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ISSUE 7.15 August 2010

Low-doc lending declared ‘dead and buried’

Low-doc lending ‘gone’: Steve Kane, FAST

 NCCP and GFC

fallout blamed for demise of low-docs Low-doc lending has been pronounced “dead and buried” by leading industry players, with new National Consumer Credit Protection (NCCP) laws and the financial crisis regulatory fallout combining to scuttle a possible revival of the low-doc sector to pre-crisis levels. FAST managing director Steve Kane said low-doc lending is now effectively “gone”, while FirstMac chief financial officer James Austin

and Resi head of consumer advocacy Lisa Montgomery agreed that low-doc lending can now be labelled “dead”. The demise is being attributed to the NCCP legislation, which requires brokers and lenders to obtain adequate information and take reasonable steps to verify a borrower’s situation at loan origination, requiring increased documentation. Meanwhile, irresponsible lending practices abroad which preceded the financial crisis, particularly in the US, have yielded reactive international regulation that will stifle a local low-doc revival.

Austin said low-doc lending had been “tarred by the US brush”, despite local lenders not entertaining the irresponsible practices seen overseas. “Unfortunately, with what’s happened offshore in changes to legislation, low-doc is now dead, and that does have the unintended consequence of choking off finance to the market,” he said. Kane said pressure from lenders mortgage insurance providers is adding to the tightening of credit, and borrowers “playing in the margins” would be hardest hit. “Even self-certification type transactions I think will come under significant pressure.” Nationwide Lending chief executive Glen Jones said the low-doc policies of funders and LMIs “has become somewhat difficult to place” since the crisis, and more so since the new NCCP regime. The lender recently chose to rebadge its low-doc loan as ‘Self-Employed Lite’ to better reflect its attributes, despite no material changes to the product. Australian First Mortgage national sales and marketing director Iain Forbes agreed that ‘no-doc’ loans – which rely on borrower certification – will be “extinct” by 1 January 2011 thanks to NCCP, and lenders will have to withdraw or modify these offerings. “Given the new legislative requirements to verify the borrower’s financial circumstances, we don’t believe there’s any ongoing place for these types of products.” Page 18 cont.


Always read the fine print The future of your trail commissions could depend on you carefully scrutinising your owner/ principal contracts .

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12.5% by 2016

A leading forecaster believes that as the global economy recovers, Australia could be hit by rate rises – and a recession Page 16


Invest in new investors With investors taking the place of first-time buyers as the driving force in the market, you need to find out how to harness this powerful resource Page 24



News Macquarie product push sparks controversy

The announcement of Macquarie Bank’s new product suite has provoked mixed responses from the mortgage industry. The bank has been testing the Macquarie Bank Mortgage Solutions through AFG and Vow Financial brokers since late last year, and the lender is planning to fund up to $5bn worth of mortgages in the next 12 months. It is targeting “… borrowers who are looking for a holistic financial package, with options they can choose from, that could help to support their financial goals”. Future business development plans would focus on bringing together Macquarie’s experience in mortgages with its broad financial services expertise. However, responses to the product launch have been mixed. The lender shocked and disappointed brokers and mortgage

managers when it wound down its participation in the mortgage market in early 2008, due to the credit crisis crippling Macquarie Mortgages. While some brokers have welcomed Macquarie’s return, others are not prepared to give the bank another chance. One broker, Kelly Cameron-Tull of Get Real Finance, told AB she would not refer any business to Macquarie after a client incurred extra costs of around $10,000 in exit fees and establishment costs elsewhere after Macquarie’s decision to wind down its mortgage arm in 2008 scuppered a deal. Cameron-Tull, who featured as one of MPA’s Top 100 Brokers last year, also questioned the bank’s commitment to the broker channel and accused Macquarie of making “business decisions that suit itself, without any concern for the implications [to] others”.

Macquarie executive director Frank Ganis admitted the bank had to make difficult decisions during the financial crisis, but maintains that it did not completely abandon the market. “Due to the unprecedented market conditions, we made the difficult decision to wind back our operations, but we continued to service our portfolio and maintained cornerstone relationships,” Ganis said. “Since then, we’ve taken our time in order to understand needs and expectations in a deliberate, cautious and careful way … to create a product that will appeal to those end customers who want to use their mortgages to generate future wealth.” When asked how Macquarie could win back the trust of brokers, Ganis replied it wasn’t for him to convince people to recommend Macquarie’s products. He did reiterate, however, that the bank’s new product had been tested in conjunction with numerous intermediaries, including brokers, and that Macquarie had very positive feedback and demand from the market. “We’re an organisation that believes all actions we take should have the highest quality support and provide the highest quality customer service. That’s the way we look to earn trust and respect,” Ganis said.

NFC secures ING Direct funding Adelaide-based National Finance Club has clinched a funding partnership with ING Direct which will see it expand its product range and geographic reach. The deal is going ahead as ING Direct begins to ramp up its mortgage lending activity as conditions improve post-GFC. NFC managing director Andrew Clouston said ING – in addition to Advantedge, FirstMac and Resimac – will significantly boost the mortgage manager’s funding base.

NFC has been in the sights of ING Direct since 2007, though the deal was put on hold through the financial crisis. Clouston said NFC was the “first cab off the rank” following the downturn, making it ING’s first point of expansion back into the market. ING mortgage management head Laurie Shaw said NFC was chosen because of its reputation, the quality of loans and its presence in South Australia and Victoria, where ING is looking for further growth.

Shaw said ING – which has a $37bn mortgage book – took a “controlled growth strategy” during the crisis and will look to maintain its distribution split, which sees mortgage managers accounting for 22% of business, with brokers 75% and direct business the remainder. The deal will broaden NFC’s product offering: additions include ING’s family guarantee and low-doc loans. And ING’s more lenient postcode restrictions will allow NFC more scope to lend regionally. Publishing director.... Justin Kennedy Managing editor.....George Walmsley Editor..................................Ben Abbott Journalist........................... Kevin Eddy Production editors....... Moira Daniels ...........................................Carolin Wun Design manager..... Jacqui Alexander Designer......................... Lucila Lamas HR manager.................. Julia Bookallil Marketing coordinator...Anna Keane Traffic manager............. Stacey Rudd Advertising sales Simon Kerslake t: 02 8437 4786 f: 02 9439 4599 Rajan Khatak t: 02 8437 4772 f: 02 9439 4599 Editorial enquiries Ben Abbott t: 02 8437 4773 f: 02 9439 4599 Distribution Australian Broker is available by subscription. E-mail all subscriptions. and mailing enquiries to: t: 02 8437 4731 f: 02 8437 4753

Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker can accept no responsibility for loss. © Key Media 2010 Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008. The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews. This magazine is printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

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Opportune outlines industry ‘second coming’ Non-bank lender Opportune Home Loans is on track to have 30 principals in place by the end of 2010, as it continues to grow through offering equity to top performing brokers. The business will add three new principals over the next six weeks, in addition to the 18 it currently has in place, and will target 120 principals across Australia by December 2012. Founder and managing director Paul Ryan said the group’s business model marked “a second coming” or “second generation” of independent players in the industry, and it is a model that seeks to reward brokers as well as the business’ shareholders.

Opportune’s model offers a 25% equity pool to brokers who meet certain targets. Seven brokers have achieved equity since the launch of the distribution model in October 2007. “Given the current environment I don’t know why a mortgage broker would want to continue to increase their aggregator shareholder value without getting a piece of the pie for themselves,” Ryan said. The business launched in Western Australia in July following the recruitment of a local principal in the state; this followed Opportune’s expansion into Queensland earlier on in the year.

Broker image needs work: Homeloans National licensing laws present an opportunity for mortgage brokers to improve their image among homebuyers, which is “less positive” than expected, according to Homeloans Ltd. The group’s latest Homebuyer Barometer found that over 50% of consumers surveyed have never used a mortgage broker, and that one in four who have would be unlikely to use one again. “We know that over the past couple of years, over 80% of borrowers have been referred by brokers to a bank,” Homeloans Ltd’s general manager Tony Carn explained.

“This finding strongly suggests that they will choose to deal directly with the bank in the future.” Carn said the figures are a “harbinger” for brokers to ensure they stop channel conflicts occurring. The research suggested mortgage brokers have some “work to do” on their professional images. “Consumers’ opinions of brokers – which were in no way negative – were less positive than we would have expected.” More promisingly, 64% of consumers surveyed were open to using a broker in the future, which is seen as an opportunity to

Opportune local principal in Mornington, Peter Ritchie, said a number of successful mortgage businesses had achieved incredible shareholder returns in recent years, “and as you contribute to another’s value it makes good business sense to retain some of it for yourself”. Ryan, who co-founded Wizard Home Loans, said the model gave principals a voice in the business, which has become a real drive in their ability to operate profitably. In recent years, the shareholders of non-bank lenders and aggregators have benefitted from takeover activity by major bank lenders, though brokers have not shared in the sales. change perceptions, particularly under the new licensing regime. Carn points to Western Australia, which has had licensing for many years, as a good example of the positive impact that national licensing laws could have on the industry. “Research by Homeloans showed more than 50% of people had used a broker in WA, while in the other states the figure was lower. There’s obviously a lot more awareness and understanding of, and trust in, brokers in WA.” The lack of interest in brokers may also be due to a lack of awareness of broker services, and possible costs, the research suggests. The research found consumers relied primarily on word of mouth when choosing a mortgage broker, with 67% of respondents saying they relied on referrals from

Paul Ryan

friends, family or a professional service provider. This compared with 13% who found one via the internet, 6% from television advertisements and 3% from newspaper advertisements. Buyers are also choosing to shop around, with 43% of respondents to the survey saying they saw more than one mortgage broker before making a decision. Over 70% of respondents were also open to dealing with lenders other than major banks.

Key points  50% of consumers have never used a mortgage broker  25% of those who have, would not use one again  64% would be open to using a broker in the future

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News Trails depend on contract fine print, lawyer warns

Loan writers should carefully scrutinise the commission clauses of contracts they enter into with their owner/principals, or risk having their trail commissions terminated unexpectedly. Jon Denovan, senior partner at law firm Gadens, said that sometimes trail commissions are only payable while brokers remain a member of a group, which he said “makes sense” – particularly if the group provides the loan writer with leads, and wants to keep hold of its clients. However, Denovan said problems can arise if brokers are unsure of the contractual arrangements they have entered into. “The big problem is that so many people sign up to these contracts without reading them carefully and understanding what they mean,” he said. Recently, a loan writer contacted Australian Broker and said his trail commissions and trail information had been blocked by his owner/principal after a falling out, with the assistance of his aggregator FAST. At the time, the loan writer was not working due to cancer treatment. “I guess the issue is that most brokers, whether licensed as individuals or not under the new regime, write loans under a letterhead business name not

owned by them, large or small,” the loan writer said. “It does appear that any trail payment arrangements between the sub-aggregator/business principal and the broker, would struggle to survive events such as a simple falling out, closure of the subaggregator business, bankruptcy or liquidation of the sub-aggregator, greed, divorce, or death of the sub-aggregator principal,” he said. Denovan said brokers are indeed at risk of what banks would call “additional credit risk”, as the further down the commission chain they fall, the more likelihood of credit problems. “For example, if a broker contracts directly with a lender, the broker’s only credit risk is whether the lender can afford to pay the trail. If the lender goes broke, no trail. If you add an aggregator into the mix, you have a second credit risk, and the further down the food chain you go, the larger the number of credit risks a broker is taking,” Denovan said. However, he said the National Consumer Credit Protection legislation would not change these arrangements. “The NCCP Act has no impact at all on the relationship between aggregators and brokers, as that is purely a matter of contract.”

Bankwest names broker sales heads Bankwest has appointed new heads of broker sales, origination and quality within its business division, as it seeks to reform its operations and improve broker relationships. Aaron Milburn will be the bank’s new head of broker sales for Bankwest Business, moving across from his former role as head of broker sales for Bankwest Retail. Milburn has been charged with driving activity, as well as sales and quality, and will be Bankwest’s brand ambassador in the business broker market. Meanwhile, Bankwest’s regional business development manager for commercial banking, Andrew Benham, will step into a new role as head of origination and quality. Benham will be responsible for credit quality and customer satisfaction. Bankwest head of business and private banking, Mark Reid, said the appointments are designed to improve broker relationships and the quality of loans written, following aggregator feedback. “On the basis of their feedback it’s difficult for brokers to get hold of someone from Bankwest Business,” Reid said. “What this will give the brokers now is a clear point of contact. Equally though, because we don’t have that sort of strong relationship, the brokers don’t know what we are looking for; this will allow more quality as opposed to quantity.” Reid said “quality has always been a concern”. “I just don’t think you can grow at the expense of quality, because at some point it will come back and bite you.” The division will be restructured to make sure business development managers

spend more time out in the marketplace, while dedicated back-office staff will put the deals together. Commenting on the appointments, Reid said Milburn has “knowledge of the broker network and strong relationships with the chief executives of our aggregator partners”. Benham, meanwhile, has experience across commercial lending and credit risk management. The business broker sales team will be responsible for the origination of all new brokerintroduced business loans from 30 September. Ian Rakhit, Bankwest’s current retail head of specialist banking, will continue to manage the retail broker channel, as well as taking on Milburn’s previous responsibilities within the retail business. Reid joined as head of business and private banking earlier this year, and in May flagged his intention to intensify the bank’s business broker presence. Plans included the launch of a dedicated business broker website and constructing a business broker strategy.

Mark Reid



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Caveat loans: options still available Brokers can still offer shortterm lending to clients despite restrictions stemming from the new consumer credit protection law. Paul Stone, director of HomeSec Finance Express, is warning brokers that some types of investment loans have been reclassified as consumer loans under the National Consumer Credit Protection Act – meaning that caveat loan providers are now unable to provide loans in certain circumstances in which they have been able to prior to 1 July.

Examples of situations in which a caveat loan would not be available include an individual seeking funding to do some repairs to a residential investment property prior to the listing of the property on the market, and an individual looking for funding to pay arrears on an existing residential investment property. However, there are still a number of circumstances in which caveat loans will still be available, following clarification from ASIC. “We can no longer lend for ‘investment purposes’, except

Caveat loans: when are they not allowed? • An individual wants funding to do some repairs to a residential

investment property, prior to the listing of the property on the market • An individual wants funding to pay arrears on an existing residential

investment property • An individual wants to subdivide a block of land into two or three

blocks and then sell them off once subdivided, but needs shortterm funding for capital works, permits and so on, when the land is purchased by an individual

when the borrower is a company,” said Stone. “However, we can still lend on commercial and residential property, as long as the purpose of the loan is wholly or predominately business. If the borrower is a company or trust, pretty much nothing changes. If the borrower is an individual, then the loan needs to be wholly or predominately for business purposes or be for a commercial property transaction.” Situations where a caveat lender will be able to provide a loan include a company wanting funding to buy a residential investment property and shares in a company, a self-employed individual who wants to use his home as security to borrow funds to put into his business, and an individual seeking funding to carry out repairs on an existing commercial investment property. Stone added that the caveat lender will need “some evidence” of the actual business purpose, and can no longer rely on a

Paul Stone

declaration of purpose being signed by the borrower. “ASIC wants you and us as the lender to be able to verify what the borrower is using the funds for,” he commented. “In most cases, this should be very easy.”



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Mortgage fraud ‘costing lenders millions’ Early warning signs • No agent involved in the

sale process • Gift required to facilitate the

transaction • Suspicious-looking documents,

The finance sector is being defrauded millions of dollars each year, according to a leading mortgage insurer. QBE LMI is arguing that mortgage fraud is “a rising concern”, due to fraudsters becoming more sophisticated and increasingly viewing mortgages as an “easy target”. The mortgage industry is seen as lucrative, as the amount of money the criminal can acquire is much greater than in other markets. “Organised criminal rings are manipulative and work towards pilfering the identities of people who own their properties,” said

QBE LMI chief executive Ian Graham. “Criminals acquire loans masquerading as these people and use their property as security. Victims are unaware they have been targeted until they are contacted by a bank chasing loan repayments.” Graham added that fraudsters often target recent migrants and the elderly, and that a number of different lending institutions are being targeted simultaneously as specialised criminal rings gain inside knowledge of lending practices. He also commented that criminal rings can include rogue

including bank statements, income documents (font size doesn’t match original, BSB number doesn’t match branch, spelling mistakes, totals on bank statements are inaccurate) • Identification of inter-related

parties (vendor’s agent has same surname, de-facto relationships, company searches) • Additional parties between

the borrower and the lender involved in the origination of the loan or mortgage • Highly suspicious income and

age correlations

real estate agents, valuers, developers, accountants and loan originators (including brokers). However, he also maintained that brokers can play a key role in preventing fraud. “Brokers can help prevent fraud firstly by fulfilling their role as a trusted advisor to the borrower, and also being vigilant in situations where they suspect the borrower might not be genuine,” said Graham. “This is especially important in cases where a broker has authority to carry out employment and income checks for lenders; brokers should ensure they undertake said checks in a diligent and complete manner.” He added that a broker is not only at risk of losing industry accreditation and trailing commissions if he or she wittingly or unwittingly assists in perpetrating fraud, but that he or she also risks credit licence revocation by ASIC under the new NCCP regulations – and could even serve jail time if found guilty of committing fraud.



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Housing market in ASIC’s sights?

The housing market could be the next sector to come under the purview of the Australian Securities & Investments Commission, if its chief economist has his way.

ASIC’s head number-cruncher Alex Erskine has suggested that oversight of the housing market would be “the next logical step” for the regulator, given the role the market played in the GFC.

Greens’ bank fee attack meets opposition The Australian Bankers’ Association is seeking to head off possible legislative changes to bank fees, should the Greens win a balance of power in the Senate in the 21 August election. The peak industry lobby group has lodged a submission with a Senate inquiry examining a controversial Greens bill, introduced into Parliament by Greens leader Bob Brown in May, which calls for wide-ranging caps on bank fees to stop “fee-gouging”. ABA chief executive Steven Münchenberg told Australian

Broker the group did not support the Greens bill, because it does not philosophically believe in price controls and “much of the Greens bill is about abolishing some fees or capping some prices”. “If this bill is the approach that the Greens wish to take towards banking, our concern would be that they could use their balance of power to pressure a government of either persuasion,” Münchenberg said. “Further, we are concerned we will be seeing these sorts of changes in return for support of other legislation.”

Erskine argued in a paper that the housing market should operate on principles similar to those of stock exchanges. This, he suggested, would help increase transparency while reducing dramatic distortions in pricing for homes. It would also allow for the rise of products that allow consumers to hedge house price risk, as they can in equities and currency markets. “The housing market played a key part in the financial and economic boom and bust,” said Erskine in the paper, which was prepared for other securities regulators around the world following a recent meeting. “It seems set to continue to pose an acute challenge in the recovery period, with concerns over price bubbles and excessive borrowing, and speculation in some economies and the consequences of previous excesses still washing through other economies,” he added.

ASIC has stressed that the comments released were its chief economist’s personal views. Even so, FBAA president Peter White told Australian Broker that he doesn’t think the proposal is unexpected. “This idea is already in a range of players’ thought processes,” he said. “But it’s still very much a case of ‘watch this space’ – however, the FBAA will be making sure that our members aren’t caught off guard.” White would not be drawn on whether ASIC placing the housing market in its sights would be a good move or not. “It’s hard to speculate at this stage, and I don’t think I’d be able to say whether this would be a positive or negative move unless something more tangible came out. “No one likes the idea of more enforced regulation, but you never know – ASIC could come out with something fantastic.”

The bill would require banks to cap mortgage exit fees and offer home loan products with interest rates that would only increase in line with a lender’s cost in funds. Other changes would require banks to cap fees on savings accounts and ATM transactions. Introducing the bill, Australian Greens leader Bob Brown said the average Australian pays around $1,000 in bank fees every year– 22% more than in the UK and 10% more than in the US. “Self-regulation by the big banks is not going to protect the public,” Senator Brown said. Münchenberg said the ABA does not support price controls and for competitive reasons, banks had already slashed a whole range of fees. “There is now a range of low-cost basic bank accounts and

more than 130 providers of home loans offering different rates and product features. We believe competition can drive change rather than legislation,” he said.

Senator Bob Brown


Fixed rate demand fails to materialise The demand for fixed rate loans fell during June according to Fixed rate cuts data from Mortgage Choice, Rate cut despite a rash of rate cuts from Lender National Finance 0.21% on two-year fixed rate to 7.20%; lenders earlier this year. 0.30% on three-year fixed rate to 7.46% New loan approval data from Club Australian First 0.21% on two-year fixed rate to 7.22%; the national broker suggests Mortgage 0.30% on three-year fixed rate to the proportion of borrowers 7.48% (for Advantedge loans) opting for a fixed rate mortgage National Australia 0.20% on standard fixed rate to 7.49%; fell from 3.3% in May to just Bank 0.20% on packaged three-year fixed 2.6% in June. rate to 7.39% “Many people in the industry Bankwest 7.64% to 7.38% on standard fixed were expecting a rise in fixed mortgage; 8.09% to 7.89% on fiverate demand last month but year standard fixed rate that hasn’t happened with our customers. Instead we’ve seen this product’s popularity reduce by one fifth,” said Mortgage Choice senior corporate affairs manager, Kristy Sheppard. “Perhaps the price tag is still too high when potential borrowers weigh up the advantages and disadvantages of fixed versus variable – or perhaps whispers of a much steadier cash rate are seeping through and wielding influence over borrowers’ decision processes.” Mortgage Choice’s figures are in stark contrast to several industry commentators’ beliefs that demand for fixed rate mortgages would increase as a result of rising interest rates, as well as efforts by nearly all major lenders to promote fixed rate loans by slashing their pricing. Other industry research also contradicts the group’s findings. Australian Finance Group’s Mortgage Index suggested the take-up of fixed rate mortgages did increase in June – from 2.9% to 3.9% of borrowers. Meanwhile, Loan Market produced research in July that said enquiries for fixed rate home loans in its call centre had risen by 20% over the June quarter. Loan Market chief operating officer Dean Rushton said at the time that while not all customers are following through to take out the fixed rate products, it showed that people “are seriously considering fixing their home loans again”. In May, Mortgage Choice found the popularity of fixed interest rate loans rose in all states except Western Australia in that month, breaking 3% nationally for the first time in eight months.

Consumers craving more debt

Australians are gearing up to shoulder more debt in coming months, despite one in two households expecting future interest rate rises to negatively impact their finances. The strength of the local economy has resulted in one in five households saying they expect their debt levels to increase during the September 2010 quarter in the latest Dun & Bradstreet consumer credit expectations survey. This comes despite 49% of households indicating that further rate increases would negatively impact household finances. Dun & Bradstreet points out this behaviour in Australia is in stark contrast to other developed economies – whose debt

to household income ratios are similar to Australia’s – where consumers are paying down their liabilities in response to recent global events. The survey found that certain demographics – such as 18–49-year-olds and families with children – are more likely to experience financial stress and are more exposed to rate rises due to a higher reliance on credit to pay for unaffordable expenses. Indeed, close to 50% of households with dependents said they will use credit to pay for otherwise unaffordable expenses during the quarter, while for other households, turning to credit is only likely to occur in 31% of cases. The survey claims younger Australians are demonstrating the biggest signs of entering financial stress, with 44% of people aged 49 and under indicating that there will be a need to turn to credit during the quarter. The findings come on the back of figures released by the Reserve Bank, which show that average credit card balances are increasing. The average balance is up 5% on the level measured a year ago – the fastest rate of increase in two years.



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SMSFs could be ‘as big as negative gearing’

Investing in property through self-managed superannuation funds could have as much impact on the housing market as the advent of negative gearing. Craig Morgan, managing director of SMSF specialist I-Financial Group, told Australian Broker that the demand for SMSF borrowing seen thus far is just “the tip of the iceberg”, particularly in

relation to Baby Boomers seeking a secure retirement income. “SMSFs now account for more super money than the conventional super funds,” said Morgan. “There’s also a greater awareness of what an SMSF is and how it works amongst the rank-and-file Baby Boomers. There’s certainly a growing trend for leveraging into property via SMSF lending, which is at least

partly fuelled by the fact that confidence in standard super funds and the stock market have been rocked. Australian Baby Boomers are falling back on what they know and trust most as the safest option – residential property.” Peter Burgess, technical director of the SMSF Professionals’ Association of Australia (SPAA), agrees that SMSF borrowing is starting to gain more traction. “Super contribution caps have also contributed to the growth in interest in SMSF borrowing, as they have forced savers to look at other ways to accumulate wealth,” said Burgess. Additionally, recent clarifications to super rules and on who can advise on SMSF borrowing will lead to more people making use of the borrowing rules, says Burgess – although he warns that as of September, professionals will need an AFSL to advise on SMSFs. “I’d encourage brokers to partner with others in the industry so that they have access to someone with knowledge about the super rules, so

clients can be advised appropriately,” he commented. Morgan agreed that forming a referral network is a wise move. “You don’t necessarily need to be an expert on SMSFs yourself. However, knowing where to point your client in said situations means that you’re still able to say ‘yes’ to them, even if you’re not doing the work yourself.” Morgan also commented that there is still the possibility of limited coverage for brokers being introduced under SMSF regulation, which would allow brokers to work in the SMSF arena. He speculated that this could take the form of a broker gaining some kind of accreditation under another party’s financial services licence.

 SMSFs now

account for more super money than the conventional super funds

INDUSTRY NEWS IN BRIEF Brokers upbeat about regulation

FBAA members have responded positively to the consumer credit protection regime. The body’s president Peter White said although the FBAA is still handling queries, its members have had a positive reaction to complying with the National Consumer Credit Protection Act, following its introduction on 1 July. “People are getting to grips with the new regime,” he said. “The main priority for most brokers now is applying for licences before the end of the year.” White said there is a fairly even spread between members applying for a full Australian Credit Licence and those becoming credit representatives of another ACL holder, although it will be some time before the final split becomes clear. He said brokers choosing the credit representative route should ensure they have full confidence in their parent organisation.

Connective books $800m in June

Aggregator Connective has achieved its second highest month on record in June, with settlements totalling more than $800m. Connective principal Mark Haron said the June figures are “particularly pleasing” given the market dynamics are different from when it achieved its settlement record of $823m in July last year. “Broadly speaking there’s been a slight softening in the markets since this time last year, so to record our second highest month of settlements in June is very encouraging,” Haron said. The group said it is on track to achieve $1bn in total settlements this financial year. The group’s average monthly settlements are around $700m.

RHG considers market return

An unexpected tax windfall has RHG Limited considering a re-entry into the home loan market. The company, which sold the RAMS Home Loans brand and distribution platform to Westpac at the beginning of the economic crisis, received a $21.2m tax refund, bumping its full-year earnings guidance to between $86m and $96m. Though RHG Ltd signed an agreement not to re-enter the home loan market until next year, as the expiry date nears it is considering whether to use its reported cash reserves of $390m to jump back in again. RHG chairman John Kinghorn told members at last year’s AFG conference that the company was considering whether to return to mortgage lending or give investors a capital return.

ALI Group teams up with MetLife

Mortgage protection insurer ALI Group has signed a deal with life insurance provider MetLife Insurance that will see ALI sell simplified life insurance products through the mortgage channel. ALI Group, which started business in 2003, seeks to use MetLife’s global life insurance offerings to improve its service proposition to brokers. Australia’s MetLife chief executive Marc Lieberman said the insurance group wanted to offer simple life insurance products to customers “at an important time in their lives”. “Investing in a home is a big commitment and an appropriate time to think about insurance,” he said. ALI has provided $25bn in mortgage protection, and has trained and accredited 7,000 brokers.

RP Data acquisitions cleared by ACCC

The Australian Competition and Consumer Commission has cleared RP Data’s acquisition of Valex Group and the VMS division of Sandstone Technology. The $46m purchase, which was originally announced in May, sees RP Data combine Valex’s managed property valuations business and Sandstone Technology’s mortgage finance valuation platform with its existing property information services. RP Data said it can now “provide the full spectrum of valuation products and risk solutions to the mortgage finance and insurance industries”.

Small businesses lose out to holiday homes

Funding for weekend holiday homes has been easier to obtain by borrowers than funding for small- to mediumsized businesses, following a tightening of lending to the SME sector. Joseph Healy, NAB group executive business banking, has said that mortgages have become more attractive for banks due largely to international banking rules, which favour the provision of credit to the household sector over SMEs. While 10 years ago banks were lending a dollar to the SME sector for every dollar in the mortgage sector, now for every $1,000 available for mortgages, only $600 is lent to small businesses. Bank debt in the household sector has grown from $280bn to $1.1trn during that period. Healy said the situation was a “big concern”, and that “we mustn’t lose sight of the fact that small business is the engine room of the economy”.




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Interest rates could hit 12.5% by 2016

Economist Phil Ruthven told delegates at the FAST Business Excellence Conference in Palm Cove, Queensland, that interest

rates in Australia could almost treble over the next six years. Ruthven, founder and chairman of business

information forecaster IBIS World, said that as the global economy regains its composure, it would rediscover its appetite for finance. He added that while international markets such as China and India were able to service their own needs, other countries in the developed world like Australia didn’t have such an aptitude for saving, which could force interest rates to rise. Ruthven forecasted rates could reach 12.5% in 2016, but remarked that this was still way short of the levels reached in the early 1990s. He also predicted that Australia could experience its next recession in 2018 based on previous cycles, and praised the government for helping Australia to avoid the worst of the global financial crisis, which hit other countries around the world far harder. At the conference, held at the end of July, FAST chief executive Steve Kane told delegates the

take-up of the aggregator’s white-labelled FASTLend product had exceeded all expectations. FASTLend was piloted to a panel of 50 brokers in February before a full launch in March, with the group having targeted a top 10 position among the top mortgage lenders by the end of June 2010. The success of the product – which has seen $60m a month in applications since the launch – has seen FASTLend jump to eighth position, behind the big banks. Delegates at the conference in Palm Cove – which included FAST’s top-performing brokers from each state – also listened to presentations from a number of leading lights from the world of business, including founder of pizza chain Eagle Boys, Tom Potter.

For more on FAST’s

conference, see page 33



For all the latest mortgage industry news, visit

First homes no closer with saver accounts

of the financial position of the main companies within the group. The disqualification still permits Kaye to manage Dorcas 1 Pty Ltd and Medinvest 2 Pty Ltd – the trustee companies to Kaye’s self-managed superannuation funds. Kaye built a reputation in the 1990s by holding property seminars, which he claimed were ASIC-approved, and charged investors up to $15,000 to attend. In 2003, ASIC ordered Kaye to stop the wealth-creation seminars and repay investors, while in 2004, the Australian Competition & Consumer Commission found Kaye had breached the Trade Practices Act in claiming that he could turn ordinary Australians into “property millionaires”. The demise of his companies, which are now in liquidation, reportedly caused 13,000 people to lose money on their investments. Kaye still has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC’s decision.

First Home Saver Accounts have received a damning report card from brokers, despite recent changes designed to make the accounts more palatable to prospective borrowers. A recent survey of Loan Market brokers found only 2% said the accounts were the first choice for borrowers looking for a means to gather a deposit. Don Crellin, GM of Resolve Finance in Osborne Park Western Australia, said “any scheme that looks to assist first homebuyers has to be applauded”, but acknowledged that “to date, we have come across very few customers who are holding these accounts”. Crellin said that given the accounts have a minimum four-year savings horizon on them and were only introduced in late 2008, it still may be some time before we see more customers embrace them. But he said this savings horizon itself was the problem. “Of the few examples we’ve come across, it has been where the customer has been saving regularly and has actually reached a position whereby they have saved the deposit required to purchase their first home,” he said. “Unfortunately, given the four-year savings horizon, they have been unable to access the funds to do so.” Mortgage Solutions Australia mortgage specialist Sandra Joseph said she had discouraged two of her own children, who are saving for deposits, from using the scheme. “At first I thought they were a great idea, but the restrictions on the funds once deposited are too strict. “Most young people are going to say, ‘I’ll take my chances and save normally’ and have control of their money,” she said. The accounts received a boost on 1 July, following indexation of the contribution threshold and account balance cap. The calculation of

benefits is now based on a sum of $5,500, taking the maximum benefit to $935 pa, while maximum cap was raised to $80,000. However, the four-year term has not been revised, despite efforts in the 2010 budget to make the accounts less restrictive. Upon the maturation of the account, funds can now be paid into an approved mortgage; previously, borrowers who closed their accounts early were forced to watch their funds disappear into superannuation. Crellin said: “The four-year savings horizon is an inhibiting factor. Many customers will be able to reach their savings goals well within this period.” Loan Market’s chief operating officer Dean Rushton said brokers in the first homebuyer age group were thinking more in the order of six months, rather than four years. Minister for Financial Services, Chris Bowen, recently said the accounts were a better option for entrants to the market than SMSFs.

there are still ways brokers can ensure the loan is not unsuitable for clients, without having to go to the extent of doing a full income verification.” This is particularly pertinent for lower LVR loans, he said, though a funding increase in the low-doc segment is unlikely. “There has been quite a big pull-back, so I wouldn’t say there’ll be an increase, but you’d like to think we could maintain current levels and distribution for those products, because they have a

valuable place, especially in the self-employed market.” ING Direct still offers a low-doc product and has no intention of withdrawing the offering, according to head of mortgage management Laurie Shaw. “We have had a look at the ASIC guidelines under NCCP, and at the moment we are comfortable with the way our product is being offered,” he said. “Bearing in mind we have managed our risks right throughout this period of time, having one of the lowest defaults in

the market, and we’ll continue to offer that product provided it meets those ASIC guidelines.” Jones said the financial crisis in the US and the ramifications worldwide have not helped the longevity of low-doc products, though the future could hold positive news. “The world has yet to recover from the GFC and Europe is currently in turmoil. I feel there will be a ‘revival’ of sorts, but only once global economies are back in a positive and sustainable favour.”

Property spruiker faces five-year ban The Australian Securities & Investments Commission has disqualified notorious Melbournebased property guru Henry Kaye from managing corporations for five years. Kaye was involved in 26 companies which provided investment and property education services to the public, as well as the running of property investment and development activities. The companies eventually collapsed, owing a reported $60m. ASIC found that Kaye breached his duties as a director by failing to document significant intercompany loans within the group and to ensure the loans were property secured. The loans were made to companies that were controlled by Kaye and not repaid, ASIC said in a statement, contributing to the collapse of the group of companies. The regulator also found Kaye failed to maintain financial records in relation to a number of companies and was not fully aware cont. from cover


However, Forbes argues that low-doc lending is not dead. “It fills a legitimate need targeting a market which has recently become clearer and more narrowly defined,” he said. Australian Finance Group managing director Mark Hewitt agreed low-doc lending – albeit different to 18 months ago – is still “viable”, although he classifies no-doc lending as “extinct”. “I think under the credit code

First Home Saver Accounts • Contribution threshold raised

to $5,500 • Maximum annual benefit

amount now $935, up from $850 • Maximum cap raised to

$80,000, from $75,000

Don Crellin

Regulation to hit first-time buyers

The advent of responsible lending regulations may impinge the ability of first homebuyers to enter the market, at the same

time as affordability issues continue to increase. The new National Consumer Credit Protection regime’s

responsible lending guidelines require lenders and brokers to focus on serviceability, or the ability of borrowers to repay. FAST managing director Steve Kane said while most lending applications had previously focused on static data, “the focus under responsible lending is to ensure that the customer can afford the debt going forward, as much as what their historical data says”. Kane said that as a result, regulation will put an increased amount of pressure on affordability in the marketplace. He said the increasing level of deposits required to break the housing market, particularly in Sydney and New South Wales, would also make it difficult. James Austin of FirstMac said recent rate increases make first homebuyers “the most vulnerable” players in the market, though investors are coming in to replace them. He said stress for first homebuyers will come as a result of high loan-to-value ratios. Lisa Montgomery, head of marketing and consumer


advocacy at Resi, said the problem of affordability may result in product innovation over the next 12 months among lenders, particularly in the area of shared equity loans, which are now “more significant on the radar”. “They’ve been around since 2002/03, but no one has really done it well,” she said. Kane said this trend is indicative of an “intergenerational effect”, as Baby Boomers begin to cede their property wealth to their children, who are entering the market as first homebuyers. He said the equity that the Baby Boomers have built up will start to be used less for pure investment, and more often in helping their families get into the property market. A recent survey of Loan Market brokers revealed that getting family and friends to help with deposits was the fastest growing method of obtaining one, with 56% of respondents to its broker survey saying it was increasingly popular due to tighter lending restrictions.

Canberra issued with housing policy challenge Ambitious demands for a comprehensive national housing policy have been put before the full spectrum of federal political players in Canberra by the Real Estate Institute of Australia. Covering a litany of areas including the First Home Owner Grant (FHOG), the state of banking competition, property tax frameworks and Foreign Investment Review Board (FIRB) guidelines, the REIA demands

primarily target housing supply and affordability. “We have written to all political parties and independent senators seeking support for these specific policy initiatives,” said REIA president David Airey in a statement. To combat affordability problems, the REIA advocates the setting of the FHOG at $15,000, and indexing it to median house price movements annually, as well

as allowing first homebuyers access to their superannuation for the purchase of a home. In regard to competition in the mortgage market, the REIA called for any advantage that the Big Four banks have obtained during the financial crisis over the smaller banks be mitigated. On taxes, the association called for consultation to ensure “inefficient” state property taxes were abolished, and also argued

for a commitment as part of any national housing policy not to impose capital gains tax on family homes, regardless of their value. “The REIA welcomes the opportunity to present proposals for inclusion in a specific housing policy which is aimed at contributing to Australia’s continuing strong economic development,” Airey said in the statement.


Comment FORUM OPPORTUNE OPPORTUNITY, A MACQUARIE COMEBACK, AND HARD-HIT HOMEBUYERS When Opportune Home Loans’ Paul Ryan told AB the business was growing quickly through sharing 25% of its equity with broker principals, the positive response was immediate. Here’s what you said on this, and other issues, on the Broker News forum. Commented by: Mike McHugh at 21 Jul 2010 09:51 AM Makes great sense – encourages loyalty and real teamwork – a breath of fresh air in the industry. Commented by: ex wizard at 21 Jul 2010 11:06 AM As an ex-Wizard branch who got absolutely zero when it was sold to GE for $500m, this would have been nice. I wonder how much the RAMS branches got when it went public? Probably the same… Commented by: Pete Ritchie at 21 Jul 2010 03:19 PM With a minimal point of difference between broker models, aggregators and mortgage managers, etc, why wouldn’t you get involved with a business model that pays commissions at the high end of the scale, has its own products and offers you a piece of the pie as a reward for your hard work… Commented by: ex wizard 2 at 21 Jul 2010 04:20 PM Good on you Paul, it’s great to see the man who really made Wizard what it was do something great. He had a good mentor in Mark [Bouris], but we all loved Paul…

The launch of Macquarie’s new mortgage product, Macquarie Bank Mortgage Solutions, met with a mixed response following the group’s pullback during the GFC. Commented by: jaded at 12 Jul 2010 12:01 PM I am glad there is another player. But any small niches Macquarie bring are already in the market and are available on slightly lower interest rates and fees. The majors won’t be one bit threatened by this re-launch. Macquarie still has a relatively big exit cost and really nothing that grabs my attention. Given the hurt they caused when they pulled out, they have a long way to go, as many brokers remain wary of them. Their marketing team probably think they will just put a toe in the pool and not cause a splash, then slowly gain everyone’s confidence before embarking on competitive strategies. They need to make sure their systems can deliver top notch service levels. I hope they get their act together so they can start challenging the majors sooner than later.

On comments made by ASIC’s chief economist Alex Erskine, who said regulating the housing market could be “the next logical step” in the evolution of the regulator. Commented by: Melb Broker at 21 Jul 2010 11:07 AM How can ASIC possibly regulate the housing market? It’s simply controlled by what people are prepared to pay for a property. By all means try to regulate the lies told by agents but leave the rest alone. ASIC is getting too invasive. Both the finance and property industries have managed their own affairs for many years without being told what to do, and they have done it successfully. Commented by: Paul at 21 Jul 2010 01:53 PM Let’s get back to what ASIC is about – to inform and protect. Unfortunately, its performance is poor when we examine the likes of Westpoint, Storm, ABC Learning, etc. Yes, ASIC is the sheriff who . rides into town after the bank has been robbed – too late. Let ASIC . work on what it was designed to do, and get that right before it goes . off on tangents. Commented by: Steve at 21 Jul 2010 06:38 PM In regards to the comment, “The housing market played a . key part in the financial and economic boom and bust” – the way . Erskine speaks, he is blaming the average consumer who buys real . estate (mainly the US) for the GFC. It is well documented that the big banks and financial institutions who were providing (selling) debt instruments for massive profits were the cause of the GFC. These same banks and finance institutions then started offering money to consumers at low rates with very loose credit policies so they could sell more debt. ASIC needs to regulate the big players who provide these instruments and products.

On regulation impinging the prospects of first homebuyers. Commented by: Phil Johns at 21 Jul 2010 10:03 AM Just wait until Comprehensive Credit reporting is up and running in 2012 and the consumers cannot hide their real debt levels. That is when there will be a true restriction of credit for years as consumers are forced to pay down debt levels before they can be approved for a ‘responsible loan’.

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Australian Broker and MPA asked a panel of industry leaders their views on the licensing regime, as it applies to brokers. Here’s what they said on the burning issue of regulation.

Steve Kane,

Lisa Montgomery,

Simon Dehne,

James Austin,

FAST managing director

Resi head of consumer advocacy

FirstMac chief financial officer

“We have to be careful …of the statement of advice concept out of the FSRA being placed across the mortgage industry – we need very clear guidelines around how that statement of advice looks. We really don’t need an 80-page statement of advice for a mortgage loan. I think that will depend on the detail in the regulations, and how those regulations are interpreted by lawyers, and how that then flows into the documentation we use. We have just completed a survey of a number of brokers asking their views about the legislation, and 78% said it was a positive move in terms of professionalism in the marketplace.”

“This is actually going to lift the mortgage into an area where it is a wealth creation tool, for people to move onto that next aspect of their investment strategy, whether it be back into property or back into shares. Not only is it talking about the responsible lending side of things, but it’s that go-forward piece from the sale of that home loan, which is so important. And don’t we think that maybe there will be greater retention of clients, because we are investing more time in them, and investing more time in how they are going to be repaying that loan, and about the future of that loan, and … how we communicate with them post-settlement.”

Mortgage Choice national manager of non-core products

“The legislation just makes the mortgage broking industry more professional, and ensures that the customer is fully aware of what they are getting themselves into. I think it further enhances the industry … and just strengthens that whole message that we are trying to get to the consumer. More importantly, we don’t want to complicate it, and I think that is something we need to monitor and make sure that we don’t end up with a 100-page statement of advice document like the UCCC in terms of confusing everyone.”

“I think good brokers will have been doing that in any case, and the legislation won’t change that. It’s certainly the fringe brokers that need to be removed from the industry. But I would have thought that brokers should then be licensed individually as opposed to becoming a credit rep of another organisation. If ASIC is looking to protect consumers, they should be licensing the broker directly … As far as the broker is concerned, I would have thought for their own business, being truly independent is probably the way that they should go.”

To view the discussion, go to



Rate rises: the big squeeze?  The RBA may have chosen to hold interest rates for the

time being – but what happens if the major banks increase their rates independently? Kevin Eddy investigates


he rumblings began in the week before the RBA’s regular rate announcement at the beginning of July. Various key executives from a number of banks began raising the issue of the cost of wholesale funding, and how it is increasing. That, they warned, is increasing the cost of doing business, and that those costs may well end up being passed onto mortgage holders. While none of the Big Four have gone on record to confirm or deny whether they will make such a move, industry is slowly coming to a consensus that the banks will go ahead with an increase. The belief is that any rate rises would be announced after the federal election. A Morgan Stanley paper has calculated that the combined profits of the Big Four banks would decrease by $700m by next year if funding costs continue to increase and are not offset by rate rises from the banks. In order to maintain current profitability, the paper argues that rates would need to increase by 0.1 to 0.15 of a percentage point above the RBA rate. Loan Market’s chief operating officer, Dean

Dean Rushton

Paul Ryan

Tight-lipped? What the Big Four say about independent rate rises: NAB When pressed on the possibility of rate rises, an NAB spokesperson said: “We do not comment on speculation by others about interest rates. What we would do is ask people to consider our track record: NAB was the only bank not to lift its rates above the RBA move in December 2009.” ANZ ANZ chief executive Phil Chronican commented on 28 June that banks might make changes to their mortgage packages in order to tackle the current margin squeeze, rather than increase rates. He suggested this could take the form of reducing the discounts on the average standard variable rates offered to some new and existing customers. CBA When CBA treasurer Lynn Cobley was asked if higher borrowing costs could result in banks raising their lending rates outside of any move by the central bank, she would only say “the funding cost pressures remain”. Westpac Has remained silent on the issue, preferring to concentrate on the likelihood of an RBA rate rise in August. Perhaps it is still feeling the sting from the customer backlash after it increased mortgage rates by 20 basis points above the RBA rate last December.

Rushton, reckons that the rate rise is inevitable. “They have clearly flagged that they are considering lifting their rates against the trend and out of cycle because their cost of funds is increasing due to the ongoing European debt crisis and the roll-over of cheaper funding,” he said. “It is not a matter of if banks will lift their rates but when, because they are not only paying more for wholesale rates but paying more on deposits, which is another key area of their funding. This is clearly of concern to mortgage holders.” Rushton added that borrowers could potentially face a ‘double whammy’ worst-case scenario of an RBA move accompanied by an incremental rise from the banks, which could put even more pressure on the family budget. However, he also speculated that an independent increase from the banks could ‘stay the RBA’s hand for future decisions’, as the average standard variable rate would be above long-term averages, inclusive of the banks’ margins. Not everyone is happy with the banks’ approach, though. Paul Ryan, the founder of non-bank lender Opportune Home Loans, has challenged the major banks over suggestions mortgage interest rates might increase outside the Reserve Bank cycle. Ryan, who also founded Wizard Home Loans in the 1990s, told Australian Broker that there is “no reason” for banks to increase rates over and above the RBA while many others are still offering discount rates on home loans. “There is no reason for banks to be increasing rates outside the cycle when they’re still discounting mortgages by 0.6% to 0.7%,” Ryan said. “You’ve got to question whether that’s fair to consumers.”

Knock-on effect

Any move on interest rates by the Big Four would also have an impact on the wider industry – particularly non-bank lenders, which typically obtain at least some of their funding from the majors. Will this lead to an allround increase in rates? Rushton believes that there will be a general upwards drift. “In terms of base pricing competition, it’s likely that most second tiers and non-banks will follow the banks to some degree as they are subject to the same credit market,” he commented. That won’t necessarily be a bad thing for competition, he added. Rushton reckons the changing environment will present an opportunity for lenders generally, as borrowers will be more willing to assess their options as the base rates push higher. That could even lead to a rash of refinancing activity. “We saw one of our busiest months in terms of lead enquiry the last time the banks moved outside the RBA,” continued Rushton. “While the inertia effect is amazing with some borrowers – who view the paperwork and hassle as outweighing the benefits – the spread on variable rates now is over 1%. The savings are significant, and it will be well worth borrowers spending an hour with a mortgage broker to assess their options.” In fact, that refinancing activity is already starting to happen, as households suffering the effects of the recent RBA rises look for a better deal. AFG’s monthly mortgage figures for June showed that refinancing accounted for 39% of its business – the highest result the group has seen since 2008. Consumer confidence in non-banks is returning, and competitive rates are seeing borrowers regard them favourably. This is likely to continue – assuming, of course, that mortgage managers’ rates can remain competitive. That, of course, is where brokers come in. A rate rise by the major banks might just be the excuse many borrowers – both those who need to relieve financial stress and those who want to release equity – are looking for to refinance their mortgages, and a timely phone call from a friendly broker could be just what they need. Peter Webb is an organisational and leadership capability psychologist.

OPINION SHOULD I STAY OR SHOULD I GO? Regulation is causing many brokers to question their future in the industry. Peter Webb from Intentional Training Concepts urges you to complete a simple engagement checklist, to see if you – or your team – are still committed Staying engaged at work is a daily decision, a mental tugof-war. Some days are diamonds and other days are… well let’s just say you’d rather be anywhere than here! But you can improve the odds of staying in your job, and encourage key members of your team to stay as well, by following this simple checklist (give yourself a score out of 20 for each item, where 1 is ‘totally unclear’, and 20 is ‘completely clear’): 1. KSAs: Are you clear about the KSAs (Knowledge, Skills and Abilities) required for the job? These can change over time or with different assignments. Perhaps you’re feeling out of your depth. What additional skills are now required to get the job done? 2. Role: Are you expected to do more (or less) than you were before? Work roles can change shape. New managers or new team members can change the requirements of the job. Do you know how your performance is measured? Some parameters may have changed without your knowledge. 3. Alignment: Does the job still interest you? Are your motives, values, and beliefs in alignment with the values and attitudes practised by the organisation? Can you easily reconcile differences between your personal values

and the values expected on the job? 4. Reinforcement: Are you happy with how your performance is rewarded? Not just financially, but in terms of meeting your needs and interests in the job? What is it that gets you out of bed to come to work? How satisfied do you feel with the work you do and the people you do it with? 5. Progress: Do you get sufficient support at work to help you get the job done, or do you face constant roadblocks? Do you feel that you’re progressing towards your goals? Are you accomplishing those things you set out to do? Now add up your score. Does it tell you whether you should stay or go? • A score above 75 suggests this job fits you like a glove. You were born for this! • A score between 60 and 75 suggests you can manage quite well. The good easily outweighs the bad. • A score between 45 and 60 suggests it sometimes takes an effort to come to work. You can get by. But you would be tempted by a better offer. • A score between 30 and 45 suggests you’re hanging on by your fingernails. Sometimes it’s good, but mostly it’s bad. You’d probably leave if you could. • A score below 30 suggests you’re already out the door. You might be on the payroll but your spirit has left town. It’s time to move on! Now, what scores do you suspect some of your team members might get if they rated themselves? Are you doing enough to make each of these factors clear to them? Staff engagement is simply balancing performance with satisfaction.



Insight EXECUTIVE COUNSEL ANZ head of broker distribution, Meg Bonighton, shares with Australian Broker the approach to business that propelled her to the top – and where she is going from here. Meg Bonighton

Name a business leader you admire. Why? Anita Roddick, founder of The Body Shop, who led from a view of both profit and principle. What main goal/s got you to where you are? My main goal has always been to seek opportunities that challenge me and that I’m passionate about. The combination of the two usually gets you well on your way to success. Is success due to talent, hard work, or luck? Probably sounds cliché, but success always involves all three. Luck may place you in the right place at the right time, but the other two will ensure your success when you are there. What character trait has helped you the most in business? Actually there are probably two – resilience and a sense of humour. One of the key things I’ve learnt is that things won’t always go your way, but as long as you ‘don’t sweat the small stuff’ and you persevere on matters of substance, things will fall into place. What is the key to great business relationships? Mutual understanding – about what creates value in each business, as well as what the risks and challenges are. Once you have understanding as a foundation, you can work together better on that next crucial stage – mutual benefit. What’s the first thing to look at when growing a business? You can’t be all things to all people. Pick your market and make sure your finger is on the pulse. What’s the best piece of advice you’ve ever received? Pick you battles, save your energy for the things you can change and are worth changing. What trend are you currently watching? Over and above the commercial trends in our industry… olive boots with all black outfits. Get on board… What is your next big ambition? Considering the imminent addition to my family, my lofty ambition is to create a happy healthy family, and to get an occasional good nights’ sleep!

Investing in the new investors With first homebuyers now struggling to get a foothold in the market, investors are stepping in to take their place. How can brokers tap this lucrative market? Ben Abbott investigates


he Australian Bureau of Statistics released housing finance figures in June showing investors are the market’s new driving force, taking the place of beleaguered first homebuyers. Increased activity by investors was the impetus for a 2.6% growth in seasonally-adjusted finance commitments in May this year, while first-time buyers – who once boasted a 28% slice of the market – accounted for just 16% of all new commitments. The statistics only confirm what brokers already know. The paring back of incentives for first homebuyers mean the first-time market segment is back to more normal levels. The question, then, is should brokers realign their businesses to take advantage of investor activity? Smartline mortgage advisor Kevin Lee says investors are a key to his success. Fifty per cent of his clients are investors, and over half of these own multiple properties. “First homebuyers and the homebuyer segment is obviously extremely important, but I think the icing on the cake is really the investment market,” Lee says. In a market downturn, Lee argues an investor clientele will galvanise a business, as they see “opportunities, not problems”. So how can brokers look to tap into this growing portion of the market?

Understanding investors

Investors take a different approach to procuring finance than the typical homebuyer – and particularly first-time buyer – according to Lee. “A smart investor client is not looking at it from an emotional point of view,” Lee says. “With most homebuyers, first and foremost their emotions and heart are going into the purchase, whereas investors primarily see it as a means to an end – part of the wealth creation process – and buy investment property with a calculator, pen, pad and their brain.” As a result, investors can be “quite broker friendly”, according to FrontRunner Consulting Group’s Doug Mathlin. “They have borrowed money plenty of times before,” he says. The most broker-savvy investors aren’t likely to be Baby Boomers, who primarily prefer to deal directly with banks. Instead, Mathlin says the likes of older Gen Ys have been a witness to the growth of Aussie Home Loans

Doug Mathlin

Investors want proof that you’ll look after them – then they’ll be loyal to you

and Mortgage Choice, and are more used to brokers. However, while more comfortable using the third party channel, investors also make for a much more sophisticated client – and are more demanding when it comes to advice. “They are harder to win over in the first place,” Mathlin explains. “They want to know who you are, how much experience you have with investors, and proof that you’ll look after them – then they’ll be as loyal as the day is long.” This involves some measure of patience and often repeated meetings, as Mathlin says these relationships take more time to build. Lee is able to meet higher client demands by “walking the walk”. A property investor himself, Lee says investors want to be able to talk about investment strategies, and benefit from knowledge the broker has picked up from personal experience. “I do a lot of research and reading for myself, and that helps so many of our clients,” he says. Brokers may also have to counter negative perceptions held by some investors about brokers. “As some brokers have provided a negative service proposition to investors in the past, these investors have had a poor experience – so they’ll ask more questions,” Mathlin says.

What does a property investor look like?

The power of referral

Your main occupation....................5%

The most effective way to source business from investors, experts agree, is through referrals. Based in Pennant Hills in Sydney, Lee’s business is built on word-of-mouth recommendation. The result is an eclectic business that services clients in every state of Australia, and 14 other countries. In fact, Lee handled a recent purchase in Melbourne out of his Sydney office, for a client that is based in Chennai, India. “Thankfully, I’ve learned that if you build rapport and trust with people they will deliver. I don’t advertise at all,” he says. Mathlin says an obvious way to generate a referral base is to partner with real estate agents and other professionals to produce property investment seminars, as “birds of a feather flock together”. A good credibilitybuilder, the seminars are a magnet for investors, who generally revel in networking and gaining new insights into the property market. However, Mathlin says brokers are better off doing investment seminars with the likes of accountants and real estate agents, rather than by themselves, so that they can field technical questions. “If you are going to have a seminar and educate people, you need the right people presenting,” he says. Advertising in investment magazines is another path likely to generate business. While “not cheap”, Mathlin argues the investment in this form of marketing will help with credibility and branding. Brokers also need to let their clients know about their specialty. “If you want to be an investment expert, you’ve got to communicate that – there’s no point just sending birthday cards out,” Mathlin says. By leveraging CRM software and tailoring communications to investment clients, it is likely that insights from a broker can find themselves the topic of discussion at the next barbeque – destined to result in new lead generation. First homebuyers should not be forgotten though – they may be the next investors.

Finding a focus

Investor clients are looking for brokers who are committed to their market segment, rather than those professionals simply looking to pick the new “lowhanging fruit” to make a quick killing. “There are too many pretenders out there just interested in selling something – they don’t do the homework and haven’t done the research,” Lee says. If brokers are genuinely interested in becoming investment property finance specialists they should say so in a consistent message sent to their client base, Mathlin says, rather than just chasing the latest trends in finance commitments from one month to the next.

MY WAY Business success has never been easy, but as Aussie Home Loans mortgage broker Mike Buchecker tells Australian Broker, writing down your goals can help you get there.

Age group?

36–45.........................34% 26–35.........................32% 46–55.........................19% 18–25............................9% 55+...............................6% Is property investing...


Mike Buchecker

Your retirement plan.............................36% Your hobby with plan to become main ccupation........... 31%

What is your greatest business achievement? Settling over 1,000 loans in my first five years as a broker. I reached that goal with two weeks to spare.

Your hobby.................. 14%

What’s the key to getting business through the door? Work hard, treat customers well, ask for the business and ask for referrals.

I’m a firsttime buyer................... 14%




Source: Your Investment Property Reader Survey

What goal/s got you to where you are? Having yearly, monthly and weekly goals written down for both personal and business life. Planning three holidays a year well in advance and having the brochures on your desk helps to keep you going. If goals are in writing or can be viewed you will achieve them; if not you are just dreaming. Who has helped you the most, and how? My secretary Claire. For eight years she has been “the glue” that keeps the whole thing together, especially when I have lost the plot. What character trait do you most value in yourself? A sense of humour is essential. When all else fails have a laugh and move on. How do you stand out from the crowd/ competition? Having a customer for life mentality. Selling yourself on service and not on price ensures customers last longer. If you are selling purely on price the first chance a customer gets to jump ship they will. What do you tell yourself when the going gets tough? “Tough times never last, only tough people do”. It does not matter what happens to you, it is how you deal with it that matters. Trying not to listen to the negative media on TV and radio, and limit myself to reading the comics and sporting pages in the newspapers. What is one thing you want to improve in your business? On-line communications. Our teenage kids leave me scratching my head whilst I struggle with the remote. What piece of advice would you give to an ambitious broker? Write your goals down, surround yourself with good people and read the policy manuals of the main lenders and mortgage insurers. If you suffer from insomnia this is also ideal reading material for you. What’s your next greatest ambition? A round-the-world holiday involving some great sporting events; outstanding scenery is optional.


Market talk

The growth market

Are property investors the way forward in the current market? Australian Broker investigates


he market has slowed as a result of interest rises, first-time buyers have all but disappeared and affordability is becoming an increasingly prominent issue. It may be an overstatement to call the situation ‘dire’, but it’s certain that Australia’s property market is in a very different state than what it was 12 or even six months ago. Even so, recent figures suggest that one section of the market is going from strength to strength – and that’s property investors. Seasonally-adjusted Australian Bureau of Statistics data for May reveals that the value of housing finance commitments made by investors increased 2.6% indeed, investment finance was the only category to increase in real terms, by $77m. Research by PRDnationwide, meanwhile, reckons that property investors’ market share is at its highest level since before the global financial crisis. Michael Yardney, director of Metropole Property Investment Strategists, thinks that the resurgence of investors is due to the economy picking up and a lingering distrust of shares since the GFC. “The stock market has proven to be too volatile, so investors are coming to property due to its stability and quality – the term ‘safe as houses’ is proving to be true here!” he says. “Added to that is the growing trend to invest in property through borrowing in self-managed super funds. Many Baby Boomers have, frankly, lost faith in the share market, and the advent of DIY super funds is attractive, especially in terms of being able to control one’s own destiny.” PRDnationwide’s research director, Aaron Maskrey, also believes that Baby Boomers seeking long-term security are the key to property growth in future. He suggests that ‘empty nester’ Baby Boomers will drive the greatest demand over the next 25 years. “Baby Boomers have typically seen the assets they hold grow substantially over a number of years, so they have a significant amount of potential equity that they could release for property investment. In parallel to that,

property has become slightly more unaffordable – especially for Gen X/Gen Y buyers. Younger prospective buyers also have a different attitude: they want lowmaintenance, inner-city living, and that costs.” Maskrey suggests that we could see generations working together. “I think we could see Gen Ys going in with the Baby Boomers in investment or co-ownership, with the older partners providing most or all of the equity. That works for both parties: it gives Gen Ys access to properties in the areas they want to live in, while continual investment and reinvestment in property will provide a sustainable income for Baby Boomers as they get older.” Even so, sentiment amongst investors themselves isn’t uniformly positive; a recent poll by Colmar Brunton and the Sydney Morning Herald found that 62% of investors believe that a long-term flattening of prices is likely. Yardney agrees that growth is slowing – but believes that it will lead to two tiers of investor forming. “Some investors – probably the more experienced ones, who’ve been through a few property cycles – will see this as an opportunity. They tend to prefer times where there’s less competition, to pick up a bargain. Novice investors tend to be a bit more nervous, will go with the herd, and take more notice of mixed media messages. They’re the people who will sit back, and who may look back and regret not buying property.” So, the message is that investors are out there, in a number of different forms, and they’re looking to buy. Brokers would be foolish to neglect this segment of the market, especially in the current market conditions.

Research by PRDnationwide shows that property investors’ market share is at its highest level since before the global financial crisis

MARKET NEWS IN BRIEF August election equals spring boom?

August’s federal election could set the stage for a bumper spring selling season. Angus Raine, chief executive of Raine & Horne believes the election is ‘perfectly timed’. “Australians are normally wary of buying or selling a home in the lead up to a federal election – generally, we tend to wait until the election is decided just in case there are any unforeseen surprises,” he said. “Winter is typically a quieter time for property sales, so an early poll will enable vendors to list in August or earlier – and won’t affect buying aspirations through the traditional spring selling season.”

Affordability pressure threatens growth

Research company Residex’s end of financial year report is warning that affordability is putting a brake on property markets in the eastern capitals. Residex chief executive John Edwards has calculated that more than 60% of the gross after-tax take-home pay of a typical household in both Melbourne and Sydney would currently be used to purchase a median valued home, assuming current home loan interest rates and a deposit of 20% of the property’s value. This, Edwards argues, is constraining markets. He adds that rentals are constrained by affordability too, and that at these levels there will be pressure on those renting to either reduce expenditure and increase people density in rented properties, or move to more affordable areas.

Private equity to fund housing development

Private equity groups are looking increasingly likely to begin offering funding to residential developers. A number of mezzanine debt funds, including local firms Gresham Property and Quantum Group, are seeking up to $200m from institutional investors and high-networth individuals to plug the gap between available bank finance and developers’ need for working capital. Gresham Property’s managing director, Mike Burley, told The Australian he could see “clear demand” in the market for mezzanine finance. The outfit has launched three mezzanine funds since 2002, raising $270m, and launched a fourth fund this year. Private equity firms said to be assessing the mezzanine debt market include Switzerland-based Partners Group, US-based Babson Group, LaSalle Investment Management and Blackstone Group.

NUMBER CRUNCHING Auction clearance rates: Week ending 11 July Clearance rate

Number of auctions


Not sold

57.8% 62.6% 26.6% 51% 50% 25% 61.9% 37.5%

372 519 94 51 6 12 32 8

215 325 25 26 3 3 13 3

157 194 69 25 3 9 8 5

Sydney Melbourne Brisbane Adelaide Darwin Perth Canberra Hobart

Auction clearance rates: Week ending 18 July Clearance rate

Number of auctions


Not sold

64.4% 66.1% 24.3% 54.2% n/a 41.7% 64% 13.3%

379 561 111 59 3 24 25 15

244 371 27 32 0 10 16 2

135 190 84 27 3 14 9 13

Sydney Melbourne Brisbane Adelaide Darwin Perth Canberra Hobart

Stock levels: Month ending 18 July New advertised listings


Month ending 18 July 14,745 13,494 11,882 6,569 3,578 372 569 1,291 52,500

At same point last year 13,218 13,379 10,058 5,277 3,083 281 446 1,165 46,907


1,527 115 1,824 1,292 495 91 123 126 5,593

Total advertised listings Month ending 18 July 68,148 56,525 41,695 28,729 13,665 1,387 1,371 7,729 219,249

At same point last year 59,117 61,132 41,897 24,848 12,706 925 1,269 7,460 209,354


Approximate value of total listed stock

9,031 -4,607 -202 3,881 959 462 102 269 9,895

$40,401,181,009 $36,822,925,802 $25,490,672,667 $19,696,654,892 $5,764,834,103 $804,175,460 $2,212,517,536 $2,824,014,849 $134,016,976,318

City by city: May 2010 State

Property type

Number sold

Median price

Quarterly growth


Houses Units Houses Units Houses Units Houses Units Houses Units Houses Units Houses Units

48,330 39,213 50,251 25,334 30,510 11,570 18,597 6,388 21,771 7,185 1,788 970 4,339 2,983

$653,184 $496,548 $565,911 $448,031 $489,849 $361,257 $459,693 $374,156 $519,043 $503,504 $558,883 $436,280 $571,574 $446,742

2.3% 2.4% 3.7% 1.8% 0.9% 0.4% 2.8% 0.5% -2.3% -1.0% 0.8% 4.0% 3.6% 4.3%


Gen Ys say yes to units

Inner-city high rise apartments are becoming the property purchase of choice for younger buyers. The trend, which is being spearheaded in the Melbourne market, is a result of buyers being priced out of urban house markets but being unwilling to move to outer suburbs. Sam Nathan, an apartment specialist with property researchers and advisors Charter Keck Cramer, said that Generation X and Generation Y saw apartments as their primary housing option. “They have made a lifestyle decision not to live in traditional houses in outer suburbs,” he commented. “They want to be close to the CBD so as to not lose contact with social and business networks.” Sydney is another market that is highly likely to see growth in the apartment market, as a result of off-theplan stamp duty concessions introduced at the beginning of July.


Brisbane Adelaide Perth Darwin Canberra

All information supplied by RP Data

12-month growth 10.8% 10.6% 17.1% 15.5% 6.5% 6.3% 10.7% 7.2% 5.9% 5.9% 13.0% 22.5% 15.6% 13.7%



Do packages pack a punch? Macquarie recently launched its Macquarie Bank Mortgage Solutions product range, of which the Optimum Package is the group’s flagship product. Macquarie executive director Frank Ganis said the product suite would most likely appeal to aspirational borrowers looking for a “total financial package”, geared towards wealth creation. The response to the product has been positive, according to Australian Financial Group and Vow Financial, two broking groups who distributed it on a trial basis. “The response has been quite good. We’ve written good quality deals,” Vow’s chief operating officer Steve Lambert said. However, Macquarie’s offering enters a market crowded with packaged loans – indeed, they have become the vehicle of choice for lenders, particularly the major banks, who see benefits in selling additional products – such as credit cards – in tandem with mortgages. Canstar Cannex financial analyst Mitchell Watson said packaged products “are the driving force for wholesale volumes”, with up to 80% of loans currently of the packaged variety. “They offer a whole banking experience,” Watson said. This growth has increased, with more credit unions entering the packaged market. The primary advantage for borrowers is a substantial discount on interest rates, in the order of 0.85% on variable rates. Additional benefits, say banks, include saving annual fees on credit cards or monthly account keeping fees on transaction accounts, potential higher savings rates on term deposits and deductions on home and contents insurance. For brokers, higher commission rates are on offer, as well as the attraction of opening more business lines with a particular client. “The

Popular packaged loans Institution


Annual fee*

Nab Community First CU HomeSide Lending Qld Teachers CU Heritage Building Soc Electricity CU Australian Central CU HSBC AMP Banking Newcastle Permanent St.George Bank/BankSA Suncorp Bendigo Bank IMB Limited AMP Banking Bank of Queensland Westpac

Choice Package True Professional Homeplus Package Gold Star Premium Professional Package Loyalty Plus Home Loan Package PowerVantage Select Package Premium Plus Package Advantage Package My Home Package Home Loan Package Plus Prof Mortgage Plus Pkg Professional Package Home Loan Privileges Premier Advantage

$395 $395 $120 $395 $250 $360 $325 $240 $349 $300 $395 $300 $96 $360 $349 $375 $395

Loan amount $250,000



6.54% 6.54% 6.57% 6.59% 6.64% 6.65% 6.66% 6.69% 6.69% 6.72% 6.73% 6.74% 6.75% 6.75% 6.79% 6.81% 6.81%

6.54% 6.54% 6.57% 6.59% 6.64% 6.65% 6.66%

6.54% 6.54% 6.57% 6.59% 6.64% 6.65% 6.66%

6.69% 6.72% 6.73% 6.74% 6.75% 6.75% 6.79% 6.81% 6.81%

6.69% 6.72% 6.73% 6.74% 6.75% 6.75% 6.74% 6.81% 6.81%

Source: Canstar Cannex, 15/07/2010 * Annual fee is represented as total fees over one year. Frequency of payments could vary.

more a broker does with a client, the more they will be seen to be their financial manager, so the importance of a professional pack is … helping with client retention,” Lambert said. ‘Professional packs’ or packaged loans have changed somewhat from their original form. In the past, borrowers had to be qualified in certain occupations – such as doctors or lawyers – to access these packs, but as bank competition increased, these classifications and restrictions disappeared, and they became available to just about anyone borrowing over $250,000. This liberal approach is now being wound back. AFG’s Mark Hewitt has said discounts on packaged mortgage rates are being slashed, with customers now having to borrow $700,000 to access the full 0.7% discount, or settle for a 0.6% discount on smaller loans in the vicinity of

$500,000. “We’ve seen the entry level to some packages increasing,” Hewitt said. “Banks are quite focused now on attracting the type of customer that they want.” The advantage of packaged loans is clearly the interest rate discount – so much so, that customers often take packages, and never make use of the extra services on offer. Aggregators have been critical of this lack of innovation. Lambert said lenders could “do a bit more refining of products to differentiate them”, or be at risk of supplying the market with “more of the same”. He suggests value-added benefits, such as offering better savings interest rates to mortgage customers. While Macquarie’s offering adds another option for brokers in the range of packages on offer, pricing is still at a premium. The success of the group in differentiating its product suite for borrowers remains to be seen.

Macquarie Optimum Package Different accounts: unlimited accounts (after settlement), with a choice of loan features Global borrowing limit: no need to ‘ask permission’ regarding investment opportunities Interest capitalisation: can capitalise interest on part of the mortgage Access: internet, phone, ATM and EFTPOS access, and cheque book can be linked to loan Credit card: Macquarie Platinum or Gold Visa Card MortgageGuard: optional insurance package Choice of style: Premium, line of credit, or mix and match

One year on What a difference a year makes... or not. Australian Broker reflects on the top stories from issue 6.15 and finds out whether things have changed

Issue: Australian Broker issue 6.15

activity, with AFG recording this at a current 10% of the market.

Headline: Numbers point to investor return (page 4) What we reported: As the first homebuyers’ bubble burst, property investors were lining up as the next big thing in mortgages. The release of May housing finance figures by the Australian Bureau of Statistics (ABS) lent support to this view with the value of dwelling commitments for investor-fixed loans rising by 2.4%, after a rise of 8.9% in April, the third consecutive month of increases for this category. Data released by AFG in its June mortgage index suggested momentum would continue with the proportion of loans to investors rising to 29%, up from a low of 24.5% in March and heading back towards AFG’s longterm norm for this sector; a range of 30 to 35% of all mortgages. What has happened since? The relentless march of investors back to the top of the property pile has continued. The ABS’s May 2010 housing finance figures revealed investors are currently driving the property market, with investment finance increasing by 2.6% in seasonally-adjusted growth and increase in real terms by $77m. AFG’s mortgage index for June 2010 also saw investors maintain a significant market share at 35.4% of all mortgages sold across Australia – just 3.6% behind refinancers. The end of the First Home Owners Grant boost and several successive interest rate rises has practically frozen first homebuyer

Headline: Non-bank award for HomeStar Finance (page 15) What we reported: HomeStar Finance had captured the Non-Bank Lender of the Year award from Your Mortgage magazine for the second year in a row. The industry’s leading consumer magazine on residential and investment property finance also awarded the lender silver in the categories of Best Loan for First-Home Buyers and Best Loan for Investors. As well, HomeStar Finance was awarded a silver, bronze in the Best Standard Variable Loan category and a bronze for the Best Fixed Fiveyear Loan. What has happened since? Your Mortgage magazine has carried out its 2010 comparison, and yet again HomeStar came out on top in the NonBank Lender of the Year category. It wasn’t the lender’s only success: it also scored gold awards in the Best New Product, Best Lender Website and Best Five-Year Fixed Loan categories; a silver award in the Best Introductory Loan category; and bronze awards in the Best Line of Credit Loan and Best Three-Year Fixed Loan categories. The Mortgage of the Year Award went to Ratebusters’ Fightback Premium product, and the Bank of the Year was NAB.

Headline: Still a place for part-timers? (page 1) What we reported: With less than three months to go until ASIC licence registrations kick in, the future of part-time mortgage brokers has continued to divide opinion. Since its inception, the industry has been a flexible option for working mothers, and more recently, other professionals such as accountants, lawyers and financial planners have added mortgage broking to their tool boxes. But with the aim of licensing and new regulation being to create a professional industry mirroring financial planning, many questioned where this leaves part-time players. Industry views were mixed: MFAA CEO Phil Naylor said there was a place for part-timers with a professional mentality. What has happened since? The licensing process is now in full swing – but have we seen a drop in part-time brokers? It seems like it’s still too early to say. Out of the organisations AB contacted, few were able or willing to comment on the current presence – or otherwise – of parttime brokers. Anecdotally, the consensus seems to be that the new credit regulations will lead to consolidation for one-man-band operators – whether under aggregators or with other brokers. This would suggest that part-timers may fall away; but equally, they may choose to become a credit representative of another outfit.



Feature OFF THE CUFF Ian Rakhit,

Head of specialist banking, Bankwest What was the last book you read? I’m a big reader and my favourite authors are Ian Rankin, John Grisham, John King and Bill Bryson. The last book I read was A Question of Blood, part of the Inspector Rebus series by Ian Rankin. If you did not live in Australia, where would you live? I’m originally from Manchester, England, home to Oasis, New Order and the legendary football club, Manchester City. Even if I wasn’t so lucky to live in Sydney, I would still call Manchester home. If you could sit down to lunch with anyone you like, who would it be? Joe Strummer, the lead singer of The Clash. They were THE group as I was growing up and even 30 years later, I still find his lyrics and writings so relevant. What was the first job you ever had? I remember clearing snow from the driveways of our neighbours every winter for a few pounds, and my first real job was with the Halifax Building Society… next month I complete 25 years in banking!! What do you do to unwind? I love to run before and after work to clear my mind and always need to get a chapter finished before bed. What’s the most extravagant gift you ever bought yourself? I bought an Audi TT 9 years ago which I adored, but it had to go as my children began to arrive.

What CD is currently playing in your car stereo? Falcon by The Courteeners. If you like English indie/alternative, this band is the best around at the moment. If you could give anyone starting out in business one piece of advice, what would it be? Have a very specific and measurable short and medium term plan and set out to absolutely delight your customers. I still use the same shops and tradespeople I have for years, simply because they look after me. We are all customers and our business can be so easily lost. If I was not working in the mortgage industry, I would like to be...? Half back for the Wests Tigers. To play alongside Benji Marshall would be a dream job. This year the comp is ours! Where was the last place you went on holiday? A short break with my family and some friends from the UK to Hyams Beach on the South Coast of NSW. Truly the whitest sand in the world – beautiful!

Finalists announced in MPA 10.9 September 24, 2010 The Westin Hotel, Sydney

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CBA enlists footballers in cancer fight


Commonwealth Bank Captains’ Lunch in Brisbane conducted by the group’s third party banking arm has raised $30,000 for the Prostate Cancer Foundation of Australia (PCFA), thanks to the support of mortgage brokers and other financial services industry participants. Featuring the captains of three football codes – Darren Lockyer from the Brisbane Broncos (Rugby League), Jonathon Brown of the Brisbane Lions (AFL) and James Horwill from the Queensland Reds (Rugby Union) – a third of the turnout on the day were brokers. Third party banking executive general manager Kathy Cummings said it was a great success. “By bringing together the three football codes we attracted a great amount of interest from Brisbane’s footy fans and they were very generous in their support for the PCFA,” she said. Queensland state manager for the third party business, Steve Sharp, said the broker turnout reflected “a real commitment to the cause” championed by the PCFA. “All the money raised will go directly to support the PCFA’s efforts in finding a cure for prostate cancer,” he said.

Jonathon Brown, James Horwill and Darren Lockyer

Recently, CBA held a lunch at the MFAA Convention in Melbourne to raise awareness of the prostate cancer cause, and regularly conducts other activities in support of the PCFA. Third party banking staff in each state have conducted morning teas or barbeques to support their fund raising, while many of the male staff participated in “Movember”. The total funds raised for the PCFA by CBA is almost $50,000 in the 2009/10 financial year. Commonwealth’s third party arm has partnered with the PCFA and the Breast Cancer Institute of Australia, and works with the group’s arts and health sponsorship team, leveraging off their connections and expertise to raise funds for the charity groups. “We are passionate about raising awareness and funds for health issues that affect men and women,” Cummings said. “I want to commend Steve on his initiative to hold the Captains’ Lunch and the personal drive of Steve and his team to make it such a success.”

By bringing together the three football codes we attracted a great amount of interest from Brisbane’s footy fans

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news to the editor at .


NMB appoints new BDM

Firstfolio names new overseers

nthony Boulos has been appointed as National Mortgage Brokers’ business development manager, NSW and the ACT, joining from Australian Loan Company (ALCo). Boulos has 15 years of experience in finance, with a particular specialisation in banking and aggregation. NMB said Boulos’ recent achievements include establishing broker networks in the ACT, NSW, Queensland and WA, the recruitment of referral partners in these markets and integrating mortgage services for financial

irstfolio Limited has appointed Greg Paramor to its board. Paramor is the former chief executive of listed developer Mirvac and a board member of real estate group LJ Hooker, and joins Firstfolio as a non-executive director. In a statement accompanying the announcement, the financial services group said Paramor’s appointment signals a strengthening of Firstfolio’s board in line with rapid growth. Current chief executive Mark Forsyth has also been appointed to the board as a director.


Anthony Boulos

planners, accountants and insurance brokers. The group said Boulos would be “an asset”, and he will be put to work driving recruitment and productivity objectives.


Greg Paramor

Paramor has worked in real estate and funds management for more than 35 years. He is a past president of the Property Council of Australia and the Investment Funds Association.


Caught on camera Aggregator FAST recently hosted a Business Excellence Conference in Palm Cove, Queensland for its top performing brokers. They were treated to business information – and a mix of motivation and acclamation













10 PHOTO 1: Darren Fidoe (FAST), Anthony Donataccio and Kim Dennis (Premium Financial Services), Kristen Beale (FAST) PHOTO 2: Darrell Rice (Prowest Financial Solutions), Adam Baker (Bankwest), Leigh Matthews (Home Loan Options), Karen McDowell (FAST) PHOTO 3: Craig Burford (Bob Wigley Home Loans), Craig Williams (API Home Loans), Brenton Moyle (Genesys Wealth Advisers), Roy Colaco (APR Financial Services) PHOTO 4: Laurie Duffus (FAST), David Lamperd (First Point Group), Cynthia Grisbrook and Simon Pinnock (DLV Finance Solutions), Daniel Puckeridge (Homeloans Limited) PHOTO 5: Guest speaker: Tom Potter, founder of Australianowned Eagle Boys Pizza. PHOTO 6: CBA Team: Tony Semrani, David Bergen, Mark Schultz, Wayne Keating, Judy Harvey PHOTO 7: Motivational speaker John Coutis with Hannah Carter(FAST) PHOTO 8: Winner, NSW Small Operator: Paul Saba (FAST) and Darren Lee (General Homeloans) PHOTO 9: Speaker and investigative reporter, John Silvester PHOTO 10: Winner, QLD Small Operator: Darren Fidoe (FAST), Xavier Quenon (Go Mortgage Corporation) and Kristen Beale (FAST) PHOTO 11: Zoe Uyen (FAST), Craig Burford (Bob Wigley Home Loans), Natasha Southern (FAST) PHOTO 12: Tony Semrani (CBA), Nicole Cannon (Pink Finance), Jeff Purcell (KSG Finance), David O’Toole (FAST) PHOTO 13: National Winner, WA Group Operator: Kim Pyke (FAST), Jeffrey Rimmer (Select Mortgage Services), Kristen Beale (FAST)



Got any juicy gossip, or a funny story that you’d like to share with Insider? Drop us a line at

Red light for bad traffic

which time the broker, who pleaded guilty, had already served the first year of a seven-year prison term – but better late than never.

Do banks have souls?


N Future imperfect


rystal ball gazing is a difficult enough game at the best of times – however, it’s even trickier when even other economists seem to be having an existential crisis about the point of their work. The Treasury’s budget forecast revision in mid-July was met by a wave of derision from economists countrywide. Commsec’s economist Craig James led the charge by arguing that no one should spend more than “five minutes” on the predictions. However, that’s not because he thinks they’re wrong – instead, it seems that he has problems with the concept of forecasting itself. “Simply, they are just forecasts – the best guesses of events, some way off,” he told the ABC. Forgive us if we’re being obtuse, but isn’t providing forecasts the raison d’etre of economists? True, most people know to take them with a pinch of salt – especially since the financial crisis – but isn’t publicly

admitting that you’re essentially making it up the quickest way out of a job? Insider eagerly awaits James’ next set of growth predictions.

Bad connections?


n an inspired piece of sleuthing, Terry Ryder from has discovered that RBA governor Glenn Stevens owns a property in Sutherland shire – the area of Sydney that’s rated worst for capital growth. Ryder says he’s long harboured suspicions that Stevens has ‘scant knowledge of real estate’, not least due to the recent run of interest rate rises, and this just adds fuel to the fire. Apparently, the main problem with Sutherland is its ‘disconnect’ with the rest of Sydney. Going by Ryder’s view, that disconnect is only mirrored by Governor Stevens’ insight into what’s going on in the property industry right now.

ow that ASIC has taken over mortgage industry regulation, Insider suspects quite a lot of dodgy – if not downright illegal – behaviour may be brought into the light of day. If so, Insider would highly recommend brokers refrain from using mortgage applications as a means to launder money obtained through drug trafficking – as one broker did in the UK. The Financial Services Authority concluded that the former broker – convicted of four counts of obtaining a money transfer by deception, and two counts of attempting to obtain a money transfer by deception at Nottingham Crown Court in June 2008 – was not a fit and proper person to carry out regulated activities, and has therefore been banned. It only took the FSA a year to reach the verdict – during

hile Insider was walking down the street, minding his own business just a few short weeks ago, he was confronted with a shiny, bright red billboard – and a sudden and disturbing existential question that has bothered him ever since – do banks have souls? Of course, Insider had been aware of St.George’s “Big Enough, Small Enough” campaign, launched in January. Following Westpac’s acquisition of its smaller rival, the bank had seen the need to promote the new union, highlighting the “strength, security, convenience and range of products” on offer from a big bank, along with the “genuine care, warmth and friendly service” of a small bank – a fair enough proposition, and a nice message at that. However, it was the soul suggestion – “All the strength of a big bank with the soul of a small” – that is the point of Insider’s pondering. Insider understands the soul as the “spiritual or immaterial part of a human being or animal, regarded as immortal,” – as does Oxford. So, is the advertising guru responsible right to claim a soul for the bank? And if so, Insider would like to know what incarnation the bank may take next, since its life as an independently-owned (though still separately branded) entity, came to an end during the financial crisis. Perhaps the historical Saint George himself can assist the bank’s heavenly fortunes.


Receive breaking news updates direct to your inbox. Sign-up for the FREE e-newsletter at AGGREGATOR / WHOLESALE BROKER PLAN Australia 1300 78 78 14 page 5 BUSINESS FINANCE Bibby Financial 1300 850 322 page 13 COMMERCIAL Banksia Financial Group 1800 333 114 page 9 Think Tank Property Finance 1300 781 043 page 10 EQUIPMENT/VEHICLE LEASING Macquarie Leasing Pty Ltd 1800 005 046 page 19 INSURANCE Life Broker 1300 304 964 page 15 LENDER Citibank Mortgages 1300 651 059 page 36 Homeloans Ltd 1300 787 866 page 35


NON-BANK LENDER Hemisphere Financial Services 1300 793 742 page 17, page 30

Liberty Financial 13 11 80 page 3 MAS Funder 02 9283 7566 page 16

Mortgage Ezy 1800 TOO EZY (866 399) page 11

MKM Capital 1300 762 151 page 2 Provident Capital 1800 668 008 page 4

NON-CONFORMING Pepper Homeloans 1800 737 737 page 14 The House Price Information People

QBE LMI 1300 367 764 page 21

RAMS Home Loans 1300 130 769 page 7 MORTGAGE MANAGER / NON-BANK Mango Media 02 9555 7073 page 1 Royal Guardian Home Loans 133 455 Vault Mortgage Corporation 1300 798 676 page 28

OTHER SERVICES Residex 1300 139 775 page 23 RP Data page 29 Trailerhomes 0417 392 132 page 32 SHORT TERM LENDER Interim Finance 02 9971 6650 page 6 NCF Financial Services Pty Ltd 1300 550 707 page 8 WHOLESALE Resimac 1300 764 447

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Australian Broker magazine Issue 7.15  

The no. 1 news magazine for Australian brokers.

Australian Broker magazine Issue 7.15  

The no. 1 news magazine for Australian brokers.