Australian Broker 17.05

MARCH 2020 ISSUE 17.05

Banned NSW broker faces charges Charges laid against former Aussie broker who breached an ASIC ban /12

The regional rundown Regional brokers on opportunities and challenges outside the concrete jungle /16

ROBERT BELL The CEO of Australia’s newest smartbank says being new is not enough – it’s about being different /14

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Reshaping the future of broking Australian Mortgage Innovation Summit panellists discuss broking’s future /20

ALSO IN THIS ISSUE… Big four recoup market share Major banks reclaim market share after ceding 12% to non-majors /04 A big deal Smartline’s Tony Caab on why it’s key to prepare for application assessors /22 In the hot seat Moneytech’s Nick McGrath says it’s important to have thick skin /30

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NEWS

IN THIS SECTION

Lenders Big four banks recoup market share in commercial space /04

Aggregators Sharp rise in complaints about home loans /06

Market Macquarie dominates growth in mortgage sector /10

Regulators Charges laid against banned NSW broker/12

Technology Use tech as an aid, not a crutch, says non-bank /08

www.brokernews.com.au MARCH 2O20 EDITORIAL

SALES & MARKETING

Editor Victoria Ticha

Sales Manager Simon Kerslake

News Editor Madison Utley

Global Head of Communications Adrijana Monevska

Production Editor Roslyn Meredith

DATES TO WATCH

Upcoming can’t-miss events

ART & PRODUCTION Designer Jommel Ramos

25–26 MARCH

30-31 MARCH

06 APRIL

ASIC Annual Forum 2020

AFR Banking & Wealth Summit

AltFi Australasia Summit 2020

ASIC’s annual forum is a long-standing key event for participants in the financial services and markets sectors.

This year’s speakers include Attracta Lagan, co-principal at Managing Values; Paul Harrison, deputy director at Deakin Business School; and Nicolette Rubinsztein, non-executive director at Zurich Australia.

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

Join over 350 industry leaders to explore the twin themes of alternative finance and fintech at AltFi’s largest event yet.

The full-day event will examine the opportunities and challenges facing both disruptive newer players and established names looking to bring to the market genuinely radical new products. It will be held at Doltone House, Jones Bay Wharf, on the foreshore of the Sydney Harbour.

Production Manager Alicia Chin Traffic Coordinator Kristine Jamir

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

EDITORIAL ENQUIRIES

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

SUBSCRIPTION ENQUIRIES

7 M AY Banking Summit Sydney To be held at Doltone House, Hyde Park, this event brings together over 100 chiefs and divisional heads from Australia’s largest banks and financial services organisations to share insights on industry trends and emerging technologies that will change the face of the industry in the coming years.

2 2 M AY

1 1 J U LY

TEDxSydney 2020

Sydney Property Expo

This year’s event promises to be jam-packed with engaging talks, inventive performances, and thought-provoking films. It will be held at the ICC in Sydney, and talks will cover science, business, technology, art, design, entertainment, culture, social justice and much more. The Kick Start program from principal partner St. George Bank will give small businesses and entrepreneurs the opportunity to pitch their business ideas on stage.

Developers, agents and real estate industry leaders will be exhibiting with 100-plus developers and exhibitors at this expo.

The benefits of the local region, the current property market, new projects, investment opportunities, future trends of the property market and key issues impacting the sector will be discussed. The event will be held at the ICC Sydney Convention and Exhibition Centre.

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

ADVERTISING ENQUIRIES

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

16 OCTOBER

28-30 OCTOBER

05-06 NOVEMBER

Australian Mortgage Awards

AFG Next’s National Broker Conference

Future of Financial Services Conference

This year’s Australian Mortgage Awards, the leading independent awards event for the mortgage and finance industry, will recognise excellence and highlight the outstanding work done by individuals and their companies.

Winners of the Australian Mortgage Awards 2020 will be announced at the awards ceremony, to be held at The Star Sydney in Pyrmont.

AFG Next is offering brokers and industry professionals an immersive two days of thought leadership, education, professional development and networking. Find out what’s next for your industry, your business and the year ahead. All parts of this year’s event will focus on three key themes: evolve, excel and experience.

The event will be held in Melbourne.

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

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This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss. Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008. The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.

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

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16/03/2020 2:58:47 PM

NEWS

LENDERS BANK EXPANDS HOME LOAN OFFERING has announced it is making the Family Guarantee home loan offering available to investors as well as owner-occupiers, effective immediately. Heritage’s Family Guarantee splits the total amount across two loans, with one secured by the property purchased and the second partially secured by a property owned by a family member who acts as guarantor. The structure enables the borrower to avoid taking out lenders mortgage insurance, making the loan more affordable, while limiting the amount the family member is responsible for.

HERITAGE BANK

MAJ0RS PASS 25BPS CUT ON TO CUSTOMERS the Reserve Bank’s 25 basis points cut to the official cash rate, each of Australia’s big four banks announced they would be passing the reduction through to their customers in full before the day’s end. Currently, NAB has the lowest standard variable rate of the major banks – as it has since September 2018. Non-major lenders such as Macquarie, Suncorp, Newcastle Permanent and Athena Home Loans have also joined in passing the full rate cut on to their mortgage holders.

FOLLOWING

“Competition in business and commercial lending remains strong” Brendan Wright CEO, FAST

4

BIG FOUR RECOUP MARKET SHARE IN COMMERCIAL SPACE The big four banks have boosted their market share, while smaller lenders saw a drop in settlements in the last quarter, according to FAST’s latest Business Lending Index big four banks have reclaimed market share in the commercial space after ceding 12% to the non-majors in FY19, the FAST Business Lending Index has revealed. While the report found that business lending for the December 2019 quarter was down 9.4% to $1.25bn year-on-year across all lenders, its results show that smaller institutions felt the crunch more acutely than their larger counterparts.

“In our last report we cautioned that the large lenders wouldn’t sit on their hands. This has proven to be correct, and the major banks are now firmly back in the game with sharp pricing and conditions, particularly for commercial property loans,” said FAST CEO Brendan Wright.

AUSTRALIA’S

“Competition in business and commercial lending remains strong.

Complexity continues to characterise the market, and experienced brokers are therefore essential to delivering sound credit advice and good outcomes for their business clients.”

While smaller lenders grew their market share from 24% to 40% in FY19, FAST’s most recent data shows this fell to 35% in the final three months of the last calendar year. The sector recorded a 20% decline in settlements over the period to $437m.

The major banks currently have a 65% share of the business and commercial lending market, settling $817m over the December quarter.

FAST attributed the weaker figures over the three-month period to the seasonality of the market, as the

September quarter is typically busier than the December quarter.

“June to September is typically the busiest quarter for commercial lending as businesses are in full swing, applications lodged earlier in the year are being settled and the start of a new financial year brings fresh energy to the market,” Wright said.

“Competition remains red hot in the commercial lending space, with business lending seeing highly competitive rates almost as low as those seen in the home loan market. “[However,] while competition remains fierce, the latest findings reflect a broader downturn in business lending in the Australian economy. We anticipate that this slowdown will continue as the impact of the bushfires and coronavirus weigh on sentiment,” the CEO said.

“The economic impact of these challenges is only now being quantified and we expect to see that reflected in the next quarterly data to come out of the FAST Business Lending Index.”

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Faster than Banks, Cheaper than Caveats EASTWOOD SECURITIES

Melbourne (03) 9225 5189

Sydney (02) 9239 3144

Adelaide (08) 8408 0800

Eastwood Securities Pty Ltd • ACN: 143 030 540 • ARSN: 146 451 792 • Credit Licence Number: 385467

eastwoodsecurities.com.au

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16/03/2020 3:00:19 PM

NEWS

A G G R E G AT O R S AGGREGATOR DIVERSIFIES LENDER PANEL network of 1,600-plus brokers now have access to unsecuredbusiness lender Moula. PLAN CEO Anja Pannek said, “With the constantly changing needs of Australian businesses, it is more important than ever that we maintain a diversified lender panel to ensure our members can offer greater choice to suit the needs of their business clients.” Moula offers loans of between $5,000 and $500k for terms of up to 36 months, with decisions made within 24 hours.

PLAN AUSTRALIA’S

SHARP RISE IN COMPLAINTS ABOUT HOME LOANS AFCA has reported a ‘disappointing’ increase of 20% in complaints about home loans in the last six months of 2019 data, freely available to the public through the Australian Financial Complaints Authority’s Datacube, shows that between July and December last year the Financial Ombudsman Service received 2,201 complaints about home loans, or an average of 367 per month – an increase of 20% in complaints.

However, the figure remains just 6% of a total of 36,562 complaints received over the period.

AFCA CEO Justin Untersteiner nonetheless called the results “disappointing”, with 49 complaints relating specifically to mortgage brokers, 19 involving NAB-owned BLSSA Pty Ltd, 16 concerning Mortgage Choice, 10 regarding Bestwell Mortgage, NEW

and four against Auscred Services, the licensed credit assistance provider of Lendi.

Mortgage aggregators garnered 38 complaints, divided among Loan Market (15), Australian Finance Group (10), Connective (8) and Finsure (5). Mortgage managers accounted for 135, with the top four spots taken

by Bluestone Mortgages (29), Mortgage House (21), Resimac (19) and Liberty Financial (13).

Over the six-month period, the most complained about product overall was credit cards, with 2,748 complaints. The most complained about insurance product was home-building insurance, with 1,445 complaints. The most superannuation complaints related

to account administration, with 1,129 complaints, and the most complained about investment and advice product was derivatives, hedging and securities, with 794 complaints.

By releasing the data, AFCA said it hoped to contribute to rebuilding trust in Australian financial services.

“Transparency is key in this transformation, and we have made significant changes in the way we report our data and decisions to make them more accessible to the public,” said Untersteiner.

“There has been a dramatic increase in complaints about home loans. This increase has been driven by financial firms failing to respond to requests for assistance, the conversion of loans from interestonly to principal and interest, and issues with responsible lending.

“The data also shows that we are getting very few complaints about financial advice, just 30 per month, and complaints against debt buyers or collectors rose by just 5%.”

IRON CAPITAL JOINS CONNECTIVE PANEL financier Iron Capital

EQUIPMENT Group has joined

Connective’s asset finance lending panel. The partnership is the first of its kind for Iron Capital and will open up Connective’s broker network to advice on a wide range of machinery requirements in civil, mining and earthmoving industries. Connective head of asset finance Brent Starrenburg said the partnership would support growing investment in Australia’s infrastructure projects.

“We firmly believe there will be no substantial lessening of competition from Connective’s merger with AFG” Mark Haron, Executive director, Connective

Only 1 form of income verification required Prime Alt Doc and Specialist Alt Doc

broker.resimac.com.au Resimac Limited ABN 67 002 997 935.

Australian Credit Licence 247283.

6

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16/03/2020 3:00:55 PM

NEAR PRIME AND SPECIALIST LOANS UPDATE

NEAR PRIME AND SPECIALIST LOANS – A REAL-LIFE OPPORTUNITY

need for an alternative solution in the market today has never been greater.

Customers are increasingly finding themselves underserved by the big banks, but we believe that Pepper Money’s diverse range of loan solutions can meet the differing real-life circumstances of brokers’ clients.

THE

What makes a borrower Near Prime or Specialist?

We have the ability to help borrowers who fall outside of the traditional lenders’ parameters, including those clients in regional areas. It’s not limited to people who have had a credit event – investors, the self-employed and families, to name a few, are all potential clients who can benefit from a Near Prime or Specialist solution, wherever they live.

For example, a broker may have a client who identifies with the following scenarios:

• Complex income Contractors, overtime hours or borrowers who receive income from multiple sources like Centrelink.

• Self-employment Self-employed borrowers with an ABN registered less than 12 months ago, or incomplete tax returns but who can provide alternative income documentation such as BAS statements.

• Past credit impairment Borrowers with defaults under $1,000, defaults of any amount once registered over 24 months, or have been discharged from bankruptcy by more than 1 day.

Common reasons why Near Prime and Specialist borrowers come to Pepper Money The Pepper Money difference that brokers can rely on is our real-life approach to assessing applications. We assess every application on a case-by-case

basis to make our decisions. In other words, if the customer can afford the loan, and it makes sense, we’ll make it happen.

Generally, we find that customers who fit a Near Prime or Specialist profile are looking to: • Refinance or consolidate an unlimited number of debts • Access cash out for business expansion • Increase their investment property portfolio How should brokers best position their loan applications so they get approved?

The application process for a Near Prime or Specialist loan is no different to a Prime loan. In submitting a strong application, attention to detail is key. Taking the time to include as much information as possible upfront will save time in processing and result in a quicker path to approval for the customer.

How should brokers go about educating their existing clients about alternative solutions?

The challenge for brokers is often positioning a Near Prime or Specialist solution when the client may have never needed to consider an alternative lender in the past. This is where Pepper’s 5 Step Process can come in handy.

Brokers can use this as a guide on how to successfully offer an alternative lending solution, as well as get some tips in navigating the emotional aspect of the customer’s lending experience.

Brokers can access this guide via the Pepper Money Broker Portal.

If you have a client you think may need a Near Prime or Specialist solution, contact your Pepper Money BDM or our dedicated Scenarios Team today.

Alternatively, run the scenario through the Pepper Product Selector Tool, which could give you an Indicative Offer within 2 minutes.

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NEWS

TECHNOLOGY LENDER UNVEILS TIMELINE FOR LAUNCH OF NEOBANK ambitions to become “one of Australia’s leading digital challenger banks” is on the way to being realised as the lender has announced that it’s neobank will be launched before the end of 2020. Working in partnership with Deloitte Digital and global banking software company Temenos, Virgin Money Australia plans to consolidate its range of product lines on a single platform, creating a centralised, digital-first experience for its customers.

VIRGIN MONEY’S

‘SLUGGISH’ INCOME GROWTH MAY SLOW BUYER ACTIVITY values have shown eight consecutive months of growth, with CoreLogic’s February 2020 Home Value Index revealing home prices are at a record high in five of Australia’s eight capital cities.

But the momentum seems unlikely to hold, given the affordability concerns guiding homebuyer behaviour. Head of research Tim Lawless explained that, “considering the sluggish pace of household income growth, housing affordability is eroding rapidly, which is likely to see some parts of the market become less active”.

PROPERTY

“Customer service has always been a cornerstone of the broking industry, but expectations have evolved”

John Mohnacheff National sales manager, Liberty

USE TECH AS AN AID, NOT A CRUTCH, SAYS NON-BANK A non-bank executive has encouraged brokers to use the time saved by technology to work with lenders to provide a more personalised service to customers to Liberty national sales manager John Mohnacheff, lenders should work alongside brokers to ensure a seamless transition for the customer. A positive broker experience, backed by a negative lender experience, or vice versa, could actually leave the customer with a negative view of both parties.

He said, “Customer service has always been a cornerstone of the broking industry, but expectations have evolved. Today’s customer expects a high level of fast, flexible and personalised service. If you don’t meet their needs, they won’t hesitate to walk away.”

Technology, at both the broker and lender level, is crucial to delivering the speed now expected ACCORDING

by customers; however, Mohnacheff warned that it should be used as “an aid, not a crutch”.

“Many brokers are time-poor, but there is a whole world of tech options designed to save time.

However, for you to see any measurable value in this, it’s important to reinvest the hours you save back into your business,” he said.

“While it’s easy to start relying on digital marketing alone to bring in leads, getting out there and remaining active in your local community is essential to broker success.”

Whether pursuing new leads, meeting with possible referral partners or gathering feedback on service provided, it’s absolutely

essential that brokers are having “open and honest dialogues” with their customers to get an accurate read on how they’re doing and how they could improve.

The non-bank executive acknowledged that lenders also held a substantial portion of the responsibility for creating an entirely positive home loan experience for consumers.

“Liberty works closely with our broker network to ensure we are delivering the best service possible.

As part of this, our teams all work to competitive service time frames to help process applications without unnecessary delays,” said Mohnacheff.

“We have a dedicated team of BDMs ready to discuss scenarios, talk through applications and provide clarification on what is required to progress.

“And, with direct access to our underwriting teams, brokers can always count on Liberty to provide the guidance and support needed to secure complex deals and achieve positive customer outcomes.”

FIRST MORTGAGES — SECOND MORTGAGES — CAVEAT LOANS — CONSTRUCTIONS LOANS

Smarter commercial lending 3 day settlements Flexible lending

CONTACT

8

Competitive rates and LVR’s

George Lyall — 0450 472 904

ADDRESS

Metro locations Quick credit decisions

Level 9, 30 Collins St, MELBOURNE VIC 3000

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NEWS

MARKET BROKERS’ MARKET SHARE SUBDUED brokers reclaimed 0.4 percentage points in the December 2019 quarter, facilitating 55.3% of all new residential home loans, according to data released by a CoreLogic report commissioned by the MFAA. While the result represents the first year-on-year decline in broker market share for the final quarter of a calendar year, MFAA CEO Mike Felton attributed the outcome, in part, to market share coming off a high base in the December 2018 quarter.

MORTGAGE

MACQUARIE DOMINATES GROWTH IN MORTGAGE SECTOR Macquarie Bank has charted stronger growth than other ADIs, particularly in new investment lending, according to APRA’s monthly banking statistics data has revealed that the investment loan balances at NAB and Westpac both decreased in January, and the values of both investment and owner-occupier loans fell at ANZ. The totals across the three majors remained largely flat.

While Commonwealth Bank added just over $1bn to its owner-occupier loan book, it showed only a $165m jump in investment lending.

Conversely, Macquarie led growth in investment lending at just under $650m, and $800m was also added to its owneroccupier loan book.

Macquarie’s recent success was addressed at RFi’s 2020 Australian Mortgage Innovation Summit, APRA

where NAB and Westpac executives discussed what the second-tier lender was getting right.

According to Byron Donovan, NAB’s head of commercial management, “[Macquarie] takes up a bit of our time, trying to understand what they’re doing”.

He added, “From what we see, they’ve had a very strong focus on service and the broker proposition. They’re very transparent with what their strategy is; they support that with a very strong digital offering.

They price above the line, with a lot of discretionary pricing.

“They’ve been really clear around supporting brokers, having a really slick service experience.

When it first rolled out, in terms

of volume, they did have some challenges, but they were quite open and honest and faced into it and said, ‘We understand we’ve had some challenges. Stick with us. In four or five weeks, we’ll have it rectified’. And they did.

So it’s been a very strong broker play, with service being the predominant driver. The numbers speak for themselves.”

Westpac’s head of customer engagement for home ownership, Joel Larsen, said Donovan’s sentiments were “very close” to his own observations.

“Macquarie was really bold in backing the broker channel, probably when the broker channel needed it the most through the royal commission. That was really sensible,” he said.

“The other thing I would say is they’re really clear around who they can loan to, and who they’re not going to loan to, which means, one, they’re able to position that price point but also put that service offering out to a consumer really early.”

AUSSIE CEO CAMPAIGNS FOR BROKERS the official cash rate being cut to a record low, Aussie CEO James Symond has urged borrowers to seek brokers’ help.

“I expect many fixed and variable mortgage rates will fall below 3% over the next month. Borrowers should be exploring the market for competitive rates and speaking with a reputable mortgage broker,” he said. Those who take advantage of the full 0.25% cut being passed on by many lenders could save by refinancing, he added.

FOLLOWING

“I expect many fixed and variable mortgage rates will fall below 3% over the next month” James Symond CEO, Aussie

HOME BUILDING ACTIVITY EASES Source: CommSec, ABS

Dwelling starts, % change on decade average, September quarter

Tasmania Victoria New South Wales

Australian Capital Territory South Australia Queensland Western Australia Northern Territory -80%

10

-60%

-40%

-20%

0%

20%

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NEWS

R E G U L AT O R S

COBA: GOVERNMENT INTERVENTION NEEDED Customer Owned Banking Association has called on the government to reconsider the changes to banking regulations given how the low interest rate environment is squeezing competition. “The government should think carefully about phasing and targeting the enormous wave of regulatory change queued up for implementation over the next few years,” said CEO Michael Lawrence. “As the banking regulator APRA has warned, the worsening margin squeeze caused by very low rates hits smaller banks harder than the major banks.”

THE

CORELOGIC: METRICS SUPPORT RBA RATE CUT Reserve Bank’s decision to bring the official cash rate down to 0.50% earlier in the month was “widely expected” but not exclusively attributable to the growing concern around COVID-19, according to CoreLogic head of research Tim Lawless. “The cut comes as inflation remains well below the RBA target range, labour markets hold plenty of slack with an underemployment rate of 8.5%, and wages growth tracks at a near record low of 2.2%,” said Lawless.

CHARGES LAID AGAINST BANNED NSW BROKER A former Aussie broker has been charged with breaching an ASIC ban that permanently barred him from the industry five years ago Lidcombe-based finance broker has been charged with breaching an ASIC banning order handed down in 2015 that permanently barred him from engaging in credit activity.

Five years ago, an ASIC investigation found that between November 2011 and August 2013, an Aussie representative and finance broker, Shiv Prakash Sahay, had made 13 false statements in home loan applications and created and used 23 false documents – namely bank statements – for 17 clients in an attempt to secure home loans totalling around $7m.

Of the $7m in loans Sahay applied for at the time, just under $5m were approved by Bankwest and Suncorp.

A

Sahay was convicted of making false statements, making false documents and using false documents in home loan applications; in addition to being permanently banned from the industry, he was sentenced to 350 hours of community service work.

However, ASIC has now alleged that Sahay has since engaged in credit activity involving 38 credit contracts between October 2015 and October 2018, dealing with loans worth over $17m combined and earning $111,064 in commissions.

Earlier this month, Sahay’s solicitor advised the court that Sahay would plead guilty to the charges. The matter will return to the Downing Centre Local Court

in NSW on 7 April 2020 for sentencing.

If convicted, Sahay faces a maximum penalty for the first offence of a fine of $18,000 or two years’ imprisonment, or both.

The maximum penalty for the second offence is a fine of $21,000 or two years’ imprisonment or both.

At the time of Sahay’s original banning in 2015, ASIC commissioner Peter Kell said, “The reputation of the lending industry depends on mortgage brokers and other credit representatives acting honestly and in compliance with the credit laws.

“ASIC will vigorously pursue offenders involved in falsifying loan documents and other statements for their own financial benefit.”

A story published by the Sydney Morning Herald reported that it “emerged that Aussie chose not to tell Sahay’s clients about the fraud, and also did not directly tell the institutions whose loans it brokered”.

COMMISSIONER HAYNE’S FINAL REPORT AT A GLANCE Source: Gilbert + Tobin 2020

Breakdown of the royal commission’s 76 recommendations by area of concern

THE

12

14

Regulators

KEY THEMES • Simplication of laws • Regulators’ enforcement culture

• Role of remuneration in culture and governance

Consumer lending

8

Small business lending

8

• Managing conflicts of interest and non-financial risks

Financial advice

• Leadership and responsiblity

Superannuation

• Power

7

Remuneration, culture and governance

10 9

Insurance Other

15 5

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New bank criteria left you high & dry?

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

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

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

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To view our ratings and awards please visit our Awards and Ratings page on our website. This publication is for accredited broker use only and is not for distribution to consumers. Copyright 2020 La Trobe Financial Services Pty Ltd ACN 006 479 527. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial.

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FE AT URES

SPECIAL REPORT

‘WE WANT TO BE MORE THAN JUST A NEOBANK’ Australians now have access to a new digital ‘smartbank’ called 86 400. CEO Robert Bell speaks to Australian Broker about modernising bank technology to help customers take control of their money, why being a ‘new’ bank is not enough, and the role of brokers in the transition to open banking BUSINESS METRICS

2019

launch of 86 400

86 400 seconds in a day

Aggregators SFG and Vow Financial

>500 accredited brokers

100% funded by major shareholder and independent payments provider Cuscal

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www.brokernews.com.au

newest smartbank, 86 400, was built from the most modern technology with online customers and digital loans in mind.

“As an industry, we should really be using technology to help people take control of their money every second of every day,” explains the bank’s CEO, Robert Bell.

Having previously worked at Cuscal – an Australian IT service management company and the smartbank’s only funder to date – Bell has been with 86 400 since the beginning.

Launched just last year, the bank – whose name derives from the number of seconds in a day – is still in its early stages but has already gained a lot of attention from brokers and consumers.

“We want to be more than just a new bank; we aspire to be a ‘smart’ bank. Our purpose is to help Australians take control of their money,” Bell explains.

Indeed, everything the bank has built – from its app to its transaction and savings accounts and more – has been designed with that aspiration in mind.

“Whether it’s predicting upcoming bills; our new energy switch product that helps people save money on our energy bills; or the prompts that we give to help people earn bonus interest, these are all designed around that,” Bell says.

AUSTRALIA’S

A new era of banking The bank has watched what’s been happening at the digital banks across the UK and Europe for inspiration, but to some extent the Australian market is already more

advanced, Bell explains.

“When we launched we were actually more holistic than anything else we’ve seen in other markets.”

But at the same time, he says large incumbent banks still hold the majority of the market share.

“Our definition of a smartbank is giving people features and benefits that you wouldn’t expect but need.

Being new is not enough. You’ve got to be different; you’ve got to be smart,” he says.

But there’s more to 86 400 than just innovative use of modern technology. As the first bank to offer digital home loans through brokers,

time with their customers and then spend less time on all the paperwork that they would have to do with traditional lenders?

“That’s the key difference for us, with brokers.”

Verifying income through smart statements Typically, brokers have to get income statements and rental statements from banks, but 86 400 uses “smart statements processes”.

This entails digitally taking 12 months of the client’s data, or a “scrape of all their transactions”, which is then played back to them.

Bell explains, “The broker and the customer, therefore, see the entire financial snapshot of their finances that they haven’t seen before.

“What could be a week-long process becomes a half-hour process. Our credit assessment process is very automated and very fast. What we then do is give the broker a ‘yes’ or ‘no’ decision on that

“The sorts of things we’re doing now, like taking snapshots of financial statements, that is being open-banking ready two years before open banking becomes helpful” Robert Bell, CEO, 86 400 it highlights the need to still form very real relationships with clients.

Bell says, “The first question people ask is, why are you going through brokers for mortgages?”

He explains that, despite all the technology and innovation that 86 400 has become known for, mortgage brokers still look at some 60% of all home loans that come through the marketplace.

He says, “People still love brokers. So what we wanted to ask was: how do we solve all the pain points for a mortgage broker, to make it easier for them to spend

credit significantly faster than what a traditional bank can do.”

He continues, “When they’ve been approved, all documents that need to be signed can be done online. The final piece that we’ve done is a digital ID integrated process. It makes things much easier and simpler for the customer and the broker.”

Collaborating with aggregators and technology partners To make these processes work, Bell says 86 400 has collaborated with multiple technology partners

Bell says, “We’re working through accrediting brokers at the moment; we’ve got over 500 accredited already. Brokers have a really important job in helping customers understand what they need, their options, etc.

“We’re just getting started, but we’re in a good position to ramp up growth.”

Major banks still own majority of market share Bell estimates that the major banks own around 80% of the market share in retail banking. He says, “It’s a large market and we’re realistic, but even with just 1% market share we could be very successful.”

He adds that Australia doesn’t need more banks per se; rather “it needs banks that are different”.

And unfortunately, traditional banks are generally thought of as slow and sluggish.

“A bank that helps Australians truly take control of their money can deliver features people haven’t even thought of before, and that really excites me,” Bell says.

Additionally, he points out that the new requirements surrounding responsible lending will only be met by advanced digital processes, not by doing things manually.

“We’re only going to see an increase in technology and efficiency over the next one or two years, with the market looking very different over the next decade.”

Robert Bell, CEO, 86 400

and vendors, but getting them all together to work on it has taken some time.

“Although we’ve got a very efficient digital process, getting brokers to adopt the new process, and getting people used to working in a different way, is our biggest

challenge,” he says.

“It’ll take a little while to get going. We’ve seen lots of products and processes being digitised, and it just makes sense.

“And the idea of the broker or a bank collecting physical statements, income statements and tax returns

and then manually going through them – that will completely disappear over time.”

To date, 86 400 has also partnered with two mortgage aggregators: SFG and Vow Financial, which together represent about 2,500 brokers.

One of the few banks testing open data 86 400 is one of the very few groups of people who are testing out open banking at present.

“Although we think that open banking will change the ability to take more data on, to help make decisions, etc., it won’t be quick to roll out. The sorts of things that we’re doing now, like taking snapshots of financial statements, that is being open-banking ready two years before open banking becomes helpful,” Bell says.

“We want to keep doing things differently, keep innovating, keep bringing new products and testing new products. We’re really supportive of brokers, and our immediate aim is to give brokers a fantastic experience and get in front of as many brokers as possible so they can see that there truly is a different way of doing things.” AB www.brokernews.com.au

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SPECIAL REPORT

THE REGIONAL RUNDOWN

Is working in big cities overrated? Australian Broker talks to some of the top regional brokers, who divulge the biggest opportunities and challenges they experience outside the concrete jungle

property values have charted eight consecutive months of growth, with the CoreLogic February 2020 Home Value Index showing that home prices reached a record high in five of Australia’s eight capital cities, the momentum seems unlikely to hold, given affordability concerns.

Although the financial comfort of metropolitan households increased 3% to near-record highs, the financial comfort of regional households fell 4%. The gap between regional and metro areas has now reached a record 13% – almost twice the historical average.

These notable falls in financial comfort across regional Australia dampened the overall rise in national financial comfort, with the overall Household Financial Comfort Index improving by 2% to just 5.59 out of 10 during the six months to December 2019.

In such conditions, how are regional brokers faring? Here’s what some had to say about working on the ground in regional areas of Australia.

makes plans for the day ahead. She sees clients throughout the day and structures loans for submission; works out at lunchtime at the local gym; and tries to finish the day in time to be home for dinner and to help with homework.

On average, Small’s loan sizes are around $450,000, and she handles about 14 loans a month. This is her second year as a broker.

For Small, the biggest difference between working regionally and working with clients in the city is that it usually involves smaller loans.

She says, “I deal with a friendlier client base that prefers a simple, straightforward, honest

Wallsend, NSW Amy Small, regional director and credit representative at Professional Lending Solutions in Wallsend, a western suburb of Newcastle in NSW, was previously employed as a lender and lender support at My Choice Home Loans, and before that she was a lender or lending support at Westpac and CBA. Like many brokers with children, Small’s day starts with getting her kids ready to go to school.

Once in the office she conducts the first debrief of the day for staff and

conversation to help them with their finance goals.

“Wallsend/Newcastle is a tradie town known for a few tourism spots like the Hunter Valley vineyards and the Supercars. This town has strong ties with the mining and medical industry. It is a combination of country and city that satisfies me, as I grew up in a small country town north of here but still love the metropolitan feel.”

Small says that, based on her experience, regional brokers have great work-life balance in

WHILE

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comparison to, say, city brokers.

She says, “I have met local brokers long-term in the industry who have structured their business around their life, and this is similar to what I do with the mum-work life juggle. There would be larger loan sizes in Sydney but more cut-throat competition.”

Nowra, NSW Paddy O’Sullivan, senior mortgage broker at Mortgage Choice in Nowra, previously worked in mining as a materials engineer. He says he was inspired to become a mortgage broker because he felt that it would allow him more time to live and

“I deal with a friendlier client base that prefers a simple, straightforward, honest conversation to help them with their finance goals” Amy Small, regional director and credit representative, Professional Lending Solutions work in the Shoalhaven region where he grew up, closer to his friends and family.

O’Sullivan starts the day by exercising at 5am, then heads into the office where he begins working on loan scenarios and submitting applications.

He says, “My day is broken up with appointments and phone calls.

I work late Tuesday and Thursday nights, with appointments into the evening when I can meet with customers after hours.”

O’Sullivan’s average loan size is

about $350,000, and he has completed over 271 loans over the last 12 months.

In terms of the major difference between working regionally and working with clients in the city, he says, “We have a diverse client base, from first home buyers, investors and refinancers to those seeking commercial loans and reverse mortgages. It is harder for us to specialise in a niche market, which is why my team and I are constantly working on building our knowledge to cater to a more diverse client base.

“Nowra is a vibrant regional hub with a growing cafe culture. It is the major commercial district linking the smaller tourist-driven towns on the coast. Our community is laid-back, consisting of a large mix of self-employed and PAYG clients.”

He advises that all brokers should immerse themselves in their communities. He says, “Surround yourself with great people, work hard and you will build a great business.”

In his opinion, it’s tougher working in a regional area than in the city.

“We need to cover more scenarios with less support, and we have the geographic challenge of a spread-out customer base, which sometimes means lenders will postcode-restrict their lending,” O’Sullivan says. “[But] the mortgage broking industry is a fantastic industry to be a part of; it’s important to stay focused, block out all the noise and keep your clients’ best interests at heart. The early years can be challenging and somewhat tiring.

Keep pushing forward and you will be rewarded.”

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Kaia Hunter, owner and director, Mortgage Choice

Buderim, Queensland Kaia Hunter, owner and director of Mortgage Choice Buderim and Sunshine Coast, runs her own business as well as working as a broker. Prior to working as a broker she spent 10 years in the digital media space, which she says gave her the experience that has come in handy in marketing her business.

She was inspired to become a broker because she wanted to share her love of property investing and help others create a property portfolio.

She says, “I am a single mum so my day usually entails rushing to get out the door in time for school and to arrive at the office before 8.30am.

My team and I start the day with a huddle at 8.30am to run through the status of our clients’ applications, any bottlenecks, address questions from the team, and check in on how everyone is doing.

“Then it’s on to client appointments, assisting the team, working with potential new clients and moving them forward, checking in on existing clients and monitoring any applications in progress to ensure all is running smoothly.”

Hunter’s average loan is about $300,000, roughly in line with property prices on the coast, and she conducts about 300 loans a year.

She adds, “Without having worked in the city, I’m not certain there are too many major differences.

However, our client base consists of a large number of self-employed applicants, perhaps stemming from the coast having a smaller population, and there are more limited job

Paddy O’Sullivan, senior mortgage broker, Mortgage Choice

opportunities than in larger cities.

“We also write a large number of construction loans as a result of all the development in the Sunshine Coast.”

Originally from Sydney, Hunter says she loves the Sunshine Coast. “It’s a beautiful place to live, and it’s so much more relaxed than the city. I love that I get to run a business in paradise and that I get to raise my daughter in such a wonderful environment. Working in a smaller community is wonderful.

“I also think it’s perhaps more relaxed workwise, given the coastal

Amy Small, regional director, Professional Lending Solutions

doing 70–80 hours per week, barely seeing my wife and two young children at all. My wife was worried about my health, and I wasn’t happy to be missing out on so much of my kids’ lives – I wanted to be much more involved. We realised something had to change,” he says.

“I had spent part of my childhood in Bunbury, and it was quite influential for me – it was a great place to grow up. It has all the facilities of a big city, but they are right at your fingertips – everything is a five-minute drive away!

“I love that I get to run a business in paradise and that I get to raise my daughter in such a wonderful environment” Kaia Hunter, owner and director, Mortgage Choice Buderim and Sunshine Coast location. People move here from the big city for the relaxed lifestyle, and that’s evident in the way we live and spend our time.”

Bunbury, WA Todd Haffner, mortgage broker at Smartline, lives and works near the beach in Bunbury, WA, about 200km south of Perth.

From Perth originally, he says he started his own broking business, Mortgage Force, in 1996, which became Smartline in 2009.

“During those early years I was working myself into the ground,

It is also accessible to Perth, so I felt I could maintain the clientele I had worked so hard to build up in my broking business. So, in 2005, we moved to Bunbury, and we really haven’t looked back.”

Haffner typically writes around eight loans a month, with the average loan size around $445,000.

“Since moving to Bunbury, most communication with my Perth clients is by phone and email. I have much more time now to get on the phone and give my clients a call to check they are happy with their loans or ask if they need anything,” he says.

“My clients are generally as time-poor as I am, so this arrangement suits them too. I spend two solid days a week in Perth visiting my clients. For potential new clients – both here and in Perth – I now do all the research, fact-finding, reviewing market offers and arranging documentation before our face-to-face meeting.

“This generally means that, by the time I meet with the client, we are well on the way to finalising the loan, and there aren’t many who drop out from that point. For my Bunbury clients, I can visit them very easily of course, but I still run my business in Bunbury the same way.”

He adds, “Our lifestyle here is very different to what it was in Perth. I am away for my two working days in Perth, but this means that when I’m in Bunbury, I’m there for my family – it really is quality time. We usually have at least an hour to spend together each morning, and we will often go for a swim at the beach together before work and school.”

Haffner’s advice to a city broker considering moving to a regional area is to thoroughly consider where they want to get their business from, and the great opportunity to save on living costs. However, he says, “You may have to work a bit harder because the dollar value of the loans will be less if you build all your business in the regional area.

“I would also suggest you make your business paperless. Buy yourself a good laptop with all the right software and make sure you know how to use the software effectively. That way, www.brokernews.com.au

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Todd Haffner, mortgage broker, Smartline

you can work from anywhere – on the side of the road, in a cafe, in an airport or in someone else’s office.

There’s really no need for paper these days!”

Bathurst, NSW Katharine Smoother, mortgage broker at Smartline, is a mobile lender in the Bathurst region about three hours west of Sydney.

She works from home, and most of her clients live in the broader region, in towns like Blayney, Orange, Oberon and Portland.

“I lived in Wollongong for 32 years and used to write home loans for Commonwealth Bank. But I was becoming disillusioned by the traffic, the crowds and the stressed-out, unfriendly people. In 2003, my husband, my two children and I went on a trip to see a car show in Bathurst. We loved it so much that within 12 months we had moved there!” she says.

“Of course, living in the Bathurst region, you generally aren’t paying the exorbitant prices for real estate that you pay in the cities. There is a lot more variety in the types of loans I write in Bathurst. In Wollongong, most clients just want a standard suburban home. But in this area there are more different types of property available.”

Her advice to someone considering becoming a regional broker is to ensure they are client-focused.

“You need to care about each and every client and do the right thing by them no matter what, otherwise you will not be respected in the 18

Katharine Smoother, mortgage broker, Smartline

community, and this damages your business’s reputation. In Bathurst, there’s often only two degrees of separation; that is, if you don’t know someone, they will probably know someone you know,” Smoother says.

“You can’t hide in a regional town like you can in a big city. Everyone will hear about it if you’ve done something poorly, for example if your service is very slow, if you aren’t willing to be available to discuss

Travis Hole, financial affairs specialist and credit representative, Zobel

Mount Gambier, SA Until recently, Travis Hole, financial affairs specialist and credit representative at Zobel, was located in Mount Gambier, SA. He has been a broker at Zobel for over 13 years, originally in Mount Gambier prior to a six-year stint setting up the Whyalla office in SA’s Iron Triangle region on the Eyre Peninsula. The Zobel group itself was founded in Mt Gambier in 1999 and continues

“It’s important to stay focused ...

The early years can be challenging and somewhat tiring. Keep pushing forward and you will be rewarded” Paddy O’Sullivan, senior mortgage broker, Mortgage Choice issues, or if you give bad advice.

You need to be willing to talk to your clients and give them your best effort each time.”

She adds, “Having your own business in a regional area isn’t for everyone – it really depends on your personality. Some brokers thrive on a fast-paced lifestyle. They enjoy drumming up business, networking, analysing figures and arranging as many loans as possible. If that lifestyle comes naturally to you, you might find working in a capital city easier. On the other hand, I burnt out very quickly in the city, so if you are like me, you’ll probably find you love working in a regional area!”

to see the Mt Gambier office as the flagship office of the group.

Hole’s average loan size is around $280,000, and he might transact around 120 loans in a given year.

Mt Gambier is SA’s largest regional city, located approximately 450km southeast of Adelaide near the Victorian border. Within the city limits it has a population of approximately 25,000, but it is in reality a business/retail centre for closer to 75,000 people, taking into consideration the surrounding towns and farming communities.

According to Hole, it is a diverse area from an employment and business perspective, with forestry

and agriculture as its key industries.

He suggests brokers thinking of going regional should not look at these areas simply as a potential source of clients or leads, because without a legitimate presence and a plan to get fully integrated and involved in the community, the potential to establish and grow a business in a regional location would be low.

“From a business operational point of view, I’d suggest the pros and cons of regional versus capital cities most likely level out,” he says.

“Being regionally based makes it easier – commute time, ability to advertise cost-effectively, known within community, etc. However, the lower average loan size dictates that we need to work considerably harder to achieve similar financial objectives.

“The resources (time consumed and support staff wages) associated with processing applications is more often than not transaction based as opposed to volume based, and as such the need to process more transactions does presumably make it more difficult for a regional-based broker compared with our capital city counterparts.”

Finally, he adds, “From a lending perspective, regional areas and properties do present challenges in their own right when it comes to acceptable security locations/types, which can more often than not restrict the panel lenders we can work with, and in many cases this, along with valuation variances, can add an extra layer or two to the process when presenting clients with options.” AB

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FROM THE FORUM

Top comments from trending stories on brokernews.com.au

CONNECTIVE DIRECTOR RESPONDS TO ACCC CONCERNS Last month, the ACCC issued a warning that the proposed acquisition of Connective by Australian Finance Group could impact market competition in Australia. The merger would create the largest mortgage aggregator in Australia by a significant margin, accounting for almost 40% of all mortgage brokers operating in Australia. But Connective executive director Mark Haron said concerns were misplaced. “ACCC has a very robust process, and we are respectful of that. But we firmly believe there will be no substantial lessening of competition from Connective’s merger with AFG,” he said. “Our commitment to our brokers won’t change; our values remain the same. We are committed to supporting our brokers and advocating on their behalf.”

I am a Connective-aligned broker and this merger is not in our best interests at all. It gives market power to the combined aggregator group. We have been continually told that if we don’t like it we can leave. Easier said than done with accreditations. I don’t see how handing market power to a publicly listed entity enhances competition. It only enhances the back pockets of the Connective directors.

Connective Broker

ACCC should totally block this merging. There are no benefits to anyone, brokers or customers. Recently my AFG BDM got fired, some of us became orphans, [receiving] no service at all. “Broker advocate” is nonsense, more like deceiving the public.

AFG Broker

“Our commitment to our brokers won’t change; our values remain the same. We are committed to supporting our brokers and advocating on their behalf.” What is this comment based on? All the failures to date that the CIF has achieved for brokers? The best being that our incomes are now exposed for two years, which seems to sit just fine with all the salaried execs? I trust they are all working on having their own incomes clawed back too. This merger will not benefit brokers in any way.

Broker

I find this difficult to understand. As a broker who is not in either group, I question how this merger would enhance competition for brokers looking to enter the market or leave one of these two aggregators and move to another aggregator. I am willing to say the merged group would move hell and high water to stop a broker from leaving if they were dissatisfied with the new group. I think it would not be impossible but very difficult. How a group having 40% of the brokers would enhance competition is difficult to believe.

Regional Broker

Of course Mark is going to say that. I don’t think this should go ahead. A Connective broker recently got terminated and lost his trail and livelihood. The independent accounting firm engaged by the MFAA found “no evidence to suggest the broker has done any wrong doing”. Connective and the bank will not explain what the broker did wrong. Scary stuff.

They just decided to end his association with Connective, not give him a separation letter nor provide the evidence as to what he did wrong. I am sure Connective has something, but when they and the bank operate behind closed doors this proves that even more power is not recommended. Scary stuff… not good.

Johnno

Mergers – by their very definition – decrease competition.

I almost admire Haron’s chutzpah for trying to argue otherwise.

I’m noticing a lot of the aggregators try to pitch themselves as advocates for brokers. Brokers are their cash cows. Any advocacy they do is not out of benevolence but to protect their assets. They need to calm down on the fearmongering regarding regulation. Fear only drives people to conservatism, which is exactly what’s not going to future-proof the industry.

Sarah

Mark Haron, executive director, Connective

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NE WS ANALYSIS

RESHAPING THE FUTURE OF BROKING Speaking at the Australian Mortgage Innovation Summit 2020, Jonathan Meadows, general manager of technology at Connective Broker Services, Susan Mitchell, CEO of Mortgage Choice, and Arun Maharaj, CEO of HashChing, discuss what the future broking landscape will look like

In February, ASIC released its draft regulatory guidance outlining its proposed approach to how the best interest duty (BID) will apply to mortgage brokers, providing tangible examples and parameters to aid with compliance, as well as fleshing out the conflict priority rule.

ASIC is expected to publish its final guidance before the BID obligations commence on 1 July 2020. But speaking at the Australian Mortgage Innovation Summit 2020, Mortgage Choice CEO Susan Mitchell said that much of what ASIC’s guidance was about, with respect to the duty, was ensuring that brokers provided evidence of what they were already doing.

She said, “It’s going to be about documenting the conversations that you have with your customers to ensure you have acted in their best

Arun Maharaj, CEO, HashChing 20

interest; to be more specific about certain circumstances surrounding specific issues like the features of a loan and whether you have challenged what your customer is asking you to do.”

The intent of the new regulation, therefore, is simply to refine what brokers are already doing for the customer. But how exactly can brokers document and evidence that they truly are acting in their clients’ best interests? What might this look like in practice?

Jonathan Meadows, general manager of technology at Connective Broker Services, explained, “One thing we’re looking at is making it easier for brokers to record the conversations that they’re having with their clients so that when they need to pull it all together it will be easy and efficient.”

Meanwhile, Arun Maharaj, CEO at HashChing, said he had already taken steps to roll out automated fact-finders via SMS, with consumers and brokers updated automatically.

“It’s all about documentation from the start. It needs to be automated,” he said.

Mitchell suggested that complying with BID would also mean brokers would have to listen more to their

brokers find it more difficult to earn customers’ trust, or to ensure that customers have products that are right for them, by really getting to know them throughout the different stages of their homebuying journey?

Maharaj believes that when open banking hits, there will be real implications for the mortgage industry, mainly in terms of customers being able to switch

“There are complex [client] scenarios that are not so easy to research online. The role of the broker might evolve to centre more around those complex scenarios” Arun Maharaj, CEO, HashChing clients about their personal/subjective circumstances in order to find more bespoke solutions.

“That way the broker can be very comfortable that the product they’ve suggested will hit all of the client’s goals,” she said.

However, she added, “Considering other regulatory changes, there’s more than just BID. There are also changes to clawback reform, to broker remuneration structures, and investigations into brokers’ misconduct … remuneration changes which happened 18 months ago before the royal commission as part of an ASIC review.”

In such an environment, will

products more easily.

“A lot of our brokers are working referrals, and they pay the referral fees, but they still have to pay from their own pockets,” he says.

Collaboration with lenders With all this in mind, is it the role of the broker or the lender, or both, to ensure customers are satisfied with the whole buying journey?

Meadows believes the responsibility falls on both the broker and lender, who must work together.

“From a broker perspective, it’s not always necessarily solely about the product you are providing; it’s also about the services a lender can

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Jonathan Meadows, general manager of technology, Connective Broker Services

provide,” he said. “For example, I love my internet banking and my apps.

So if my broker was with a bank that I had to walk into and make a phone call with, it would be a really poor service for me. So there’s a consideration, from a broker’s perspective, to ask, ‘Am I putting the right customer with this bank that has these limited features?’”

However, Mitchell pointed out that the banks had a bit of “a hard gig”. She said, “Brokers’ clients aren’t excited about the loan; they’re excited about the house, and it’s really important for the broker to remember that.”

“The bank might have a 10-year relationship with the client taking money out of their account.

It’s a hard gig, on top of all the regulatory pressure.”

She added, “Over the last 18 months the lenders are taking a lot of the pressure for the majority of delays to loans, with brokers passing the baton to the banks.”

Dealing with digital clients Increasingly, clients are coming to brokers having already done copious amounts of research by utilising online channels such as comparison websites.

According to Maharaj, the most searched-for term by homeowners is ‘product calculators’, and 90% of the time a consumer will go to a lender’s website to work out the cost of products, then they go to property sites, and then they come to the broker sites.

Maharaj explained, “It is said that 70% of all property customers know what they want before they get to a broker. They just want some sort of guidance, with 30% of that 70% researching on mobile.”

Given how much these customers are getting their information online, brokers might want to consider growing their online presence, and they need to make sure they’re engaging customers.

Mitchell said that when it came to digital customer acquisitions, about 80% of customers were coming from online, but regulatory and compliance structures, documentation, etc., were actually preventing the process from becoming more digital.

“We’re still one step away from a straightforward digital processing solution that looks at a panel of 30 and puts them in a product,” she said.

Pros and cons of open banking While open banking is expected to provide real choice and be a great driver of change for the industry, Meadows said it was also going to make it easier for clients to switch between products and services, so there would be a real challenge in trying to keep those clients.

Agreeing, Mitchell added that there was “no loyalty” to products any more as house prices have kept on rising.

She said, “People can’t afford loyalty. They want to earn as much

Susan Mitchell, CEO, Mortgage Choice

interest as they can, to get as cheap a loan as possible, and they want to be able to get the right price for their house. There’s no opportunity for loyalty; it is being pushed out by the level of expenses.”

But products are also much easier to find and access now than ever before, and this is likely to proliferate with the start of open banking.

Maharaj added, “So the faster you are, the better you are. Take UberEats for example. Nowadays, millennials will want to know where they are at every step of the process.

So, going forward, lenders will have to step up or the customers will go somewhere else.”

Maharaj said that, along with customers’ data, banks would also start sharing product data.

“Platforms can now pick that up and do mini comparison sites for their brokers, which helps BID because the broker will be able to feed consumer comparatives in real time, and I think that’s huge. It will drive more traffic,” he says.

“It will also be easier to switch products with all the data coming through. Though that’ll be another headache for some of us. I actually think open banking is still two years away because there’s still a lot of work that needs to be done. But it has the potential to change the demographics of broking in the country.”

Value of face-to-face interaction When it comes to things like lodging income and expense

statements with lenders, simpler transactions would be likely to go through automated mechanisms, according to Maharaj.

Mitchell added that the more complicated ones would end up being handled face-to-face.

“It wouldn’t surprise me if broking became a little more integrated into financial advice.

Reverse mortgages, etc., are the sort of thing you would want to come out of such a relationship,” she explained.

“For instance, you get a person who has a small business – it’s in a family trust; they have two investment properties; they just got divorced … but that’s not going to be programmed. It wouldn’t be worth their time and effort. So that person has to go see somebody.

“A machine can get you a long way down the line, but people still value person-to-person interactions,” Mitchell said.

Technology would never replace trust, and trust was what was needed, Maharaj agreed.

Meadows concluded that the role of the broker was about guiding the customer; being more of a partner and sounding board for advice.

He said, “Product data is easily more accessible; people can now do their research beforehand. But there are complex scenarios as well that are not so easy to research online.

The role of the broker might then evolve to centre more around those complex scenarios.” AB www.brokernews.com.au

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BIG DEAL

Tony Caab, adviser at Smartline, explains why it’s important to prepare for a high level of scrutiny when assessors review your applications, and why utilising your BDM and credit scenarios team is key to minimising credit surprises

THE SOLUTION

THE FACTS

Client Self-employed tradie

Loan size and term $1.16m; 30 years P&I

Location Goal Sydney To refinance investment property and use equity to buy holiday home

THE SCENARIO

Two successful tradies, cousins Chris and Paul, had grown up having annual holidays with family in a house on NSW’s Central Coast. It was a home that held many childhood memories for them.

The property was put up for sale mid last year. Both cousins now have young families of their own, so the prospect of buying the house was an opportunity they simply could not pass up. They were very excited to carry on the family tradition of making memories in this special holiday home.

Without delay, they conditionally signed and exchanged contracts to purchase the property together. It was only afterwards that Chris came to me to discuss financing the purchase.

Chris and Paul did not want a debt on their proposed purchase, preferring to keep it mortgage-free. The plan was for the home to be enjoyed by their family members and also be listed on Airbnb for the occasional booking.

To support this objective, Paul would use cash to pay for his portion of the property,

Lender Westpac

Aggregator Smartline

while Chris would use equity from an existing investment property.

We decided that Chris would refinance one of his existing investment properties (valued at around $1.5m) to achieve an equity release of $596,000 so that he and his cousin could purchase the holiday home outright. The total LVR for the new loan was only 70%.

The investment property offered by the client had enough equity, but as with most things in lending, nothing is ever easy, is it?

The property, a duplex, had been newly constructed and was awaiting the occupancy certificate and completion of

lending industry is full of different kinds of operators with varying levels of skill and knowledge, and many of them have come from other professions.

This was brought home to me during one loan deal when an assessor, with significant experience in mortgage credit and accounting, picked up my application.

If you score someone like this with your next deal, you may need to prepare for things to get nitpicky and technical for your self-employed client.

THE

22

were more than happy to consider these two issues, having been given the heads-up.

However, the credit assessor assigned to my clients’ application had a bit of a field day. Stating that his prior experience was as an accountant, he said he was convinced that the ‘related party’ referred to must be a third party, thus profits were not being retained within the business.

With that decision made, the loan was declined.

While business development managers are not typically involved in customer communications, they are certainly critical to the customer experience. In this case, it was thanks to the assistance of my BDM that we were able to overturn this decline.

Armed with a full history of business and personal statements, and having the client’s accountants at hand as well as the support of my BDM, after several days of patience we went in to battle for the client.

In the end, we were able to provide enough comfort to the lender’s credit team that profits were retained within the business and by the sole business owner, my client Chris.

THE TAKEAWAY

Utilising your BDM and credit scenarios team (if available) is key to minimising credit surprises.

With every deal, we must prepare for a high level of scrutiny. Nothing flies through to unconditional approval with a ‘no worries’ or ‘she’ll be right’ sticker. That is our current credit environment, and it is

With every deal, we must prepare for a high level of scrutiny. That is our current credit environment, and it is here to stay

Tony Caab, Adviser, Smartline

the land title subdivision process.

In addition, upon reviewing the last two years’ tax returns, a peculiar item was picked up in the ‘loans to related parties’ column, with a significant amount of money attached to it. When I enquired about it, Chris assured me that the ‘related party’ was himself.

Aside from these anomalies, the taxable incomes of the individual and company were more than enough to service the new loan.

Having access to the proposed banks’ credit assessors, and with customer experience in mind, I called them to discuss the two potential hurdles, and they

here to stay. But we can take our knowledge of the environment and use it to improve the customer experience.

Setting the right expectations for our clients and reminding them about the current credit climate serves us and our clients better.

Sometimes decisions take longer than expected and/or more information is requested, but pre-empting this wherever possible can facilitate delivery of the desired outcome.

Meanwhile, Chris and Paul have enjoyed the past summer holidaying with their families at the house, reliving those childhood memories. AB

www.brokernews.com.au

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FE AT URES

OPINION

THE TRUE IMPACT OF LATE PAYMENTS ON SMES There is a hidden cost stemming from clients not paying invoices on time.

Greg Charlwood, managing director at Australian Invoice Finance, discusses how to help SME clients protect their businesses from the impact of late payments

not having the cash available to pay their creditors. And late payments are a primary cause of cash flow interruptions.

According to CreditorWatch, the average late payment time across the 2018/19 financial year was 23 days – that’s

are looming on the horizon for the Australian SME industry as recent payment default numbers hint at an increase in business insolvencies in 2020.

But this potentially represents a significant business opportunity for brokers, who can help SMEs minimise their exposure to payment defaults through alternative sources of finance.

DARK CLOUDS

Payment defaults on the rise Data for Q4 2019, from the Small Business Risk Review published by the CreditorWatch, reveals a 30% year-onyear increase in payment defaults.

The industries most heavily impacted by the rise in payment defaults were healthcare and public administration and safety, which recorded increases in payment defaults of 79% and 73% year-on-year respectively.

Other industries to feel the pain of defaults were transport (a 64% increase year-on-year), and rental, hiring and real estate services (a 61% increase year-on-year).

Payment defaults are the ‘canary in the coalmine’ for SMEs. They are a strong indicator of the likelihood of a business going into administration.

According to CreditorWatch, 50% of companies that incur a payment default go into administration within 18 months.

Figures from ASIC have also revealed that 8,105 businesses entered external administration in the 2018/19 financial year, with businesses in NSW and Victoria accounting for more than 60% of those.

This was up from the 7,747 businesses that entered external administration in 2017/18.

The CreditorWatch report also noted that court actions arising from payment defaults had increased 9% year-on-year nationally, with the major increases in SA (57%), NSW (39%) and WA (33%).

Ultimately, payment defaults and administration are caused by businesses

one in five unable to undertake business expansion or take on additional work.

Late payments also restricted growth initiatives such as digital transformation of businesses and improvement of supply chain efficiency.

There are a number of cash flow finance options available to SMEs to mitigate the effects of late payments, without personal property being required as security more than seven weeks after the invoice issue date. This represents more than $7bn in working capital that Australian businesses are denied access to.

Greg Charlwood Managing director at Australian Invoice Finance

Worst offenders The CreditorWatch report revealed the administration and support services sector to be the worst offender when it came to late payments, with an average of 90 days to payment for Q4 2019.

This was followed by rental, hiring and real estate services (66 days), construction (64 days) and financial services (63 days).

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Review of Payment Terms, Times and Practices was released in March 2019 and showed the impacts of late and extended payments on SMEs. ASBFEO reported that 45% of SMEs recorded more than 10 outstanding invoices per month. Furthermore, more than half said asking for payment twice was normal.

However, 35% said asking for payment two to four times was normal and 12% said four to eight times was normal.

The ASBFEO report also noted some severe flow-on effects of late payments on SMEs, including one in four experiencing difficulties in meeting tax obligations and

What can brokers do?

So, what can you do, as a broker, to help your SME clients protect their businesses from the impacts of late payments and perhaps even administration?

There are a number of cash flow finance options available to SMEs to mitigate the effects of late payments, without personal property being required as security. In fact, the ASBFEO report “acknowledge[d] the value of many forms of supply chain finance such as invoice financing”.

Australian Invoice Finance – an Australian debtor finance and invoice finance company providing cash flow finance support to businesses – is a specialist in funding SMEs experiencing financial difficulty, particularly those with late-paying debtors.

Under our invoice finance process, up to 90% of the value of outstanding invoices, up to $3m, is converted to cash, usually within 24 hours. Once the outstanding invoice is paid, the remaining 10% of the value of the invoice is transferred to you.

Importantly, we also work with small business owners to help them better manage their cash flow over the long term. AB www.brokernews.com.au

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16/03/2020 3:22:28 PM

FEATURES

PROFILE

SARAH THOMSON CALLS FOR MORE WOMEN BROKERS One of the industry’s top-performing brokers has used International Women’s Day to encourage more young women to enter broking

senior lending manager at Loan Market Geelong and the industry’s top-performing female broker, Sarah Thomson says the industry is on the cusp of a stronger relationship with the marketplace and it’s important for women to claim their place in it.

This year’s International Women’s Day on 8 March came as the industry prepared to welcome the best interests duty reforms this year.

“I see a real opportunity for the customers to truly see and appreciate, through the best interests duty, what the vast majority of brokers have been offering for a long time: outstanding customer service!” says Thomson.

“As brokers’ value offering and commitment to clients’ best interests gains more profile in the marketplace, more people will be THE

has become an ongoing trend.

In the MFAA’s report, 34% of women believed there were no barriers to them succeeding in the industry. In contrast, 59% of men felt women were unhindered in achieving success.

Thomson, who last year placed seventh in the annual MPA Top 100 Brokers list and was named the Australian Broking Awards Regional Broker of the Year after settling 317 loans worth more than $118m, says it is important for the industry to support women.

“I’ve been a member of Loan Market’s Leading Ladies group for several years, and we have a combination of events and networking sessions to share the knowledge that really helps our professional development,” she says.

“I remember going to my first

“If women are thinking about broking as a career, they can be assured that there’s support out there” Sarah Thomson, senior lending manager, Loan Market Geelong entrusting brokers to be their trusted advisers across their financial needs.

“Whether it’s the legal profession, IT or broking, I think it’s really important for any industry to have a healthy mix of women and men to service the marketplace. I honestly think there is no better place to grow your career as a woman than in broking.”

Supporting industry’s women Thomson’s encouragement of women comes after the MFAA reported late last year that there had been a decline in women working as brokers, which 24

event and thinking, ‘OK, what’s this all about?’ But as soon as it started, I was amazed at the knowledge sharing and questions asked by women who may not have spoken up in a room full of men. From then on it cemented the need for these events in my mind, and I’ve been an advocate ever since.

“It’s also a great community to be a part of when you are new to the industry or transitioning your business to the next level. If women are thinking about broking as a career, they can be assured that there’s support out there.”

Sarah Thomson, senior lending manager, Loan Market Geelong

Leading Ladies community Executive director Andrea McNaughton, who is one of several women in senior leadership roles at Loan Market, says the network’s Leading Ladies community was more than just an event: “It’s an integral part of the culture”.

“In 2017 we initiated the Leading Ladies of Loan Market for female entrepreneurs to come together to drive growth and profitability in their businesses. Since then the initiative has swelled to touch hundreds of women in our network and beyond.”

The Leading Ladies of Loan Market

program includes quarterly events such as retreats; wine and cheese nights where the Leading Ladies bring their clients or referral partners to network; and an annual conference, which last year saw 100 attendees.

“Leading Ladies celebrates the contributions of top performers like Sarah, right through to women who are only starting out in their careers,” McNaughton explains.

“International Women’s Day is a reminder that there are support networks like Leading Ladies in our industry which enable women to take their careers to the next level.” AB

www.brokernews.com.au

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16/03/2020 3:23:24 PM

PEOPLE

CAUGHT ON CAMERA Recently, the Inspirational Women’s Breakfast – the Special Olympics Australia’s annual networking breakfast – celebrated the inspirational and powerful women from Australian society. Hosted by Peter Overton, delegates heard from three iconic women – author and motivational speaker Azita Abdollahian, the first female to officiate in the National Rugby League (NRL), a Test Match and at a World Cup, Belinda Sharpe, and multi award-winning journalist Antoinette Lattouf – who shared their insights on their life and our times and helped raise funds for people with intellectual disabilities.

www.brokernews.com.au

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16/03/2020 3:24:43 PM

DATA

SOUTH AUSTRALIA

VIC SPOTLIGHT

It’s still a ‘tricky time for investors’ looking to buy in regional SA The South Australian property market is steadying after a period of decline. In the southeast region of the state, values were up 1.6% over the three months ending November 2019.

“We are likely to see more positive housing market conditions spread to other areas of regional South Australia,” says Tim Lawless, head of research at CoreLogic. However, a rosy market doesn’t mean investors should not remain vigilant.

National Property Buyers SA director Katherine Skinner says, “We are seeing strong growth and new price brackets becoming the norm in the North Eastern Suburbs and the Western Suburbs, where competition is fierce, with buyers paying well in excess of asking prices to secure a property. However, it continues to be a tricky time for investors, who need to be smart when assessing any potential investment property.”

Thus, investors need to stick to proven criteria like affordability, quality location and demand level when it comes to determining the best suburbs to buy in.

Area

Type Median value

Quarterly

12-month

growth

growth

Adelaide

H

$455,000

1.1%

2.2%

SA Country

H

$270,000

1.9%

5.8%

Adelaide

U

$332,500

-1.0%

1.9%

SA Country

U

$220,000

0.2%

5.3%

WESTERN AUSTRALIA

Rental market improves as low supply boosts competition for properties While 2019 was hardly a banner year for Perth as sales activity flip-flopped, Damian Collins, president of the Real Estate Institute of WA, says rental activity has improved.

“We are already seeing competition for good, quality stock, which means we can expect this to pick up at the start of [2020] and continue to gain momentum,” he says.

A slowdown in the amount of housing supply entering the market has been a major contributor to Perth’s positive rental performance.

“We’re at 32 months and counting of stable median rent prices in Perth. If listings continue to decrease, new-build stock continues to decline and leasing volumes remain healthy, we should see the overall median rent price gradually increase,” Collins predicts.

“Strengthening rental conditions and the opportunity to get into good suburbs at an affordable price point means investors are likely to re-enter the market.”

Area

Type Median value

Quarterly

12-month

growth

growth

MELBOURNE DOMINATES Melbourne outdoes Sydney as housing prices show faster growth, with rising values concentrated in the premium sector of the market beat Sydney for the second quarter in a row as dwelling prices rose by 6.4% compared to Sydney’s 6.2% in the three months to November 2019, according to CoreLogic’s Home Value Index.

This increase in property prices is expected to be supported by activity from lifestyle buyers and baby boomers who are looking to retire.

“Overall, property values will be underpinned by a robust economy, jobs growth, Australia’s strongest population growth, and the influx of a large proportion of all overseas migrants,” explains Kate Forbes, national director at Metropole Property Strategists. Indeed, the city is once again expected to outdo Sydney this year.

“Melbourne rates as one of the 10 fastestgrowing large cities in the developed world, with its population likely to increase by around 10% in the next four years,” Forbes points out.

“Melbourne is currently offering investors an MELBOURNE

OPPORTUNITIES AND KEY INFRASTRUCTURE

$1.8bn Western Roads Upgrade

$10.9bn CBD North Station/Metro Tunnel

More than 20,000 tonnes of recycled materials will be used in upgrading Victoria’s western roads

Victoria’s biggest-ever transport project stretching from Domain to North Melbourne is due for completion in 2026

20% more trees

$2m bushfire recovery

The Urban Forest Fund’s goal is that by 2040 Melbourne’s urban canopy will reach 40%

Victorian government will contribute to bushfire relief fund for regional development

SUBURB TO WATCH: MOAMA

Perth

H

$470,000

-0.5%

-2.0%

Median price (houses)

WA Country

H

$325,000

0.0%

-1.2%

$1,047,403

Perth

U

$368,000

-0.8%

-5.3%

WA Country

U

$195,000

-3.6%

-3.6%

26

opportunity to buy investment-grade properties countercyclically in a buyer’s market, with little further downside and the prospect of the market moving forward again.”

Many buyers are taking the opportunity to buy into Melbourne’s premium market while growth potential remains strong.

“In Melbourne, top-quartile values were up 8.1% over the same three-month period compared with a 4.2% rise across the lower quartile,” says CoreLogic head of research Tim Lawless. “Thus, although housing values are rising across each of the valuation cohorts, the recovery trend is most concentrated within the premium sector of the market. This is most evident in Sydney and Melbourne, where the top quartile of the market is outperforming the broad ‘middle’ of the market and lower quartile.”

Median price (units) $437,929

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

8.5%

1.2%

38.8%

3.0%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

14.6%

40.7%

12.8%

4.8%

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AUSTRALIAN CAPITAL TERRITORY

Economic strength expected to sustain Canberra market While Canberra remains one of the country’s most stable markets, there are concerns about the availability of housing supply, as activity in the medium-density market has already felt its impact.

“We are concerned for Canberra’s apartment market – a staggering 63% of all dwellings approved in Canberra over the last 16 years were for attached dwellings,” says Simon Pressley, managing director of Propertyology.

With Canberra’s prices what they are – a median of $611,841 as of the November 2019 quarter – this could have an effect on the market’s performance in 2020. Nonetheless, the city’s economic strength is likely to pull it through, as well as the lower interest rates nationwide. In Knight Frank’s 2020 Outlook Report, chief economist Ben Burston says, “As a result of a sharp downward shift in interest rates and the prospect of further RBA action, we expect the investment market will drive to new highs in 2020.”

Area

Type Median value

Quarterly

12-month

growth

growth

Canberra

H

$675,000

0.4%

2.3%

Canberra

U

$440,000

0.9%

0.4%

QUEENSLAND

Vacancy rates tighten in Brisbane as demand rises

HIGHEST-YIELD SUBURBS IN VICTORIA Suburb

Weekly median

Type

Median price

Quarterly growth

12-month growth

Cape Paterson

H

$525.000

4%

24%

$1,350

13%

Ouyen

H

$94,500

2%

-12%

$200

11%

Kaniva

H

$94,000

-29%

-41%

$178

10%

Dimboola

H

$120,000

-6%

-9%

$200

9%

Donald

H

$136,000

-5%

-6%

$220

8%

Mortlake

H

$162,250

0%

-2%

$260

8%

Rushworth

H

$175,500

-16%

-8%

$270

8%

Stawell

H

$183,250

-1%

-4%

$270

8%

advertised rent

Gross rental yield

Warracknabeal

H

$129,000

12%

23%

$185

7%

Terang

H

$191,950

-8%

7%

$270

Merbein

H

$200,500

6%

11%

Nhill

H

$151,500

-3%

4%

As a more affordable alternative to Sydney and Melbourne, Brisbane continues to attract buyers from these states looking for bettervalue properties.

Vacancies ín the city tightened more quickly over the September 2019 quarter than in the previous year. In the Brisbane LGA, the vacancy rate was a very low 1.6%, according to the Queensland Market Monitor published by the Real Estate Institute of Queensland in December 2019.

Meanwhile, the Greater Brisbane region recorded its lowest vacancy rate in more than 10 years at 1.7%.

The strong performance of this state is hardly limited to the metro, as several other coastal areas recorded tight vacancy rates as well, while the Gold Coast and Sunshine Coast reported healthy rates of 2–3%. The pockets of Gladstone and Mackay were the top housing markets in the state.

Area

Type Median value

Quarterly

12-month

growth

growth

Brisbane

H

$540,000

0.0%

0.9%

7%

QLD Country

H

$450,000

0.7%

-0.4%

$280

7%

Brisbane

U

$390,000

0.5%

0.0%

$210

7%

QLD Country

U

$370,000

0.0%

-1.3%

www.brokernews.com.au

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DATA

NORTHERN TERRITORY

Darwin’s affordability and high rental yields could draw investors in 2020 While the median price of units in the Northern Territory capital has fallen in the last 12 months, the median value of housing blocks has increased; however, the volume of land sales has dropped, indicating a lack of demand.

Nevertheless, CoreLogic’s head of research, Tim Lawless, believes that 2020 could be a turning point for Darwin, although the state does still need to address some important economic problems in order to stabilise.

“Darwin is now the most affordable capital city housing market, both on a raw median value measure and relative to household incomes. It’s also the capital city showing the highest gross rental yields,” Lawless points out.

“The combination of a low entry point and strong cash flow, with the potential for medium- to long-term capital gains, could start to lure more investor interest into this market in 2020.”

Area

Type Median value

Quarterly

12-month

growth

growth

Darwin

H

$467,500

-1.7%

-3.0%

NT Country

H

$409,000

0.7%

-0.9%

Darwin

U

$285,000

-3.5%

-13.5%

NT Country

U

$327,750

2.0%

-2.3%

TASMANIA

CAPITAL CITY AUCTION CLEARANCE RATES WEEK ENDING 1 MARCH 2020 There were 2,933 capital city homes taken to auction in the week ending 1 March, returning a preliminary auction clearance rate of 77.1%. Volumes were higher than the previous week’s 2,517 auctions, which returned an only slightly higher preliminary clearance rate of 77.7%, later revising down to 72.7%. One year ago, a lower 2,201 capital city homes were taken to auction, with just over half selling (50.4%).

In Melbourne, Australia’s largest auction market, a preliminary auction clearance rate of 77.1% was recorded across 1,567 auctions.

This was the busiest week for auctions in Melbourne since October 2018, when there were 1,709 auctions. There were also 1,045 Sydney homes taken to auction in the same week, returning a preliminary auction clearance rate of 81.4% – the highest preliminary result across all capital city markets. This is an improvement on the previous week’s final clearance rate of 74.5% from 963 auctions.

ADELAIDE Total auctions

81

Cleared

32

Uncleared

19 62.7%

Clearance rate

PERTH Total auctions

17

Cleared

3

Uncleared

5 37.5%

Clearance rate

MEDIAN HOUSE AND UNIT PRICES

Hobart’s weakening housing affordability suggests its rate of growth may slow

Houses

$900,000

Units

Area

Type Median value

Quarterly

12-month

growth

growth

Hobart

H

$478,000

1.5%

6.7%

TAS Country

H

$325,000

2.3%

6.8%

Brisbane

U

$377,000

2.6%

8.7%

TAS Country

U

$257,000

0.4%

2.4%

28

Sydney Melbourne Brisbane

Perth

Hobart

$650,000

Darwin

$415,000

$535,000

$382,500

$580,625

$410,000

$455,000

$450,500

Adelaide

$264,500

$0

$325,000

$100,000

$377,500

$200,000

$491,750

$300,000

$510,000

$500,000 $400,000

$650,000

$600,000

$640,000

$700,000

$770,000

$800,000

In the November 2019 quarter, Hobart’s dwelling values increased by only 2.8% – a lower rise than in Sydney, Melbourne and Canberra, according to CoreLogic’s Home Value Index.

One contributing factor could be the declining affordability of the city. According to the Real Estate Institute of Australia’s Housing Affordability Report, the proportion of income required to repay home loans rose by 0.4% to 26.2% in the three months to September 2019.

“Housing affordability has worsened substantially since the surge in housing values commenced in mid-2015 – as affordability constraints become deeper seated, it’s likely the rate of growth will soften across both Hobart and the regional areas of the state in 2020,” says Tim Lawless, head of research at CoreLogic.

“However, with migration remaining high against an undersupply of dwellings, there is a strong likelihood that Tasmania’s housing markets will continue to be one of the best performers.”

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

0.6%

1.7%

2.9%

10.9%

Melbourne

0.3%

1.2%

2.5%

10.8%

Brisbane

0.1%

0.6%

1.0%

2.0%

Adelaide

0.0%

0.0%

0.3%

0.4%

Perth

0.3%

0.3%

0.4%

-4.0%

0.4%

1.2%

2.2%

7.6%

Combined 5 capitals

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

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16/03/2020 3:26:45 PM

BRISBANE CANBERRA Total auctions

82

Cleared

42

Uncleared

20

Clearance rate

Total auctions

136

Cleared

48

Uncleared

28

Clearance rate

63.2%

67.7%

SYDNEY Total auctions

1,045

Cleared

525

Uncleared

120 81.4%

Clearance rate

TASMANIA

MELBOURNE Total auctions

1,567

Total auctions

5

Cleared

941

Cleared

1

Uncleared

280

Uncleared

0

Clearance rate

Clearance rate

77.1%

NEW SOUTH WALES

Area

NSW’s regional areas likely to pull buyers from the capital Regional pockets of Sydney are expected to benefit from their affordability compared to the metro as the city slowly recovers from last year’s decline.

“The satellite cities adjacent to the largest capitals, such as Newcastle, Wollongong and Geelong, are likely to benefit from an overflow of demand as buyers seek out affordable housing options in areas with a diverse economy as well as commuting options into the major cities,” says CoreLogic head of research Tim Lawless. The NSW Fair Trading Office has also made some changes to the state’s Residential Tenancies Amendment (Review) Act of 2018 and Residential Tenancies Regulation 2019. These include the limitation of rent increases to once per year in a periodic agreement after the fixed term has passed; the non-payment of utilities or water being grounds for termination; and the freedom of domestic violence victims to terminate a tenancy without a penalty.

N/A

Type

Median value

Quarterly growth

12-month growth

Sydney

H

$921.000

0.0%

-6.2%

NSW Country

H

$480,000

1.1%

0.0%

Sydney

U

$710,000

-0.3%

-3.5%

NSW Country

U

$420,000

1.0%

1.2%

All data sourced from CoreLogic.com.au

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16/03/2020 3:27:11 PM

PEOPLE

IN THE HOT SEAT

Moneytech CEO Nick McGrath discusses what the biggest challenges for financial services will be this year, and why it’s important for brokers to be resilient and have thick skin

What’s the greatest challenge for financial services in Australia right now? a more macro view, I would argue that the full impacts of A Taking the coronavirus and the bushfires are yet to be realised. Many Moneytech clients import goods from China and are currently having trouble getting access to stock due to factory closures. As an organisation, we have reached out to our customers who may be affected by these events, and worked through how we can best support them. We have contacted all of our import customers to understand if the Chinese factory closures have, or will, impact their businesses. Depending on the outcome, we have offered loan repayment support by deferring future principal repayments until trading conditions improve for them.

Q

Do you think the industry is ready for open banking?

A The finance industry, like any other industry, can benefit from more competition to deliver better services and products to Australians.

Open banking is the first application of the Consumer Data Right by the ACCC; later this will come to include personal information held by utilities, etc. For finance, specifically, it will mean seamless trusted third-party access to information currently held by banks. In practice this means faster onboarding, smoother credit checks and an overall better customer experience. Our customers are ready for this and so are we.

Q

What was your first job?

A It was an IT support apprenticeship. I joined straight out of school and did that for a couple of years before going travelling and then working for Lloyds in the UK.

Q

What are your top survival tips for working in finance?

Be resilient and have thick skin! Most loans have many ups and downs A throughout the application process. When you face adversity on a transaction, be sure not to bury your head in the sand; instead, work through the issues to create a positive outcome for both you and the customer.

Q

What’s one thing, personal or professional, that you hope to achieve before 2021?

The launch of Moneytech’s amazing new Equipment Import A Finance product! We are excited to work with brokers and aggregators to get the message out there, as these relationships are extremely important to us. AB

Q

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