with its UK counterpart. The Lucky Country report, prepared for the Australian Mortgage Council by Retail Finance Intelligence (RFI), ranked these three features first, second and third respectively in Australia.
In the UK, early repayment options and additional repayment options are also highly sought after, ranking first and second. Interestingly a ‘redraw facility’ is not highly sought after by UK borrowers (ranking 11th), but ‘interest-only repayment options’ ranked much higher (6th) in the UK compared to Australia (ranked 10th). “This seems to reflect differing attitudes to debt in the two countries, with Australian consumers being very debt averse
this would make it harder for people to offer both services. “You don’t have mortgage brokers acting as part-time lawyers and financial planners; and the reverse will apply,” he said. Dean Rushton, chief operating officer at the Loan Market Group, said the best models it had seen were where these kind of professions (financial planners and accountants) refer their leads to dedicated loan writers. “Some individuals may have the capacity to do both, but the professional requirements of each role would suggest that they are not going to be as effective in both capacities. If you’re using a sporting analogy, there are very few professional sports people who can be at the top of their game in more than one sport at and wanting to clear debt as soon as possible. For this reason, an interest-only option is less popular as it is likely to prolong the loan term,” the report concluded. The ‘ability to move your loan to a new property’ was valued highly by borrowers in both countries – ranking third by UK borrowers and fourth by Australian borrowers. Offset accounts are more highly valued by Australian borrowers than UK borrowers, while a honeymoon rates have a higher priority in the UK (8th) than in Australia (11th). Overall, Australian borrowers appear to place a higher value on features related to obtaining credit, while UK borrowers value discounted introductory rates more highly.
any one time,” Rushton said. But Paul Gollan, managing director of Australian Mortgage Brokers, took a different view. He said professionals such as financial planners and accountants had the advantage when it came to lead generation. They already have the clients, he said, while brokers can spend up to 50% of their time generating leads. Furthermore, he said such professionals were already well placed when it comes to compliance. However, he said minimum volume hurdles would mean they had fewer options available.
Key points regulation will see broking become more specialised will make it harder for planners/ accountants to also be brokers Dean Rushton says planners referring on clients is the best model Paul Gollan says volume requirements will be a hurdle
RBS purchases to help ANZ As it affirmed ratings for ANZ, Moody’s said the $5bn net growth in deposits (over loans) gained through the recent acquisition of the Asian RBS businesses, would reduce the bank’s overall reliance on wholesale funding. Moody’s said this reliance was “a key constraint on the bank’s ratings”. Following the RBS acquisitions, Moody’s affirmed ANZ’s Aa1/Prime-1 deposit and debt rating. “The assets ANZ has agreed to acquire will support its long-standing Asia growth strategy and the bank will remain well capitalised after the acquisition,” said Patrick Winsbury, a senior vice president at Moody’s Sydney office.
movers & shakers Name: Simon Dehne From: Choice Aggregation Services To: Mortgage Choice Title: National manager, non-core products Dehne has taken on a newly created role with the primary focus of implementing and selling Mortgage Choiceâ€™s growing range of non-core products via its franchise network. Dehne has 27 years financial services experience. Name: Aaron Milburn From: Bankwest store business To: Bankwest Title: WA state manager, broker sales division Milburn worked for Halifax Bank of Scotland (HBOS) since 1999 in a range of roles. After five years, he moved to the Bank of Scotland. Most recently, he worked as the regional manager for the store business within Bankwest. Name: Christa Corner From: Bankwest To: Bankwest Title: Victorian state manager, broker sales division Corner is initially from the UK where she studied PR before working as a PR Officer for a charity for three years. She joined Nike in 2005. In 2006, she moved to Australia and joined Bankwest as a Partnership Manager where she has developed strong relationships. Name: David Liddy To: Deputy chairman Title: Australian Bankersâ€™ Association (ABA) Liddy is the CEO of Bank of Queensland. In his ABA role, he succeeds Stuart Davis. Chairman of the ABA, Commonwealth Bank CEO Ralph Norris, said Liddy would play an important role in the industry discussions on regulation. Name: Saul Eslake From: ANZ To: Gratton Institute Title: Program director Eslake, former ANZ chief economist for 14 years, has joined the Gratton Institute as program director in the productivity growth division. The Gratton Institute is a new think-tank that is supported by the Commonwealth and Victorian Governments, the University of Melbourne and BHP Billiton.
News Aussie facing challenges with broader appeal Aussie’s new television advertising campaign, backed by the slogan “Put yourself in a better place”, is an ambitious attempt to broaden its appeal beyond its traditional battler client base, according to advertising experts. Managing director of specialist financial services communications agency, evolution media, Marcus Field, lauded the new creative as being “positive and broadly appealing” but said it faced a “real challenge in trying to deliver so many messages to a mass audience”. “It seeks to both communicate a major shift in product offering as well as reposition the brand personality, and in attempting so many things in the one execution it has, in a sense, reduced the Aussie brand profile in the communication,” Field said. “It is a step in the right direction, but I would imagine it is but one step in a long journey for Aussie.” The multi-million dollar campaign was launched on 19 June 2009. Aussie’s general manager for marketing, Stuart Tucker, said that the re-brand and new slogan mirrored the aspiration of its customers and the company’s growth strategy. Asked if he thought the campaign achieves the objective of presenting Aussie as more than just home loans, Field said that the mass population still regarded the group based on its strong original home loan challenger position of “we’ll save you”. “Fundamentally ‘put yourself in a better place’ is a great brand statement, but much more work must yet be done to demonstrate in more specific detail how Aussie will do this,” he said. Liz Rowell, managing director of Red Ark Marketing, which worked on Mortgage Choice’s recent campaign, called the new Aussie ads a “brave departure. I would have loved to be a fly on the wall at the pitch presentation and seen John Symond’s reaction,” she said. Rowell said the campaign moves Aussie into the realms of the banks. “It’s similar in tone to the new Westpac campaign, for example. They’ve joined the establishment. The good thing is that it talks about the consumer’s needs and wants, rather than indulging in too much chest-beating.” Rowell agreed with Field that Aussie would face challenges stretching its brand into a broader market. “They’ll have to do some work on explaining to consumers their expertise and experience in this area. They will need to earn some credibility.”
Removing Aussie John is right for new focus, say advertising experts Both Marcus Field and Liz Rowell agreed that removing John Symond’s presence from the new Aussie television advertising campaign was a good idea. “Aussie John is seen to be a champion of the battlers. Removing him takes the brand upmarket,” Rowell said. However, she thought the challenge for Aussie will be in capturing the broader demographic or risk losing its individuality and saliency to become one of many players who are jostling in this space. Field said not using “Aussie John” in the current campaign challenges any pre-conceived notions about the brand and is a “sensible idea” which puts across the view that the business has changed. “It makes the brand a little less personal. But you need to do that if you are offering so many different things.”
Dale Burrows is creative director and owner at Red Ark Marketing. With more than 20 years in the industry, many awards and experience across a plethora of brands and their individual challenges, he still springs out of bed every day looking for fresh opportunities to create great communication. Favourite logo of all time: the Nike Swoosh “you just get it”. Contact him: email@example.com
top ten tips Designing a company logo A company logo should be an instantly recognisable symbol of your business . As brokers look to build their personal brand identities, Dale Burrows from Red Ark Marketing provides these handy hints:
Tip 1: Understand your positioning and capture the essence. A “value” brand should look attainable and affordable while a “premium” brand should justify its expense. Spend time asking yourself questions like, “If I were a car, what marque would I be? If I were a clothing line, which label would I be? Am I a masculine, feminine or gender neutral brand? Am I talking to businesses or consumers? Understand that business people make decisions on an emotional level as well as a rational one. For example, a “creative” business should have a creative image – although when Saatchi & Saatchi launched in London they designed their logo to look like a lawyer or an accountant, to create credibility and trust. Tip 2: Identify your intended target and make sure your brand and its positioning will connect with them. Understand them. What’s important to them? What gets them out of bed each day? Do you need to make them feel special? Or do they want to be one of a crowd (a Google user versus a VIP business traveller) Tip 3: Identify your key competitors and look at their logos, positioning and brand colours. Tip 4: Have a clear idea of where your logo will appear and any other influences on it. How important is legibility? Tip 5: Decide on mandatory requirements. This means registered trade marks or taglines are to be included. Tip 6: Sum up what your brand is very succinctly. This may get to the heart of what inspires your logo design. For example, Disney’s mission statement is “to make people happy”. Red Ark’s is “we go the extra mile to delight our clients”. Tip 7: Make a statement with your logo. Do not underestimate the power of a good logo. Think of the power of the Nike tick – you don’t even need to read the word Nike to know who the logo belongs to. Tip 8: Write a complete brief to your designer, giving them as much background and information as possible. What do you want people to think and feel when they see your logo? Tip 9: Look at several options during design stages before making a decision. Potentially put these options into some kind of research with your target. What’s your gut feel? Put it away for a couple of days and see what your more considered response is. Does it match your brief to the designer? It represents you and your business so you need to be able to own it in every sense of the word. Tip 10: Think ahead. Fashions change but your logo should endure. Be wary of faddy colours or trendy typography (unless the nature of your business is in itself ephemeral or constantly changing). The digital era is upon us. Consider how your logo will work online as well as in the physical space.
Do you have a bone to pick? Do you have an opinion on any story you may have read in the magazine or in our weekly newsletter? Australian Broker is eager to hear back from its readers, so if you feel strongly about something, send an email to: firstname.lastname@example.org
Banks cut fees to protect market share Concern over market share once the markets stabilise – similar to when the non-banks entered the market in the mid-90s – has prompted banks to cut fees, according to McGrath’s subsidiary Oxygen Home Loans’ general manager, James Green. National Australia Bank, Westpac and Commonwealth Bank have all announced recently cuts to exception fees across credit cards, home and personal accounts and business accounts. Green said there was a possibility the fee cutting might extend further into the mortgage space, and that the banks may be
forced to revisit the costs related to exit penalties. “Doing so would demonstrate that [banks] are becoming more customer-centric and less focused on short-term profitability,” he said. Meanwhile, CANSTAR CANNEX’s financial analyst, Peter Arnold, puts the fee cutting activity down to mounting government pressure. “Ever since the RBA released figures putting a dollar value (over $1.1bn) on what the public feels are excessive fees, the tide of unrest has turned, “ he said. “By using a tangible value, the RBA has shown the enormity of
AFG founder to speak at Oracle’s international conference
Founding director at AFG, Malcolm Watkins, has been invited to address Oracle’s Open World San Francisco conference in October. “This is a highly prestigious invitation for a Perth-based
company with less than 200 staff, when Oracle has over 300,000 customers, including 98 of the Fortune 100, to choose from,” AFG said. At last year’s conference, close on 43,000 attendees heard keynote addresses from technology industry leaders including HP, Intel and NetApp. “AFG has been invited to speak because its use of Oracle products has been successfully translated into a full-platform service for brokers,” the company said. AFG uses Oracle products to support sales activities, provide its customer-relationship marketing service, as well as to perform business analysis and produce reports.
these fees over the course of the year.” Arnold added that in the United Kingdom these fees were being stamped out by legislation, so he applauds our banks for pre-empting possible legislation changes in eradicating fees now. However, he didn’t expect banks to consider cutting exit fees in the mortgage space. “The $38m in penalty fees paid on mortgages is only a small proportion of the overall penalty fees paid,” Arnold said. “Most penalty fees occur on everyday transaction accounts and credit cards, where people are making large numbers of
payments and can easily lose track of how much money they have available. For now I see the concentration being on personal transaction accounts and credit cards,” he said.
Key points major banks are slashing exception fees divided sentiment on whether it will extend to mortgages Oxygen’s Green says it is to protect market share CANNEX’s Arnold puts it down to mounting pressure
Letters to the editor: Aggregators should reinvent themselves Dear editor, It is now as clear as day that aggregators will soon be dead, or dead as we know it. The major banks will see to that. An aggregator’s purpose is to ‘bulk-up’ the loans from individual brokers so as to meet each bank’s minimum loan volume requirement, thereby giving the individual broker access to a large panel of lenders. Recently, some of the major banks now want individual brokers to each meet loan volume quotas. Each broker has to make a choice of which bank (or two) of the majors to place loans with, as it’s impossible for individual brokers to attain all quotas for all banks. It’s impossible for us to maintain our wide offering, and
therefore our relevance, to clients. We've got two options: • Brokers congregate to form themselves into larger brokerages of 20 or more writers, enabling the brokerage to meet all bank quotas but making it much like an aggregator by necessity. • Brokers are forced to use mortgage managers, all of whom are competitive and some more so than the banks. A large number are not on aggregator’s panels. The only option for aggregators is to reinvent themselves in a similar position as financial planning licensees do, in the financial advice industry. Maclane Johnson The Money Tree, Perth
Cuscal considering white-label product Wholesale and transactional banking service provider Cuscal is considering launching a whitelabel mortgage product for its members as well as brokers. Cuscal managing director, Craig Kennedy, told AB it had an
AA-rating and systems in place to facilitate funding. “We are looking to unlock value in our balance sheet and provide white-label lending products to our customers, so why not make them also available to brokers?” Kennedy also put his support behind the third-party channel. “There is plenty of room for brokers in the market – they are advocates for customer choice. There is more competition in the market with third party lending.” Before the GFC, Kennedy said Cuscal had been in discussions with non-banks and foreignowned banks about providing transactional banking services. But due to the GFC their lenders had scaled back their plans in the Australian market. He said non-banks looking to offer transactional banking services to their mortgage customers should talk to Cuscal.
“The real appeal is that we are neutral without a competing retail brand. You are not at risk of being disintermediated by a major bank,” he said. The major issue remains what he calls the “competitive void” in lending. “We need to bring some competition to the market. In retail banking [it] is at an all-time low, though the majors will say otherwise,” he said. Cuscal counts credit unions, non-banks and many of the middle-tier banks as its customers, but Kennedy said that two – non-banks and middle-tier banks – had effectively gone, while credit unions and building societies were growing below system growth. “Ninety percent of lending is being done by the major banks. All the rest – credit unions, building societies, ING, Bendigo Bank, Suncorp etc – are fighting over the rest, he said.
Super support for smaller enterprises Brokers who have been manually paying employees their superannuation contributions should soon be able to take advantage of a new online service, launched by Cuscal and technology group Payment Adviser. The two businesses have combined to launch Australia’s first superannuation “clearing house” for small and medium enterprises. The service enables SMEs to make secure online payments of their employees’ superannuation contributions. The service will be rolled out progressively throughout 2010. Kennedy said Cuscal’s aggregated wholesale and transactional banking services meant it could enable smaller financial institutions to punch above their weight. It has reached a joint initiative with NAB to create a rediATM network of 3,100 ATMS, making it one of the biggest networks in Australia.
industry NEWS IN BRIEF Smartline named top Australian franchise
Ballast makes a sound business move
Small business to benefit from bank fee cuts
ANZ questions ACCC’s stance on mergers
MGIC drops expansion into Australia, Canada
Mortgage broking franchise Smartline edged out rival Mortgage Choice to be named Australia’s best franchise, according to Topfranchise.com.au. Smartline, which recently merged with Mortgage Force, came first in Topfranchise.com.au’s most recent Top 10, while Mortgage Choice placed fourth. The two franchise networks were chosen from more than 170 franchise systems In addition to taking out the top spot overall, Smartline was ranked number one in three of the five specific categories: support ( the levels of support offered by the franchisor to the franchisees); rewards (the financial and social rewards franchisees feel they receive from being part of the franchise) and passion (how passionate franchisees are about their customers, brand, product or service they offer). ANZ Mobile Lending also made it into the Top 10. Financial services company Ballast has expanded its business through the recent acquisition of Sound Finance Group. The acquisition includes the purchase of two retail offices based in Victoria Park and Rockingham. “We consider ourselves a ‘boutique’ financial services provider with a clear emphasis on courteous, ethical and professional behaviour from all our representatives,” said Ballast’s general manager, Frank Paratore. “It is extremely important to us that as we grow we never forget the qualities that have made us successful in the first place. Sound Finance and our new Midland branch are a good fit with Ballast’s business ethos and we are very pleased to say that all existing staff will be retained.” Ballasts utilises 80 different financial service representatives across Western Australia and Queensland to give their customers a “one-stop shop” experience. Small business customers are applauding Westpac and NAB for cutting bank fees. The Council of Small Business of Australia said small businesses usually received the short end of the stick, but are “extremely pleased that the fee reduction applies to small business customers, as well as personal banking customers”. “It is often the case that small business banking customers get left out of rate cuts and fee reductions when some banks restructure their fees. We’re glad to see that small businesses get the benefit of this new policy at Westpac,” said chief executive officer, Jaye Radisich. But he warned it’s still essential for small businesses to keep a closer eye on their bottom line, as part of good business practice. ANZ chief executive officer, Mike Smith, lambasted the regulators’ stance on bank mergers, saying it would not stop the lender from trying to buy a domestic rival. According to The Australian newspaper, Smith has expressed interest in expanding ANZ’s current 16% domestic share. “We need to bulk up,” he stated. “I think the issue in Australia right now is competition and the anti-competitive dialogue or muttering or whatever it is that you want to call it, coming from the ACCC. I thought they were there to actually look at deals and give a view, rather than announce ahead of that what you can and can’t do.” Smith’s comments have renewed speculation that ANZ is looking at the possible acquisition of Suncorp’s banking arm. Other listed regionals include Bank of Queensland and the Bendigo and Adelaide Bank. The Australian revealed in August that J.C. Flowers, a private equity firm from New York, has been eyeing Suncorp. David Morgan, a former Westpac chief executive, is the firm’s operating partner and Australian chairman. Mortage Guarantee Insurance Corporation Investment Co’s problems in the American mortgage industry have stymied the company’s international strategy, according to reports in US media. In mid-2007, MGIC opened offices in Sydney and Toronto, Canada. But in August, the Milwaukee-based private mortgage insurer dropped plans to seek a Canadian business license, after having earlier halted issuing new policies in Australia. MGIC executives decided to devote the company’s resources to addressing ongoing challenges in the United States housing market, said MGIC spokesman Mike Zimmerman.
More support needed Australian Broker’s Tim Neary
spoke to lenders who had received funding from the government’s RMBS scheme about what the next step should be
overnment should guarantee RMBS, just as they have done with the banks term wholesale funding, according to Steve Weston, Challenger’s general manager for residential and commercial lending. As the AOFM’s $8bn RMBS funding program dries up, Weston said this would be government’s best next course of action. Simply adding another $8bn tranche to the first would mean not only that the government would need to borrow more money, but also that it would only get the non-bank industry back to the $3bn a month lending level the first AOFM initiative had provided for, Weston said. And this, he said, was significantly less than the sector was lending before the onset of the GFC. Instead, governments actually guaranteeing RMBS issues was the only way to get back to the days of old. “When you think that only two years ago 25% of home loans in Australia were being funded by securitisation, it is no surprise now that securitisation has been taken out of the mix and that interest rates are going up,” Weston said. Frank Knez, associate director for product and marketing at Resimac, agreed with Weston. Knez told AB that at a recent European investor road show it had became abundantly clear that Australian RMBS – and consequently Australian mortgages – were the “stand-out story” of global portfolios. But while this boded well for Australian issuers, he said there remained “structural impediments” to being able to launch new deals. “The government guarantee on bank debt is probably a prime example. Extending a form of a credit wrap to RMBS would open up access to the deep government guaranteed market where there has been broad global support.” But James Austin, FirstMac’s chief financial officer, said he’d prefer to see continued government support in the form of the existing AOFM scheme until such time as there was a recovery in the wholesale markets. “A second round of AOFM RMBS investment will satisfy the government’s requirement of being timely, targeted, and temporary. “We believe this is a superior approach to the alternative of government guaranteed RMBS, as the market difficulties relate to liquidity, not credit,” he said.
Saying that he would like to see the AOFM scheme continue, Paul Garvey, manager for financial markets at Members Equity Bank, told AB he believed that overall the scheme had achieved some success in that it provided funding to a greater cross-section of industry participants. “This compares to the government guarantee for medium term issuance that has provided a competitive advantage to the Big Four banks, with regional and smaller banks forced to pay more than twice as much to access that scheme,” he said. FirstMac’s Austin agreed: “The government’s objective in directing the AOFM to invest in RMBS was to
support competition in lending for housing.” The nonbank sector provided critical competition to the major banks and was largely responsible for the historic reduction in home loan margins, he said. “The government provision of support to second tier lenders means that Australia will get to the other side of the GFC with more than just the major banks – and this is positive for consumers.” Weston also agreed that the scheme kept open the doors of the non-bank sector. But he felt that the $4bn allocated to non-ADIs just wasn’t significant enough to enable competition to return to its former levels. “While the $4bn is significant, the non-bank sector was writing $3bn worth of loans a month before the GFC, so it is little more than a month’s worth of funding,” he said. And given that the bank deposit guarantee has given the major banks access to “something like $120bn in term wholesale funding since December”, he said $4bn would not really allow the non-banks to compete with the majors. “So it’s appreciated, but it hasn’t really enabled us to open up our shoulders,” he said. Knez felt that the AOFM scheme was successful to the extent that it provided funding during the “unprecedented” GFC. However, he said the objective of increasing competition in the mortgage market required significantly more than short-term government liquidity. Garvey felt the scheme’s effectiveness lay in its placing of RMBS into the distressed market.
Australian RMBS – and consequently Australian mortgages – were the ‘stand-out story’ of global portfolios Where the money went
The proceeds of Resimac’s two AOFM supported transactions were put towards originating new mortgages. “Following our December deal, Resimac launched a new product called the Horizon Loan in addition to a new customer-beneficial feature in the Loan Access Card,” said Knez. He believed the scheme allowed Resimac to enable new warehouse capacity and also to demonstrate that government had recognised its stability as a provider of mortgage credit. Members Equity Bank participated in two transactions with the AOFM. One raised around $600m, and another raised $714m. “Members Equity Bank applied the funds to ongoing origination of residential loans,” said Garvey. Weston said that Challenger wrote new loans with the funds that it had received from the scheme. FirstMac secured $1.2bn through two RMBS tranches, and Austin said that through it the company was able to increase new lending volumes significantly – specifically through the release of a new product range it called “FightBack”. “We offered the product at an introductory one-year fixed rate mortgage of 3.99% initially, and then lowered the rate to 2.99%,” he said.
James Veigli is a mortgage broker, marketing and business strategist and founder of the Australian Mortgage Broker Alliance. He can be contacted at: email@example.com
Replacing trail: strategic partnerships In his second article looking at ways brokers can reduce their dependency on lender commissions James Veigli says brokers can create passive income streams by aligning with other complementary service professionals The serious modern-day mortgage and finance broker in Australia must align their service with other complementary service professionals. They must do this not only to create a complete financial experience for their clients, but also to create additional passive income streams for their business. In my experience as a broker trainer and mentor, I’ve worked with industry ‘newbies’ right through to the ‘dinosaurs’ and ‘power brokers’. And despite the wide range of experience, two things are crystal clear: 1. All brokers clearly understand the importance of setting up professional alliances and know these alliances are a huge value-add to their clients, as well as a powerful referral source. 2. Yet, the majority of brokers (I’m talking to the ‘newbies’ as well as the ‘dinosaurs’ and ‘power brokers’ here) do not understand exactly how to approach, setup and (most importantly) maximise professional alliances. Most brokers think they are doing this correctly, but the hidden truth is they are only scratching the surface and are leaving massive amounts of money on the table for another broker or professional to pick up! To stop this happening to you, follow my five-point fast-start (or quick-fix) guide to maximising your Strategic Partnerships: 1 Take control of the partnership setup, growth and maintenance, because most professionals simply don’t understand how to make alliances work properly. It’s the common problem of a person being a great ‘technician’ in their business – but an uneducated ‘business person’. If you don’t take control and drive the partnership in the direction you want, it will slow down, stall or even not get started! 2 Educate your strategic partners on your product, service and most importantly your marketing and sales process. Explain why partnering with you will help make them more money and improve their business. Remember – it’s all about them! The big mistake here is to do this once and think that’s good enough. Wrong! You must do this on a regular and consistent basis for maximum impact. 3 Set boundaries and agree on them up front. If your partners don’t play within the boundaries – warn them or give them the flick. The biggest tip is to quickly let go of any professionals that don’t play by the rules. They will waste your time, leech all your clients, and mentally drag you down with them! Cut them loose and move on. 4 Non-negotiable referral system. For example if you partner with an accountant, advise your clients that you will organise a ‘tax check-up’ for them with your accountant, to make sure they are paying the lowest amount of tax. In return, every client your accountant partner meets with will be directly referred to you for a ‘loans check-up’. No exceptions. Implementing this non-negotiable part of your sales process will turbo-charge your referrals and income. 5 Regular updates are essential. You must provide and request regular formal updates on the progress of all referrals. I suggest this happens weekly, but depending on your partnership it may be better suited to fortnightly or monthly tracking – but never longer than that. This point is not to ‘keep track’ of your partners, but to ensure all parties are 100% up-to-date on all clients. This will guarantee a seamless, knockout experience for your clients – plus it eliminates the stress of uncertainly, and the time wasted making update phone calls to your partners. If you implement this five-point guide with your existing and new strategic partners, you will see an immediate increase in the number of referrals, income, satisfied clients and partners – not to mention less stress and more time for you to focus on building your business. When executed correctly and in combination with our more advanced tactics, this trail replacement strategy alone can not only increase your referrals, but dramatically increase your passive income and business value – with minimal additional work! Stay tuned for the final trail replacement strategy on memberships and continuity. Until then, take action, start implementing and go get ‘em! To read James Veigli’s first column in the series go to: www.brokernews.com.au/news/ industry-talk/forging-a-new-trail/36195
Property market: state by state roundups LJ Hooker Financial’s team of property and mortgage experts access the health of the state market they operate in and what’s in store for them in coming months NSW/ACT market
Over the three months to June 2009, the LJ Hooker/ BIS Shrapnel residential property index (RPI) shows that Sydney values increased by 3.9%, after falling by 3% over the three months to May 2009. Overall, house price growth on a year-on-year basis fell by 6.5% to June 2009. September 2008 was the last month to record house price growth on a year-on-year basis, however, a trend toward decreasing negative growth has been evident since March this year. With the additional First Home Owner Grant (FHOG) on offer, house sales under $350,000 made up 20% of total sales through Sydney in June 2009, which equalled the results seen from one year earlier. Interestingly, the composition of sales in the mid-price range ($350,000 to $500,000) has increased from a modest 14% of total sales in June 2008, to record a more significant 25% in June 2009. This could indicate that increases in sales volumes are moving up in price points, suggesting that the more buoyant conditions at the lower end of the market are encouraging upgrading though to the higher price points. Peter Bromley, general manager, LJ Hooker Financial Services
Over the three months to June 2009, the nation’s capital increased values by 3% in the house price index. This follows 3.5% growth in the three months to May 2009 and 1.3 % recorded to April. The year-on-year figure took its largest tumble since February 2009, falling by 5.6%. However, the LJ Hooker/BIS Shrapnel RPI report suggests caution should be taken when looking at Canberra, due to the low level of sales and the subsequent volatility that takes place from month to month in the data. The general trend of price growth does appear positive. The percentage of sales in the market under $350,000 fell to 6% over the 12 months to June 2009. This was markedly different to the results of a year ago when 16% growth was recorded over the 12 months to June 2008. This could be an indication that the boost to the FHOG encouraged greater sales into the next price segment, the mid-range between $350,000 to $500,000. As of June 2009 house sales in this range were recorded at 61%, compared to 40% in June 2008. Seasonally, spring is the most active period on the property calendar with increased buyer and seller enquiries and properties changing hands. For this reason, LJ Hooker has chosen to hold its Spring AuctionFest nationally from 1-31 October, allowing vendors an opportunity to attract buyers through widespread promotion and publicity. Peter Bromley, general manager, LJ Hooker Financial Services
The LJ Hooker/BIS Shrapnel residential property index (RPI) report shows that Brisbane’s house price
index improved over the three months to June 2009, increasing significantly by 5.9% – as opposed to only 2.3% growth for the quarter to May 2009. The most recent quarterly increase was the largest since the index recorded growth of 6.2% in the three months to November 2007. Annual growth is still being affected by the significant RPI falls that occurred over the second half of 2008; however the annual growth rate fall of 4.6% seen up to June 2009 is an improvement on the previous month, when the price index fell by 8.8%. Total sales in the market under $350,000 have fallen from a total of 19% in June 2008, to 13% in June 2009. For the June quarter, sales above $500,000 made up an increasingly larger share – 43% of overall sales. There was little price movement taking place in the mid range ($350,000 to $500,000) for the June 2009 quarter. Brisbane’s auction clearance rates have held up steadily, including the results of the last weekend in July when it was the notable exception to a slide in clearance rates for the other capital cities. Glenn Kunning, LJ Hooker Financial Services
Victoria and Tasmania
The three months to June 2009 saw confidence grow in the Victorian market, which was also evident throughout the March quarter. While there are still some homeowners and investors acting cautiously, the majority are feeling optimistic. Improved affordability, due to low interest rates, the boost to the FHOG and other assistance programs, and a growing population, shaped a healthy first half of 2009 in the southern state’s real estate. At the end of the March quarter it was predicted that the market activity at that time would remain at its current level. Yet according to anecdotal reports from agents, takeup of loans and enquiry figures suggests increased activity. If the economy and unemployment rates remain stable, the remainder of 2009 should remain strong. A key indicator is the increase in the number of properties going to auction supported by good clearance rates. Vendors and buyers are acting confidently. Colin Judd, state manager, LJ Hooker
In the mid price range ($350,000$500,000) house sales increased from a modest 14% to 25% in June
photo: John de la Roche
The LJ Hooker/BIS Shrapnel RPI report on Hobart for the three months to June 2009 showed the price index falling by 1.7% after recording a fall of 0.8% in the quarter to May 2009. However, over the year to June 2009, a total fall of just 0.5% was recorded, suggesting that there is still relative stability here. With the lowest median house price of the Australian capitals, it is not surprising that Hobart recorded the bulk of its sales in the market at under $350,000. Colin Judd, state manager, LJ Hooker
The LJ Hooker/BIS Shrapnel Residential Property Index (RPI) report on the three months to June 2009 shows that the Perth index increased by 2.9%. This is a promising result after the -0.2% growth seen for the quarter to May 2009. On a year-on-year basis, the Perth index declined by 4.5% in June 2009. This is an improvement from the -7.1% recorded for the 12 months to May 2009 and the smallest fall seen since September 2008. The boost to the FHOG seems to have had a moderate impact at the bottom end of the market, with total sales under $350,000 increasing from 30% in June 2008 to 34% in June 2009. There is no particular region that has experienced a significant change in the composition of sales over the year to June 2009, although sales volumes have picked up at the bottom end of the market in both the southeast and south-west regions. Stock levels are beginning to tighten in the lower and middle price ranges of the market. Consequently, the impact on both these market sectors of the phasing-out of buyer incentives will be interesting to observe, through the September and December 2009 quarters. While the activity in the upper end of the market is showing some early signs of healthy growth, the “green shoots” at the $1m-plus property sale sector are not yet as apparent. That top end of the market appears not quite as ready or consistent in its growth spurt. Phil Smith, state manager, LJ Hooker
The LJ Hooker and BIS Shrapnel’s Residential Property Index (RPI) report for the June 2009 quarter shows the Adelaide index improved over the three months to June, increasing by 1.6%. This is a little more modest than the 2.3% growth recorded over the quarter to May 2009 but it is higher growth than that recorded in the three months to March 2008. A year ago Adelaide recorded 24.8% year-on-year growth. While year-on-year to June 2009 saw a fall of 7.9%, the past four months of year-on-year figures suggest a stabilisation. The impact of the FHOG boosts on the Adelaide market has not been as apparent as in the other capital cities. Volumes at the bottom end of the market have only slightly increased over the year to June 2009, with total sales below $350,000 recording a market share of 56%, as opposed to 54% in June 2008. No one particular region has changed significantly over the 12 months to June 2009, possibly highlighting the affordability of Adelaide compared to the other mainland capitals. Unlike Sydney and Brisbane, the influence on the market of the boost to the grants available in Adelaide is more broad-based. Andrew Morrison, LJ Hooker Financial Services
The impact on both these market sectors of the phasing out of buyer incentives will be interesting to watch
News off the cuff Steve Weston Challenger’s general manager, distribution –broker platforms and lending The last book you read? Flip the Switch by Andrew May. It has some great messages on how to maintain peak performance. If you did not live in Australia, where would you like to live? Fiji, because the people are so friendly and relaxed. If you could sit down to lunch with anyone, who would it be? Nelson ‘Madiba’ Mandela – what an inspiring story. What was your first job? My first full-time job was working in a branch of the Commonwealth Bank in Bowen, Queensland. I spent 12 great years with the CBA and learned the importance of setting your own personal bar to ‘high’ during that time. What do you do to unwind? I spend as much time with my family as I can. I also let my wife run me ragged on the tennis court most weekends. What’s the most extravagant gift you ever bought yourself? It would have to be our current home. It certainly blew the budget! What CD is currently playing in your car stereo? High School Musical – I have six and nine-year-old daughters. If you could give anyone starting out in business one piece of advice, what would it be? Work hard, get a thorough understanding of the industry you’re in and the value drivers of your business; and most importantly, never compromise your integrity. If I was not working in the mortgage industry, I would be… Maybe a university lecturer. I love teaching, as long as the subjects are not too theoretical. Where was the last place you went on holiday? Mooloolabah in QLD. Beautiful one day – perfect the next. What is the one thing most people would not know about you? When I left school as a 15 year old I wasn’t sure what the future had in store. It seems like light years away from my life today.
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Norris backs brokers Hair said he left the meeting with an appreciation that the bank had an ongoing commitment to the broker channel. Kevin Matthews applauded the bank for organising the lunch and said the impression he received is that Norris has a very good understanding of the third-party model. “There is no suggestion they would squeeze us out any further. He knows how important brokers are to the bank and expects the channel to continue to grow,” Matthew said. Joe Sirianni also took a lot of positives from the meeting, including the perception that Norris and the bank’s head of retail banking, Ross McEwan, have a very strong customercentric focus. On commissions, Sirianni confirmed there was no further talk of cuts: “Ralph was pretty comfortable with commissions where they are.” Sirianni said he left the lunch meeting feeling that the CBA is
still committed to third-party space and is doing much work to improve its back-end processing and systems. Asked what he took away from the meeting, Russell said firstly, that the bank remains committed to the broker channel and does recognise the value of its partnership with brokers; and secondly, that the existing commission structure is not coming under any pressure and would seem to be very sustainable in the foreseeable future The lunch also saw discussion about the ongoing challenges around funding and home loan margins following the global financial crisis, with CBA’s treasurer, Lyn Colby, expressing cautious optimism that Australia was emerging from the downturn. Colby also did a presentation on the bank’s funding strategy and its recent experience with retail deposits and wholesale funding markets.
Being a social butterfly is a business advantage Brokers that can work the room at industry events have an advantage over their more socially withdrawn counterparts. A recent survey highlighted the importance of upskilling in order to remain employable, but also reveals networking to be a key priority for many professionals. The Robert Walters’ report, Employee Insights Survey, polled 560 professionals on what they believed to be the most important strategy to remain employable in the current climate. Overall, workers voted upskilling to be the most vital strategy (29%), followed by networking (18%).
Jen Harwood, a motivational speaker, author and coach adds that while networking is obviously important, honing this skill is particularly important in the professional services industries. “In a climate like this, you need to generate new business and create new opportunities and you do that by networking and talking to people,” Harwood said. “People are going to remember you and think of you for that promotion or that job, whereas just going to a training seminar to learn something new or doing your job isn’t going to create those opportunities in the same way.”
25th September 2009 The Westin, Sydney
the countdown has begun
New leaders of the mortgage industry empire: finalists announced in MPA9.9
Book your table online at www.australianmortgageawards.com.au
www.australianmortgageawards.com.au AMA09_sciFi_AB6.15.indd 8
3/08/2009 12:57:28 PM
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Your cappuccino sir, sponsored by…
Gerard Hansen (far right), ‘The King’
nsider was recently at a closed doors media lunch at the CBA’s new third party headquarters in Darling Harbour. A sumptuous meal was served against the scenic backdrop of the harbour, after which a waiter came round to take coffee orders. At this point, excitement reached near fever pitch when a number of cappuccinos were ordered. Those present were told a ‘surprise’ was in store. Shortly after, the cappuccinos arrived…each with the CBA’s logo sprinkled on top in chocolate!
Rucks, mauls and mortgages
Broker still ‘The King’
Gerard Hansen, mortgage broker
couple of years ago, Insider reported on Auspak broker Gerard Hansen as he went all out to prove he was the real king of broking by taking part in the Elvis festival held in the central NSW town of Parkes. Recently Hansen provided some comments to Australian
Broker and we casually asked if he was still doing his Elvis impersonation. “Thought you’d never ask,” was his swift response, followed by an e-mail with photos of him and his mates in full Elvis regalia at this year’s celebration (see above). Sadly, Hansen told us next year would be his last as a ‘big hunk of burning love’…
nyone who watched the recent Tri-nations Test Match between the Springboks and the All Blacks in South Africa probably didn’t know that among those on the field was a practicing mortgage broker. So was it Richie McCaw, Victor Matfield, Muls Muliaina, Ma’a Nonu or perhaps Bryan Habana? Could Brad Thorn be selling dummy passes and mortgages? While you’re scratching your head trying to work it out, Insider can reveal that the loan writer on the field that day was none other than the Irish referee, Alain Rolland (who also refereed the 2007 World Cup Final). Indeed, when he’s not blowing his whistle or handing out yellow cards, Rolland can be found arranging loans for Dublin-based Cornmarket financial services group. Of course with all the current troubles in banking (particurlarly in Europe), Insider wonder if Rolland ever slips into referee mode when working as a broker, for example handing out yellow cards to lenders that decline mortgage applications. If he was working in Australia, he could certainly send off a few lenders for dirty play!
Australian Mortgage Awards 2009, 25th September, The Westin Sydney. Secure your table at www.australianmortgageawards.com.au
Homeloans Ltd 1300 787 866 www.homeloans.com.au page 22 MKM Capital 1300 762 151 www.mkmcapital.com.au page 8
Aggregator/wholesale broker Choice Aggregation 1300 135 389 www.choiceaggregationservices.com.au page 23 Mortgage House Aggregation Services 1300 664 774 www.mhas.net.au email@example.com pages 16 & 17
RAMS Home Loans 1300 130 769 www.ramsbroker.com.au page 15
PLAN Australia 1300 78 78 14 www.planaustralia.com.au firstname.lastname@example.org page 5
MORTGAGE MANAGEMENT/ NON-BANK Mango Media 02 9555 7073 www.mangomedia.com.au page 1
BANKS St. George Bank 1300 137 532 page 3
NON CONFORMING Liberty Financial 13 11 80 www.liberty.com.au page 7
COMMERCIAL Banksia Financial Group 1800 333 114 www.banksiagroup.com.au page 13
Oasis 1800 426 747 www.oasiscapital.com.au page 20
debtor finance Cashflow Finance Australia 1300 788 945 www.cashflowfinance.com.au page 27
Pepper Homeloans 1800 737 737 www.pepperhomeloans.com.au page 12
Real Factor www.realfactor.com.au email@example.com page 10 LEnder Citibank Mortgages 1300 651 059 www.mortgagebroker.citibank.com.au page 19 Eurofinance 02 9252 8311 www.eurofinance.com.au page 18
www.residex.com.au The House Price Information People
other services Residex 1300 139 775 www.residex.com.au page 30 RP Data www.rpdata.com page 14
Symmetry 1300 723 613 page 25 Trailerhomes 0417 392 132 page 28 short term lender Crown & Gleeson 1800 735 626 www.crownandgleeson.com.au page 2 Interim Finance 02 9971 6650 www.interimfinance.com.au page 6 NCF Financial Services Pty Ltd 1300 550 707 www.ncf1.com.au page 21 SOFTWARE/IT Finware 1300 762 444 firstname.lastname@example.org www.finware.com.au page 31 Wholesale Challenger 1300 786 552 www.challenger.com.au page 9 Resimac 1300 764 447 www.resimac.com.au email@example.com page 32
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