Australian Broker 17.11

JUNE 2020 ISSUE 17.11

THE NEW NORMAL Following a sustained period of working from home, is a return to the office really the smartest way forward? Stuart Taylor, Josh Bartlett and Peter White weigh in /14 ALSO IN THIS ISSUE… Accessing seven-figure equity The profit-generating power of their financial position that a client didn’t see /19 The four distinct stages of recovery The world will be a different place as it emerges from the COVID-19 crisis, according to KPMG /23 500,000 jobs at risk?

Housing slowdown puts half a million jobs at risk, warns the Housing Industry Association /10

Post-COVID training and development How has ANZ evolved its training and development strategy in an environment of social distancing? /16

How low will prices actually go?

Are forecasts of a 30% property price crunch truly accurate – and if not, just how low will prices fall? /20

In the hot seat A chance opportunity at uni led MyState’s Paul Herbert to a career in banking /30

NEWS

IN THIS SECTION

Lenders Major allows customers to extend interest-only term /04 Market Housing slowdown puts half a million jobs at risk /10

Industry groups FBAA highlights ‘immoral’ behaviour of some lenders /06

Technology Vinnies annual CEO Sleepout goes digital /08

www.brokernews.com.au JUNE 2O20

Aggregators Aggregator partners with CoreLogic /12

EDITORIAL

SALES & MARKETING

Editor Sarah Megginson

Publisher/Sales Manager Simon Kerslake

News Editor Madison Utley

GLOBAL WATCH How is the mortgage and broking world responding to the COVID-19 pandemic overseas?

Here’s your snapshot of the news that matters most to the mortgage industry in the US

EXISTING-HOME SALES IN US HIT DECADE LOW of existing home in the United States hit their lowest level in nearly a SALES decade in April, continuing a two-month tumble in sales driven by the COVID-19 pandemic, according to the National Association of Realtors (NAR).

Each of the four major US regions posted a decline in both month-over-month and year-over-year sales, with the West posting the largest drop in both categories, the association reported. Total existing-home sales tumbled by 17.8% from March to an annual rate of 4.33 million, the largest month-over-month drop since July 2010. April also marked the lowest level of total sales since July 2010.

“The economic lockdowns … have temporarily disrupted home sales,” said Lawrence Yun, NAR chief economist. “But the listings that are on the market are still attracting buyers and boosting home prices.”

He added, “Record-low mortgage rates are likely to remain in place for the rest of the year, and will be the key factor driving housing demand as state economies steadily reopen.”

Production Editor Roslyn Meredith

ART & PRODUCTION

Chief Executive Officer Mike Shipley

Production Manager Alicia Chin

Chief Operating Officer George Walmsley

Traffic Coordinator Kristine Jamir

companies have topped the list for COVID-19-related consumer MORTGAGE complaints across America, according to new data from the Consumer Financial Protection Bureau (CFPB). The CFPB issued a report analysing the consumer complaints it has received during the COVID-19 pandemic.

In April and May, the bureau received “historically higher complaints”, with 4,500 complaints specifically related to COVID-19 issues. Mortgage and credit card companies topped the list for coronavirus-related complaints, according to the CFPB. “While credit reporting and debt collection continue to be the most complained about products overall, mortgage and credit card complaints top the list for complaints that mention coronavirus keywords, with 22% and 19% of complaints, respectively,” the CFPB said.

The CFPB also saw a 10% spike in complaints against mortgage companies in the weeks after the outbreak was declared a national emergency. Of the consumers who complained about mortgage companies, 59% identified struggling to pay their mortgage as the issue, said the report.

Commercial Loans

Human Resources Manager Julia Bookallil

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MAJOR

MORTGAGE COMPANIES COPPING MOST COMPLAINTS

CORPORATE

Designer Jommel Ramos

MAJOR LENDER RESUMES FULL LENDING CAPACITY lender RCN Capital has announced that it is once again offering its full suite of financing options, becoming one of the United States’ first private lenders to do so after COVID-19.

“Things are looking up,” says RCN’s head of treasury and capital markets, Justin Parker. “It’s been an uphill battle getting things back to where they need to be, but we’re back at it. It’s good to be lending again.”

RCN had been lending into late April and early May, but at a greatly reduced capacity that saw it halt funding for short-term fix-and-flips, bridge loans and long-term rental loans. Those programs are all back, but in augmented forms that reflect the increased risk in the market.

“We crafted new guidelines for all of our products,” Parker says, including lower leverage and stricter FICO credentials. “Not massive discrepancies from prior guidelines, but generally more conservative than what we had previously.”

Global Head of Communications Adrijana Monevska

NEWS

LENDERS LENDER ANNOUNCES IT’S BACK IN BUSINESS than a fortnight after having its loan management agreement with a non-bank abruptly terminated, a lender has announced it’s back in business. Mortgageport has secured new funding lines and will carry on servicing the non-resident lending space. The group says it will continue offering mortgage brokers access to loans catering to the market niche. It plans to offer three mortgage products for non-residents, using its current infrastructure to process and approve these loans.

LESS

MACQUARIE CUTS FIXED INTEREST RATES has reduced fixed rates across its mortgage products in line with broker feedback, effective for new loans from 28 May. It is offering a 2.19% fixed rate for owner-occupier P&I loans up to 70% LVR for one-, two- and three-year terms. For investor P&I loans up to 70% LVR, the fixed rate is 2.59% for one-, two- and three-year terms. A fixed rate secured at approval will be valid at settlement if the loan settles within 90 days, with no lock rate fee required.

MACQUARIE BANK

MAJOR ALLOWS CUSTOMERS TO EXTEND INTEREST-ONLY TERM A major bank has announced several changes that offer its customers more flexibility in managing their home loan repayments during the COVID-19 pandemic will now allow its eligible customers with interest-only home loan repayments to apply to extend their interest-only term for up to 12 months, while those with principal and interest repayments will have the option to switch to interest-only for the same period of time.

According to Will Ranken, Westpac’s general manager WESTPAC

“We have had more than 115,000 customers defer mortgage repayments” Will Ranken, General manager of home loans, Westpac

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of home loans, the changes have been introduced in response to the continued demand from customers for support with their mortgage repayments.

“We have had more than 115,000 customers defer mortgage repayments as part of our COVID-19 consumer support package,” he explained.

“However, we recognise that many customers who have been financially impacted by COVID-19

still want the option of making some repayments during this time.

“These changes mean it is now simpler for customers to apply to extend their interest-only loan term, or switch their repayments to interest-only.”

Westpac is also among a number of banks that have allowed customers who are experiencing financial stress due to COVID-19 to have their home loan repayments deferred for three months, with a further three months available on review.

The bank has also launched a home loan repayment deferral calculator designed to help customers understand the potential financial impact of opting to temporarily suspend their mortgage repayments.

Our homes are more important now than ever.

If your clients are worried about theirs, we’re here to help.

Westpac Broker Home Loan Help

Š Westpac Banking Corporation ABN 33 007 457 141 AFSL and Australian credit licence 233714.

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NEWS

INDUSTRY GROUPS PENALTIES FOR LOW-VOLUME BROKERS Source: FBAA

ASIC TO ‘CLOSELY MONITOR’ ME BANK’S CONDUCT an emergency committee hearing on 3 June, ASIC commissioner Sean Hughes addressed the ongoing circumstances around ME Bank’s redraw issue. AFCA has received approximately 80 complaints thus far; however, many have already been dealt with, and AFCA is confident that most, if not all, will be resolved at an early stage. “ASIC will continue to closely monitor ME Bank’s conduct and engage with the bank on this issue so as to ensure a fair and transparent outcome for ME Bank’s customers,” said Hughes.

AT

It can take an hour for a call from a low-volume broker to be answered by some lenders

Clients of low-volume brokers can wait up to 30–40 working days for their application to be picked up by the lender

By comparison, brokers that process high volumes have their files picked up in 1–8 days

ACCC LAUNCHES CDR ACCREDITATION PLATFORM ACCC has launched a platform that enables banks and fintechs to apply to become accredited data recipients in order to fully engage in open banking. “The launch of this Consumer Data Right platform and portal means businesses of all sizes can take the first steps towards being part of this crucial economic reform,” said ACCC commissioner Sarah Court.

Applications are initially open to fintechs, and interested institutions can apply online on the CDR website.

THE

FBAA HIGHLIGHTS ‘IMMORAL’ BEHAVIOUR OF SOME LENDERS For the third time in under two weeks, the FBAA has called out problematic behaviour it sees being perpetuated within the industry FBAA is publicly pressuring lenders to eliminate ‘clubs’ that favour brokers based on volume – and to do so before the best interests duty comes into effect at the start of next year.

According to FBAA managing director Peter White, despite the efforts of the Combined Industry Forum and the legislation that has been introduced to combat volumebased incentives, lenders continue to give preferential treatment to brokers who write more loans.

“This disadvantages the clients of other brokers,” said White, who explained that some lenders take THE

significantly longer to process loan applications from brokers who they don’t feel write enough business for them.

“By way of a current example from a broker, without volume, it takes nearly an hour on hold for your call to be answered, and up to 30 working days for your application to be picked up. In some cases, this is extending to over 40 days,” White said.

In contrast, applications submitted by brokers meeting volume expectations are typically processed in one to eight days.

As White sees it, this behaviour is

not only “unfair” but “immoral” and could result in subpar outcomes for good-quality borrowers, even if their broker is acting responsibly and in their best interest.

“With the BID soon to be implemented, how can a broker claim to act in the best interests of a client with this sort of pressure from lenders?” White asked.

Importantly, even without the introduction of BID, the industry could once again face increased scrutiny if this unsavoury practice is allowed to continue.

“We [have] all put a lot of effort into taking the steps necessary to end volume-based broker clubs, and we are better off for it,” said White. “But the industry’s reputation will take another hit if brokers are again perceived to be favouring certain lenders based on anything other than what is best for the client.”

“The industry’s reputation will take another hit if brokers are again perceived to be favouring certain lenders” Peter White Managing director, FBAA

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NEWS

TECHNOLOGY

HERITAGE MAKES THE MOVE TO DIGITAL VOI lender has announced that it has gone live with a digital verification of identity solution to make the lending process easier for brokers. Heritage Bank has partnered with technology company InfoTrack to provide the service, effective immediately. “Where possible, we still prefer borrowers to have their identity verified face-to-face by their broker, Heritage staff member, solicitor or accountant,” said Heritage head of broker distribution Stewart Saunders. “Face-to-face VOI is not always possible. Having the new process … helps ensure a simpler and easier lending experience for all.”

ANOTHER

VINNIES ANNUAL CEO SLEEPOUT GOES DIGITAL Finance executives have been invited to register for the first-ever online Vinnies CEO Sleepout in support of those experiencing or at risk of homelessness the restrictions around the COVID-19 pandemic, the Vinnies CEO Sleepout this year will take the form of an interactive broadcast hosted by television personality Dr Andrew Rochford. Rather than sleeping out in major cities across the country as usual, the C-suite and executive-level participants will pass the night of 18 June in their cars, backyards, or on their couches.

The range of possible locations reflects the reality for many of the 116,000 people who are currently experiencing homelessness across the country.

While some may be in clear need of help, others are hidden from sight as they couch surf or sleep in cars or tents, but nonetheless require a suitable and safe place to live and sleep.

GIVEN

BUILDING SOCIETY ADOPTS VIDEO-BASED ID PROCESS has introduced a new digitised process to enable verification of identity to be completed through a video call. The building society, which has introduced the process in response to the COVID-19 pandemic, joins a number of other lenders that have adopted new technology to allow VOI to be completed without the broker having to meet with a client face-to-face. The borrower must email their ID to their broker first, and then hold up their ID during the video call for their broker to confirm their likeness to the supplied ID document.

NEWCASTLE PERMANENT

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“The onset of a global health crisis means people facing homelessness need support more than ever,” Dr Rochford said.

“It’s great to see Vinnies, and the business and community leaders who participate in the Sleepout, adapt to ensure this year’s event can go ahead in the midst of coronavirus.”

Last year, the event raised $7.9m for the group’s homelessness services across Australia, which went towards providing accommodation, domestic violence refuges, food, clothing, blankets, counselling, healthcare and individualised case support.

Unlike in years past, there is no minimum fundraising expectation for participants in the 2020 Sleepout, in recognition of the financial impact that the

COVID-19 pandemic has had.

This year’s edition of the popular annual event will take place overnight on 18 June and will be livestreamed at ceosleepout.org.au/live2020.

Interested parties can register at ceosleepout.org.au and start raising funds now.

The finance industry came out in force last year for the annual Vinnies CEO Sleepout, which was held in nine cities across the country on one of the longest nights of the year.

In Sydney, where temperatures fell as low as 4˚C, more than 300 bedded down for the night at the White Bay Cruise Terminal in Balmain, including execs from AMP Wealth, Westpac, Lendi and Athena Home Loans.

Bernard Fehon, who founded the event when he worked for AMP, said the original idea came from seeing his children doing sleepouts organised by their school, while he was organising fundraising dinners for CEOs. Combining the two ideas, the Vinnies CEO Sleepout was established.

NEWS

MARKET FIRST ROUND OF FHLDS PLACES FILLED participating in the government’s First Home Loan Deposit Scheme (FHLDS) have been informed that the 5,000 spots set aside for non-majors have now been allocated. Lenders are taking a range of approaches to handling extra applications, as well as those lodged between now and when the next round of spots are made available on 1 July 2020. Tasmania-based MyState Bank has confirmed it will put the “small number” of applications it has in progress into a queue so they may be given a place in the scheme when one becomes available.

LENDERS

COMMERCIAL PROPERTY LANDLORDS ‘ABANDONED’ many economic sectors have received direct aid from the government to see them through the COVID-19-induced downturn, a property developer advocacy group has highlighted one overlooked property segment. Urban Taskforce CEO Tom Forrest said contract law had been “flipped on its head”, with commercial property lessors now expected to bear the financial stress of their tenants, a shift that has longer-term implications.

“Commercial landlords have been abandoned, particularly those who rely on small to medium-sized enterprises for their income,” he said.

WHILE

HOUSING SLOWDOWN PUTS HALF A MILLION JOBS AT RISK The combined effects of the COVID-19 pandemic have resulted in a dramatic drop in housing demand, a shift that will send reverberations far beyond the property market the last two decades, Australia’s economic wellbeing has been underscored by stable population growth.

Now, not only are international borders remaining closed but it is unclear how many of the migrants who left the country in March plan to return.

“The nature of this shock requires significant and ongoing support from policymakers in Australia ... The risk that insufficient support will produce a decade of deflation, depression and human hardship is present,” said Housing Industry Association managing director Graham Wolfe.

“This means that of all the concerns facing government FOR

right now, debt should not be at the top of the list.”

Forecasting released last week also suggests that new home building across Australia will fall by almost 50%, putting half a million jobs at risk over the next year, according to the HIA. “In 2018–19, the industry engaged over one million people to commence building almost 200,000 new homes. Next year, we expect to start just 112,000 new homes, leaving up to 500,000 jobs at risk,” Wolfe explained.

“The shock to the economy from the halting of overseas migration, the absence of student arrivals and uncertainty over the domestic

economy will see the market at a lower point in December 2020 than it was during the 1990’s recession. It will then continue to decline though 2021, even with the return of overseas students and migration.

“This shock will reverberate through the residential building industry, up and down the supply chain. Employment in the sector is not expected to recover within the next two years.”

The association expects the disruption to migration and rising unemployment to weigh heavily on demand for residential building even beyond 2020, with dwelling starts forecast to be down by 43% from last year to next.

To Wolfe, it seems clear that increasing demand for housing will play an important role in alleviating the pressure the pandemic has put not only on new home construction but the wider economy.

“This shock will reverberate through the residential building industry, up and down the supply chain” Graham Wolfe Managing director, Housing Industry Association

HOUSING JOBS AT RISK Source: Housing Industry Association

10

200,000

112,000

500,000

Number of new homes built in 2018/19, employing around one million people

Number of new homes expected to be built this year

Number of jobs the HIA fears are at risk due to the housing slowdown

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NEWS

A G G R E G AT O R S

AGGREGATOR CONTINUES TO GROW LENDER PANEL boutique aggregator has welcomed niche lender Granite Home Loans onto its panel as part of its “long-term strategic roadmap” to expansion. Buyers Choice also recently appointed two other specialist lenders to its panel for the “hard to place” deals.

According to Buyers Choice CEO Brett Mansfield, Granite Home Loans was one of the first lenders the group targeted to try to bring on board. “We love Granite’s innovative approach to policy and product, developing solutions which are designed to fill gaps in the current lending landscape,” Mansfield said.

A

AGGREGATOR’S PARTNERSHIP WITH CORELOGIC WILL ‘EMPOWER’ BROKERS Finsure Group has struck a deal with property data provider CoreLogic that will give brokers access to property information, analytics and risk management services

SUPPORTING BORROWERS A ‘MASSIVE CHALLENGE’ aggregator head has highlighted the unique obstacle presented

by COVID-19, and the support that will be needed from banks, the government and brokers to continue doing best by borrowers. “The COVID-19 environment is going to have a very significant impact on a lot of new customers in terms of their employment,” said Connective executive director Mark Haron.

“There will be jobs people had coming into this COVID-19 pandemic that just won’t be there going forward …

Brokers need to work with their clients and the banks to adjust to that massive challenge.”

AN

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aggregator has partnered with CoreLogic, Australia and New Zealand’s largest provider of property data, in order to integrate the group’s insights into its customer relationship management platform and give its mortgage brokers a leg-up.

Finsure Group launched its new CRM system, Infynity, for its network of more than 1,700 brokers last year.

Now, the group’s brokers are positioned to benefit from CoreLogic’s market-leading property information, analytics and risk management services, says Finsure.

“The Infynity software has been one of the key developments AN

in the history of Finsure, and it is one of the most up-to-date CRMs in the market, with groundbreaking technology that streamlines workflow and automates time-consuming tasks,” said Finsure’s general manager of aggregation, Simon Bednar.

“We are very excited to be able to enhance that platform through the partnership with CoreLogic, which can provide data on recent sales of comparable properties, estimate values, sales trends and suburb insights.

“We want to empower our brokers to be the trusted partner throughout the homebuying journey and assist homebuyers and investors beyond

just arranging their finances,” Bednar explained.

He expects the partnership with CoreLogic to be a “game changer” for Finsure brokers, especially given the events of the past several months.

“In the current highly challenging economic landscape, the aggregator that can maintain the strongest offering to brokers across all services will be the one that succeeds in this market,” Bednar said.

CoreLogic’s general manager of banking and finance solutions for Australasia, Milena Malev, echoed Bednar’s sentiments.

“Being able to provide access to the most up-to-date property information in a timely manner is especially important in times like these,” she said.

“We are excited to be partnering with Finsure to provide an innovative solution that arms their members with all of the information they need to help their customers make better decisions around property.”

Subscribe to the most reliable independent news source for mortgage professionals “Australian Broker, in either print or online, is a news source we check daily. It’s speed, insights and focus on current issues makes it a ‘must have’ news source for the industry.”

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SPECIAL REPORT

THE NEW NORMAL: RETURNING TO THE OFFICE A recent workplace resilience study has confirmed that four out of five Australians are feeling overloaded and agitated at work, with 79% craving more flexibility. After a sustained period of working from home for employees across the globe, is a return to the office really the smartest way forward?

recent study by workplace resilience experts Springfox found that an individual’s resilience, which impacts heavily on their performance, is influenced by 60 different factors related to mental and physical wellbeing.

The report, Reduce Risk, Lift Performance, analysed 7,473 users of The Resilience Institute’s GDPR-compliant platform (of which 1,705 were Australian) between January and December 2019.

It evaluated how the global and local workforce measured across each of the 60 factors.

Of the Australian respondents, 83% reported feeling overloaded and agitated at work, with 82% citing difficulty in remaining mentally alert and engaged in tasks, and 79% feeling they lacked the endurance and flexibility needed to navigate changes.

This was before the COVID-19 pandemic hit, so those numbers could be nudging above 90% in the current climate.

In fact, Stuart Taylor, CEO of Springfox, says social isolation, changes to the way we work, and the pressure to provide value in challenging and fast-evolving environments are significant factors that could put people at much greater risk of experiencing mental health issues and burnout.

“Work-related mental health conditions are becoming more and more prevalent, to the point where physical health and safety is no longer the most critical risk in the workplace,” he says.

A

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“It’s important for organisations’ leaders to understand what factors are putting their teams at risk so that they can address them, especially in these challenging times.”

With a direct link between a person’s mental health and their resilience, Stuart adds that it’s important for business owners and leaders to ensure they are doing everything they can to have a positive impact

not intervene and take proactive measures to protect and strengthen their workers’ resilience.”

To that end, what types of strategies can brokers employ to ensure that their staff members are coping well and getting through this crisis as best they can, particularly when it comes to returning to the office after an extended period of working from home?

It starts with understanding that the culture and atmosphere

“Work-related mental health conditions are becoming more prevalent, to the point where physical health and safety is no longer the most critical risk in the workplace” Stuart Taylor, CEO, Springfox on employees’ wellbeing.

“With four out of five of Australians already having felt they lack the endurance and flexibility required to navigate changes, the recent global events surrounding the pandemic will likely have a huge impact on the mental fitness of our workforce,” says Taylor.

“As we now collectively grapple with the repercussions of a changing and uncertain world, we predict that feelings of angst, fatigue and worry will worsen if employers do

of your business, however big or small, begins and ends with you and your attitude, says Josh Bartlett, managing director of MAB Melbourne.

“Before I became a broker I owned a couple of gyms, and when I was deciding on my next step, I was considering getting into mortgage broking or real estate.

I love property, but when I thought about working at a real estate office I realised it meant I would be largely controlled by the energy and

attitudes of the person I worked for,” he explains.

“I realised that if I became a finance broker I could start from scratch and build my own team – and it would be my energy that helped to create their day and their experiences.”

Now more than ever, as you plan your transition back to the office, it’s essential that you are able to reassure your staff about the future, provide them with guidance and involve them in the decision-making process.

For instance, a flexible working arrangement that allows employees to log some hours from home and some hours at the office may be a compromise that works well for all involved, Bartlett says.

With the rapid advances in technology, we’re able to work remotely and achieve a number of typical in-office tasks from anywhere, at any time, which creates opportunities for employers and their staff to decide upon working hours that may step outside the traditional nine to five.

“My business has become much more efficient because of the technology we’ve been adopting since COVID-19. I don’t know if the banks are doing Zoom sessions with clients at 8pm to talk about their products, but we certainly are, and it’s saving everyone so much time.”

With restrictions easing, a number of brokers are looking at how and when their ‘return to the office’ strategy is going to be put in

Stuart Taylor, CEO, Springfox

place. For those who are currently planning how their business will look in ‘the new normal’, it’s a matter of working with your team to, first and foremost, understand the relevant state and federal government policies and directions for returning to the office, says FBAA managing director Peter White.

“Brokers need to ensure that their state’s policies are unquestionably met, together with the guidance from the federal government,” White says.

“It’s important to have conversations regarding the return to the workplace with all your staff well before it is implemented.

Review and investigate all the possible options that are open to you and your specific business and its particular needs, and then make a decision based on the needs of the staff and the needs of the business in an open-environment conversation, so everyone can take ownership and feel comfortable with the decision made.”

By liaising openly with your team in terms of your return-to-office strategy and involving them in the decision-making, you can work towards a transition that suits everyone involved, White adds.

There is a chance that members of your team may not want to return to the office – they may say they want to continue working from home, despite your plan to reassemble everyone in one place.

“Staff can refuse to return to the office, as everyone has the right to express their views and desires

Peter White, managing director, FBAA

Josh Bartlett, managing director, MAB Melbourne

“My business has become much more efficient because of the technology we’ve been adopting since COVID-19” Josh Bartlett, managing director, MAB Melbourne in the workplace, but ultimately, there is a business that needs to be run efficiently and effectively by the business owner, management or the board that governs that operation,” White says.

“If people want to remain working from home, they should be investing in the right equipment so they can work as efficiently as possible. There are OH&S laws and WFH laws that employees must comply with when

working from home, and these are complex to ensure that health and safety is up to standard for an at-home working environment.”

White adds that the FBAA itself will be “looking at a blended arrangement between working from home and in the office” in the immediate term, which is a strategy many brokers are also adopting.

“This will mean, as it would for any business, that the laws need to be adhered to and best practice must be achieved at all times, whilst also optimising the KPIs and needs of the business,” he says. AB

TECH CONSIDERATIONS FOR WORKING FROM HOME



Does everyone have quality equipment?

“Technology is a major part of being able to optimise business and productivity when working from home, including the quality of hardware such as PCs and laptops.”



Is internet connectivity an issue?

“High internet speeds and [access to] the particular platforms that are required to operate will ensure communication with your colleagues and clients is maximised.”



How is your team collaborating?

“It is important to remember that other employees or customers may not be as fluent on a particular communications platform as you are, and to not bombard people with too much email content as it could deter possible customers who may unsubscribe from your communications.”



Are you communicating regularly on social media?

“Remember that social media is the key to modern-day communication, so ‘go hard’ on these platforms, as long as it is relevant to your business and values, and creates conversations and attracts the right business for your company.”

Source: Peter White, managing director, FBAA

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BUSINESS PROFILE

POST-PANDEMIC TRAINING AND DEVELOPMENT In the blink of an eye, the industry’s previous models and methods for employee learning and training were flipped on their head as COVID-19 forced us to social distance and work from home. How has ANZ evolved its training and development strategy in the aftermath?

ANZ BUSINESS SNAPSHOT

$245.9bn Value of ANZ’s overall mortgage portfolio

$160.5bn Value of ANZ’s owneroccupier loan book

$85.4bn Value of ANZ’s investment loan portfolio

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has clearly changed the way we live, work and do business. While most businesses within the banking and finance industry have had to quickly pivot and adapt the way they work, this new way of operating doesn’t cancel out the need to train and upskill your employees, especially if you’re in the midst of rapid change as an organisation.

Such has been the case for ANZ, which has, along with all banks and lenders, recently accelerated its adoption of digitisation within its operations.

From rolling out changes to verification of identity procedures to suit the social distancing environment, to creating a framework for a huge number of staff to work from home, ANZ has been at the forefront of change and innovation, says Simone Tilley, ANZ’s general manager retail broker.

“One of the things we wanted to be proud of when reflecting on this period of isolation was how swiftly our national team pivoted and how we continued our strong, proactive broker and aggregator engagement across digital platforms,” she explains.

“Responsive, proactive contact has always been a key priority for us at ANZ, and we know that education in the industry is going to continue to be an integral factor for both new and experienced brokers.

With applications volumes recently reaching the highest levels in ANZ history, we recognise that in spite COVID-19

of the current environment, our brokers need our support more than ever. We continue to run our fortnightly national webinar series, which is designed to give brokers a solid knowledge base to build upon.”

Tilley says ANZ’s philosophy of proactively embracing change and rapidly adopting innovative practices has led to the bank expanding its webinar calendar to include smaller state-based webinars, which are run

by ANZ BDMs around the country on a weekly basis.

“The webinar calendar has been adapted to focus on topics that our brokers and aggregators are telling us they want to hear about, and our

customers and small businesses.

We wanted our brokers to be clear and confident about what was on offer and how to navigate the system to drive a seamless experience for distressed customers, whilst being cognisant of the unprecedented demands.”

Another area ANZ has been focused on is its robust research arm, which has allowed the bank to produce valuable national economic updates that have “proven to be very popular”.

“Led by our senior ANZ economist, they review macroeconomic drivers both domestically and globally to build important

“We wanted our brokers to be clear and confident about what was on offer and how to navigate the system to drive a seamless experience for distressed customers” intention is to have short, regular, focused updates on agreed topics so that we can deliver training on what brokers want to learn, when they want it. Outside of this, we continue to proactively invite feedback from our brokers on what topics they would most like us to focus on,” Tilley says.

“We have led a number of sessions around our COVID-19 assistance for

perspective in a rapidly changing external environment,” Tilley says.

In the current atmosphere of social distancing, one of the biggest trends the industry is witnessing is the move towards a more digitised environment.

As it has for all businesses, big and small, COVID-19 has forced the bank to quickly pivot and assess its methods for delivering training and

In partnership with

Simone Tilley, general manager retail broker, ANZ

BRIDGING THE JOBKEEPER GAP

ANZ has established a dedicated hotline for SME customers who may need temporary financial assistance, to “help to bridge the gap before they receive JobKeeper payments”.

Brokers should direct customers to ANZ’s dedicated hotline on 1800 571 123 or ‘Request a call back’ via anz.com.

Broker customers can reach out if they require temporary financial assistance after they have successfully enrolled for the JobKeeper Payment scheme.

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development to brokers, and Tilley says it recognises that, even in the face of these challenging times, continuous learning and upskilling is essential for all parties.

“We have seen this period accelerate and amplify digitisation.

As brokers continue to become paperless, I see a greater portion of automation of bank statement analysis, electronic signatures and electronic verification of ID, just to name a few. These are exciting advancements, and we will work together with brokers to provide a frictionless end-to-end customer experience,” she explains.

“Digitisation and technology doesn’t change our DNA as an industry – it simply enables it.

Human and digital communication strategies will continue to work in concert with one another for different purposes, and people will always want to deal with people, especially where relationships are new or new concepts are being shared. Digitisation is just another way to enable a seamless, efficient experience.”

It begs the question: now that social distancing rules are beginning to be wound back and restrictions are easing across the country, will these recent advances in digitisation continue to evolve at the same pace? It’s likely that the rapid uptake of the “new way of doing business” we’ve experienced in the last three months will begin to slow, but that doesn’t mean we haven’t made massive progress, Tilley says.

“I feel this period has created the social licence for having a digital meeting that may otherwise have taken years to achieve,” she says.

“One of our other key priorities has been protecting and enhancing the wellbeing of all individuals across the broking industry, as well as our own staff. We recently started offering a confidential wellbeing service to our brokers, free of charge, and we engaged an external psychologist and wellness expert to run sessions for our brokers and staff. This was to ensure we are doing everything possible to support the industry during these unprecedented times.

“Internally, we have also tried to be creative in the way that we drive engagement. We recently engaged comedians to entertain our BDMs for a short session so that we could 18

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“Digitisation and technology doesn’t change our DNA as an industry – it simply enables it. Human and digital communication strategies will continue to work in concert with one another for different purposes” all share a laugh. It’s important that we are open-minded and thinking about others at every step of the way.”

Looking ahead, from a training and development perspective, ANZ “continues to be fluid in our focus areas” based on the feedback that is coming from the industry and what

its greatest needs are, Tilley adds.

“Of course, there are a few things that will always be training staples, such as application quality. This drives symbiotic benefit for brokers and customers, saving them time on rework and helping customers by ensuring we make fair and reasonable assessments at first

touch. Recent applications have seen far lower rework, so we are incredibly appreciative of the time and care brokers are investing to submit deals to ANZ,” Tilley says.

“We also see value in reiterating ANZ appetite niches so there is improved clarity around what constitutes an ANZ deal, together with our processes, policies and lending fundamentals.

Furthermore, we work closely with our commercial broker team, recognising that some brokers want to grow their product offering so that they can meet the holistic needs of their customers across both residential and commercial. We take an interest in understanding what is important to brokers, and work in partnerships to help brokers achieve their own business goals.” AB

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BIG DEAL

Raj Sarin, head of investment finance at inSynergy Property Wealth Advisory, shares how feeling ‘stuck’ in your financial situation can be a matter of perception THE FACTS

Client Couple with three children

Loan size Restructure of $500k debt; 20-year loan term remaining

Goal To improve cash flow and create a stronger financial future

Location Northern Beaches, Sydney

Aggregator Finsure/AMAG

$2,273 – a reduction of $917 per month.

Next, we refinanced their $50,000 in car loans as separate loans secured by their home, reducing the interest rate from 5% to 3.6% and extending the term from three to 10 years. This reduced their repayments from $1,500 to $500 per month.

Finally, we paid out and cancelled their $10,000 credit card using their home loan, reducing the interest rate from 22% to 3.6% – and lowering minimum

THE SCENARIO

When we were introduced to this Sydney couple with three children, they were grappling with cash flow. They had a principal and interest home loan with 20 years of loan term left; two car leases and some credit card debt. They felt stressed and financially trapped.

What they did not recognise was the power of the $1.5m of equity they had in their $2m home, built from that property’s strong capital growth over the past seven years.

Our clients were seeking to improve their financial position but did not know they could use their equity to turn things around. All they could see was that after tax and bills they had very little if anything left over each month.

These clients were friends of existing clients and had been referred to us to see if we could help. We started by ordering three upfront valuations from three different lenders, which differed by 7% ($140,000). We chose the lender with the best valuation and the best terms to suit the clients’ needs. The next step was to address their cash flow issues.

What they did not recognise was the power of the $1.5m of equity they had in their $2m home, built from that property’s strong capital growth

THE SOLUTION

The first step was to improve their cash flow by restructuring their finances. By revaluing, restructuring and refinancing their home loan, we reduced its interest rate from 4.7% to 3.7% (it has since fallen further to the high 2’s); at the time this saved them around $5,000 per annum.

We also extended their home loan term from 20 to 30 years, lowering minimum repayments from $3,190 per month to

Lender Westpac and Liberty

were so much lower. As they already had considerable equity, they could now borrow against it to access enough funds for the 20% deposit plus 5% costs and two line of credit buffers valued at $50,000 each.

The 25% deposit and costs (including stamp duty, legal and other costs) for each $700,000 property totalled $175,000 each, amounting to $350,000. As there was still plenty of equity in their existing home, the clients used this to borrow the two $50,000 lines of credit – one as a personal buffer and another as an investment buffer to help with any unforeseen cash flow issues. The deposit and cost funds then allowed them to borrow the other 80% required to settle on the investment properties they wanted.

We used the niche lending policy of a lender that used “actual repayments” over a buffered amount, which almost doubles your borrowing capacity and ability to invest. To use this lender, Liberty, effectively, we had to restructure as much debt as possible against the clients’ home with the other lender in a staged lending strategy, while using cash buffers to derisk their investment portfolio as much as possible.

Each property generates circa $200 in positive cash flow every week, or $20,800 per annum combined in total.

Raj Sarin Head of investment finance at inSynergy Property Wealth Advisory

repayments from $385 to $45 per month.

The total cash flow improvement after the restructure and refinance was $2,257 per month, or $27,084 per annum. The annual interest savings came to $7,540.

Now that the clients’ cash flow restructure was sorted out, the next step was to use their equity, cash flow and interest savings to fund income protection via referral to one of our regular business partners. We also qualified them for two investment loans worth $700,000 each, which could be deployed into cash flow positive investment properties in high-growth areas. This forms the other arm of our business.

We also created a $100,000 line of credit fund as a buffer. The refinance not only improved cash flow and interest savings but substantially increased their borrowing capacity as all of their loan repayments

THE TAKEAWAYS

A well-executed finance structure combined with an investment-specific strategy is always more powerful than a marginally better spot rate that could change tomorrow.

The additional cash flow improvements we achieved for this client include $27,084 from the refinance and $20,800 from the investment properties, totalling $47,884 per annum. This was not only enough to fund income protection – a must-have for any investor – but it will also be enough to pay down their home loan in less than 10 years!

Our clients have told us what a weight off their minds it is to be actively doing something for their family’s financial future and to be in such a great position now. AB www.brokernews.com.au

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NE WS ANALYSIS

HOW LOW WILL PRICES ACTUALLY FALL?

Banks, economists and industry insiders have predicted that Australian house prices will collapse by as much as 30% in the wake of the pandemic.

But is this truly accurate – and how can we genuinely forecast just how low prices will fall?

number of factors combine to determine a property’s true value. Location, aspect, quality of finishes, number of bedrooms: these are some of the more tangible aspects of real estate that influence a particular dwelling’s value.

Next, you start to factor in proximity to local amenities such as public transport, cafes, schools, local parks and beaches.

Lastly, there are the ‘external’ influences, which have nothing to do with the property whatsoever, yet everything to do with its potential value.

This is the category that the coronavirus pandemic falls squarely into. A health crisis that birthed an economic catastrophe, the pandemic has robbed Australia’s real estate market of demand and well and truly taken the wind out of its sails in terms of property price growth.

A

Now, as the country edges back towards the ‘new normal’ with a state-by-state easing of restrictions, how will the property market be impacted?

the largest slice of the Australian mortgage pie, at a value of approximately $446bn – predicted that property prices would plunge 10% within six months as a result of

“Generally, the outlook for inner urban established housing values is to remain reasonably stable. Predicted value falls relate to lower-value, urban fringe established housing” Scott Keck, chairman, Charter Keck Cramer If we take the banks’ word for it, then the immediate outlook for property owners is grim. In the middle of April, for instance, Commonwealth Bank – which holds

COVID-19’s impact on the economy.

“Australian capital city dwelling prices, led by Sydney and Melbourne, have risen strongly over the past nine months, but we expect that stellar

run to end abruptly,” Gareth Aird, CBA’s head of Australian economics, told the media at the time.

“The policy response to limit the spread of COVID-19 has created a plunge in economic activity, and unemployment will spike. This will have profound short-term consequences for the housing market.”

By mid-May, CBA had revised these figures quite dramatically.

The bank flagged a number of scenarios, including a “prolonged downturn” forecast, which saw GDP growth fall by 7.1% this year and a further 0.8% in 2021.

In this scenario, unemployment would average 9% this year and 8.5% next year, before easing back to 6.5% by 2022. In this worst-case situation, the bank’s economists forecast that house prices would fall by around 32% over the next three years from their March 2020 peak.

CBA is not the only bank to

PROPORTION OF URGENT SALES BY CAPITAL CITY, FEB-MAY 2020

Source: Domain

FEB

MAR

APR

MAY

MID-MAY

CHANGE: FEB TO MID-MAY

Sydney

1.4%

1.2%

1.2%

1.4%

1.6%

0.2ppt

Melbourne

0.5%

0.5%

0.4%

0.5%

0.5%

–

Brisbane

3.0%

2.9%

2.8%

2.8%

2.8%

-0.1ppt

Perth

2.3%

2.2%

2.2%

2.3%

2.4%

0.1ppt

Adelaide

0.9%

0.7%

0.7%

1.0%

1.1%

0.2ppt

Canberra

0.7%

0.7%

0.6%

0.6%

0.6%

-0.1ppt

Darwin

2.8%

2.7%

2.7%

2.8%

2.8%

–

Hobart

0.7%

0.9%

0.8%

0.8%

1.0%

0.3ppt

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Nicola Powell, senior research analyst, Domain

“Homeowners are not being forced to sell, despite the economic turmoil and rising unemployment created by the current health crisis” Nicola Powell, senior research analyst, Domain prepare itself for such a negative result; Westpac, too, has modelled a potential decline in values of up to 20%, while NAB has suggested that house prices could fall by 10% to 15% in 2020/21.

NAB group chief economist Alan Oster pointed to an outlook for the economy that “more broadly is unsurprisingly significantly weaker than three months ago”.

“We expect dwelling prices to fall by around 10% this year and decline further in the first half of 2021 before levelling off. The declines will be led by Sydney and Melbourne, but the other cities will not be immune to rising unemployment and slower wage growth,” he said.

“Alongside the decline in house prices, we expect dwelling construction to continue to fall.

The pipeline of work yet to be done remains relatively elevated in NSW and Victoria, but this will be rapidly eroded with high rates of work done.”

However, despite all of these

predictions that property prices will tumble due to distressed sales, recent data from Domain reveals that most capital cities around the country have actually fared well so far.

Domain senior research analyst Nicola Powell said there was “little evidence to suggest an increase in urgent or distressed selling across Australia’s capital cities”.

In fact, our major capitals have seen only very marginal increases in distressed listings, with Canberra and Brisbane experiencing a decrease in the number of such listings.

“Sydney, Perth, Adelaide and Hobart had a marginal increase in the proportion of urgent sale listings from February to mid-May when the full economic shutdown and social distancing restrictions would have been felt,” she said.

“Melbourne and Darwin had no change, while Brisbane and Canberra saw a marginal decline in the portion of urgent listings. This suggests homeowners are not being

forced to sell, despite the economic turmoil and rising unemployment created by the current health crisis.”

While the aftermath of the economic disruption caused by the coronavirus crisis could result in rising distressed sales, Powell suggests the action taken by banks and the government may serve to largely stave off any serious declines.

“Homeowners have been provided with a lifeline during this economically challenging time through the intervention of the banks and government: the JobKeeper subsidy and the ability to pause mortgages, as well as a more generous JobSeeker payment. These will minimise the number of urgent or distressed sales, which will in turn support prices. If the policies were not in place, the immediate risk to prices would be far greater,” she said.

“The longer-term impact could be different, and an uptick in distressed selling is possible once the policies cease. If the JobKeeper subsidy performs as intended and retains jobs, together with economic activity bouncing back, any dramatic increase in distressed selling is unlikely.”

This may put a floor under actual property values in real terms, but confidence in the property market – as well as the perception of it by key stakeholders – could cause some negative price movement.

Income2Wealth CEO Paul Wilson, a property investing expert with more than 20 years of industry experience, says that despite facts and figures showing a robust real estate market, the issue of falling house prices could become “a self-fulfilling prophecy”.

“The problem we have is that when banks and lenders start forecasting a 10% drop in property values, they then start factoring this into their property valuations. The data and activity in the market may not support a 10% drop, but they are being conservative and buffering that into their valuations, when in reality there is no evidence to support that yet,” he said.

“Another part of the problem is that we’re dealing with so many lagging indicators when it comes to data. We’re seeing the numbers coming out of CoreLogic and the ABS, and they’re two or three months old, so it’s hard to get a gauge on what is actually happening in the market.”

TOP 10 AREAS WITH HIGHEST PROPORTION OF URGENT SALES 1. SA, West Coast – 9.8% 2. Qld, Gold Coast – 5.5% 3. WA, Swan Valley – 5.1% 4. Qld, Fraser Coast – 4.9% 5. SA, Eyre Peninsula – 4.6% 6. Qld, Bribie Island, Greater Region – 4.3% 7. Qld, Whitsundays – 4.0% 8. WA, North – 3.9% 9. Qld, Logan – 3.8% 10. WA, East – 3.7%

TOP 10 AREAS WITH NO URGENT PROPERTY SALES 1. ACT, Gungahlin 2. ACT, Tuggeranong 3. NSW, Far West 4. Tas, Bruny Island 5. Tas, Burnie 6. Tas, Central Coast 7. Tas, Circular Head 8. Tas, Derwent Valley 9. Tas, King Island 10. Tas, North East Source: Domain

With a lack of evidence to support a sustained drop in property values, why are valuers being so conservative?

Those in the industry are wondering whether it’s a byproduct of the GFC, when many valuers were hauled over the coals for not being conservative enough when it came to property valuations. So they’re factoring in a drop in values in advance, despite the fact that the market hasn’t yet experienced a significant increase in distressed sales.

Scott Keck, chairman of strategic www.brokernews.com.au

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IMF FORECASTS FOR AUSTRALIA

6.7% The International Monetary Fund has forecast that the Australian economy will contract by 6.7% in 2020 due to coronavirus

6.1% The IMF expects Australia’s economy to rebound by 6.1% in 2021, assuming that measures undertaken to contain the virus are successful

Paul Wilson, CEO, Income2Wealth

“When you can ride out the peaks and troughs [you’ll] experience a more profitable return on investment in the long term” Paul Wilson, CEO, Income2Wealth property consulting firm Charter Keck Cramer, has almost five decades of property valuation experience in the Melbourne market. Keck said that although the impact of COVID-19 had been dramatic, it has “not yet manifested in indisputable evidence so far as the property market and values are concerned”.

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“The simultaneous end of JobKeeper, JobSeeker and mortgage or lease deferments in September will represent a real challenge if the economy hasn’t revived sufficiently to give people the financial ability to resume their commitments. Quite significant structural changes will be occurring in the economy, which are yet to be reflected,” he explained.

A downturn in population growth as a consequence of reduced immigration through to mid-2022 is also expected to have an impact.

While this may result in a shortterm softening for houses and apartments, especially in Sydney and Melbourne, Keck is confident that a more likely outcome is a return to a balance between

supply and demand by 2023.

“Generally, the outlook for inner-urban established housing values is to remain reasonably stable.

Predicted value falls relate to lower-value, urban fringe established housing,” he said.

Banks, as Wilson suggested, are being much more conservative in their estimates.

ANZ has forecast weaker household income, sharply rising uncertainty for households, reduced population growth and a weaker investor sector as some of the factors that will depress Australia’s housing markets over the next 12 months. As a result, the major bank forecasts that the decline in demand will push prices down by around 10% on average across all capital cities.

The flip side to that coin is that ANZ expects prices will bottom out in mid-2021.

“I always advise property investors to view real estate assets as being a long-term play of at least 10 to 15 years,” Wilson says. “When you can ride out the peaks and troughs of the market along the way, you’ll be in a much better position to experience a more profitable return on investment in the long term.” AB

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OPINION

FOUR DISTINCT STAGES OF RECOVERY The world will be a different place as it emerges from the COVID-19 crisis, with Australians’ work, life and travel permanently changed. Next, we will see a previously unimaginable boost to the transformation of industries and society as we know them

3. Recovery With schools and businesses reopening, hiring, investment and consumer sentiment will cautiously improve.

Recovery paths for organisations will vary based on their ability to limit damage from the reaction stage, the length and severity of the recession, post-COVID-19 industry demand, and willingness to adapt.

Hybrid workforces – with some staff working from home part or all of the week – will remain, with work measured by outcome rather than input. Business leaders will need to be more flexible. A shift to flatter and more fluid, task-based structures will follow and require new management skills and changes to performance measurement and reward programs.

The need for national and international travel will continue to fall as organisations

to KPMG Futures’ new report, Our New Reality: Predictions after COVID-19, the pandemic has exposed existing weak links across industries, government and our economy.

The urgency and importance of addressing these weak links has radically shifted, and many decisions and discussions have been brought forward. As a result, we see four distinct stages on the path to recovery.

ACCORDING

1. Reaction We’re currently in the first stage of the recovery process. After the initial shock, professional and personal lives have been disrupted as the primary focus is on limiting damage to lives and livelihoods.

Many of us have been navigating our way through working from home while homeschooling, missing social interaction with friends and family, with pending or real unemployment keeping us awake at night. We are hypervigilant and unexpectedly tired.

One reality for most working people is that the nine-to-five routine of the office has been turned upside down, and remote working is an everyday experience.

2. Resilience This second stage is the one Australia and some other nations are moving into. As the virus spread is contained, controls start to loosen. Consumer demand begins to return but is constrained by lost wages, investment losses and recession fears.

It’s likely that certain industries will maintain stricter controls and reduced operations for longer. Airlines, for example, may need to keep measures in place until there is a vaccine or a means of establishing the health and safety of passengers.

Building business continuity and resilience will be a core competency.

Cash/liquidity has become critical to survival, and organisations will have a sharper focus on how best to balance what they can control with the things they can’t.

how can it be repurposed to serve the new needs of companies and the community?

Competition will come from the home office, with commercial real estate needing to offer more than just a place to work.

Meanwhile, reliance on connectivity has skyrocketed. There will be increasing demand for the accelerated rollout of 5G networks to boost speed and reliability.

Mass adoption of video conferencing and collaboration apps will grow the need for virtual reality and augmented reality technology, moving it into mainstream use.

Another permanent change will be a shift in our relationship with consumerism.

People will think differently about money and material goods, and what they value.

The environment and community will be more important, with an increased focus on family time, health and wellbeing.

Another permanent change will be a shift in our relationship with consumerism … with an increased focus on family time, health and wellbeing realise both time and cost savings along with productivity gains. This will mean significant impacts on the business travel industry, including airlines, hotels, the car rental business and insurance services.

James Mabbott Partner-in-charge, KPMG Futures

4. The new reality The final stage is recognising that the world will never be quite the same.

New behaviours born out of the crisis will become central to the new normal.

With more people working from home, demand for large built infrastructure projects won’t uniformly return to pre-COVID levels. Instead there will need to be a rethink when it comes to commercial real estate used for office space:

Cost consciousness and value will be front of mind and a generational hallmark.

The sudden shift to remote working has been jarring for many, compounded by other impacts of the crisis. Large shifts take time to smooth over, but further improvements will come as we create better home office set-ups, start managing by output versus input, adapt leadership and management styles and improve technology.

Compared to other nations, Australia was relatively shielded from the heaviest impacts of the 2008 GFC. From here, we are likely to see significant changes to tax and welfare regimes, health and safety regulations, and businesses required to pay ‘social dividends’ for the bailout they’ve received. AB www.brokernews.com.au

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FROM THE FORUM

Top comments from trending stories on brokernews.com.au

SPOTLIGHT ON PREFERENTIAL TREATMENT OF BROKERS

COVID-19’S LASTING IMPACT ON THE BROKING INDUSTRY

The FBAA has publicly shamed banks for their sluggish approach to executing loan discharges for borrowers that are looking to change lenders. The association also called them out for instances in which preferential treatment seems to be given to those brokers who drive high volumes. “This appears to be an intentional ploy by the banks that I believe is based on them attempting to cushion their monthly bottom line [while] also buying time so that their staff can continue to reach out to clients and try and retain them with incentives,” FBAA managing director Peter White explained. He added that lenders should direct their efforts into bettering their offering.

“I’d suggest that if a bank is experiencing a major outflow of loans, maybe they need to consider taking a look at their products and evaluating if they are meeting the needs of the borrowing marketplace.”

One benefit of the pandemic has become clear, and that is digitisation. The adoption of digital signatures and verification of identity technology, resulting in the removal of ‘paper choke points’ that had been built into broking, has happened in mere weeks, rather than the 12–18 months lenders were previously forecasting. Loan Market executive chairman Sam White says the transition from face-to-face interviews to video calls opens up a “huge amount of opportunity” for brokers to expand their customer base beyond their geographical area, while the move away from cash will create bank records that more accurately reflect spending habits. “Brokers’ key role is giving their customers confidence they’re making the right decisions. A digitally enabled broker, their skills, the knowledge, the customer focus they bring, together with an empowered customer who understands a lot about their situation and what’s available to them, delivers a better customer experience [and] I think the more we can [do to] create better files for the lenders, the faster they’re going to be able to make decisions,” White says. But is this necessarily going to be the case? One broker on our forum isn’t convinced.

This a problem I have all the time. They can do a loan in a week if it’s coming to them, but it can take three weeks if it’s moving. I work in a credit union and we have been able to do a discharge for a customer on an urgent matter in five days, and a normal matter in less than 10 days. It’s time for the regulators to put a minimum timeline of 14 days from receipt of discharge authority. It’s time-wasting and it’s costing the customer money!

One bank I work with regularly has increased their service times due to their great rates and refinance rebate, so we’re experiencing significantly increased turnaround times. It’s rubbish. It’s poor service that disappoints both us and our clients and makes us look bad. Refinances are at the bottom of their pile, sadly – you’d hope the credit assessors would be working weekends to catch up!

“Careful what you wish for, Sam. You just might get it! To coin a phrase. Open banking will allow lenders to obtain a ‘Reference Figure’ for expenses so that when a broker asks the borrower what their expenses are, unless the borrower is a highly organised borrower, they will mostly underestimate. The software that lenders use to provide the ‘Reference Figure’ will take a long time to figure out one-offs from actual. Loans will take three months to write because brokers will become ‘Statement Advisers’, advising borrowers how to spend so that they can target the lender they want. Creating three months of work prior to submission for the applicant to have a chance of approval.”

Steph

Brendan

David

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BROKER ON BROKER

Pymble-based broker Jean-Pierre Gortan from Simplicity Loans & Advisory and Marketplace.finance does most of his business in commercial lending, with some diversification into residential. He shares his experiences of the new government-backed SME loans and explains how the changing lending landscape has impacted his brokerage

How has the COVID-19 pandemic impacted you as a commercial broker?

We had a pipeline of deals we A were working on before COVID hit. Then we had to redo all the hard work on most of those loans again.

A lot of lenders were pulling out of the market – even some of the major banks in the commercial space. They were concerned that they would be

Q

It’s not quite the same when you’re doing that over a Zoom call.

What has your experience of the $250,000 government-backed business loans been like? have been amazingly A They difficult to access. The level of scrutiny means it is very difficult to qualify. The banks want to see three

Q

“Some of our clients were already approved, processed and waiting for settlement, and suddenly they were being told they couldn’t settle any more” taking on another bank’s problems, so it’s been difficult to find lenders that would mirror the loans historically. you had any clients Q Have left ‘high and dry’ because of these changes?

Some of our clients were A Yes. already approved, processed and waiting for settlement, and suddenly they were being told they couldn’t settle any more. For us as a business, that means we’ve then had to go and do all the work on their loans again.

Having our staff spread all over Sydney at the same time has been a challenge. We’re very collaborative – we like to bounce ideas off each other, talk about the characteristics of a deal.

years’ worth of financials and forward forecasts, and by the time you get it all together a month has passed and the business needs have changed again.

In practice it’s a great idea, but the execution has been poor. I’d estimate that 75% of the loans we’ve tried to get through under the scheme have not been successful. One lender said it would be easier to get an approval if our client applied for a normal business loan, rather than a government-backed loan.

The banks are anticipating reductions in income, which is all part of prudent lending, but it means there are some people in quite a lot of pain who have committed to things pre-COVID and have lost deposits.

Jean-Pierre Gortan, Simplicity Loans & Advisory and Marketplace.finance

How is COVID-19 impacting the mortgage industry compared to what occurred during the GFC? It’s very different to the GFC. A The GFC was a liquidity issue, where lenders had no capital. The current situation is a credit-induced pause, because lenders are concerned about asset values, exits and demand.

For example, at one project in Sydney’s inner west, out of 94 apartments, 40 of their buyers weren’t able to settle because they couldn’t secure finance. Lenders have basically stopped to watch how things

Q

play out – that type of approach will exacerbate the problem.

That said, I’m really optimistic.

Interest rates are low, we’re hopeful of seeing a sharp rebound in some key industries, and I don’t think it’s going to be as bad as everyone fears.

People fear the unknown; no one knew how long this was going to last, but we’ve only really had a month of semi-shutdown. Now we’re starting to see the recovery and people will be excited to get back out there, spend a little money locally and get back to doing what they do. AB

PITSTOP MENTORING Are you new to the industry, or simply keen to learn from experienced brokers who have words of wisdom to share? This is your opportunity for pitstop mentoring! If you have a question you’d like a senior broker to answer, contact us and look out for an expert answer in a future issue.

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25

DATA

WESTERN AUSTRALIA

Sales and rental volumes in the west sink to a six-year low While the week ending 17 May saw house prices dip by -0.1% across Perth, as per CoreLogic data, over the course of the month values went unchanged. Values had lifted by 0.2% in April across the western capital, bringing the median house price to $448,355.

Real Estate Institute of WA president Damian Collins says there has been a continual decline each month in the number of properties for both sale and rent in this state, which has fallen to what is now “a six-year low”.

“Perth’s property market has been showing signs of recovery since October 2019, and while COVID-19 may delay this, it most likely won’t stop it,” Collins says. “The state’s economy is coming back much quicker than many experts thought, and as long as it continues to recover, it is unlikely the property market recovery will be reversed.”

Collins adds that lower supply and a drop in seller discounting should work to avoid “any major downward price pressure” over the coming months.

Area

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Metro (H)

$475,000

0.0%

-2.0%

$380

4.1%

Metro (U)

$379,900

0.0%

-3.9%

$350

4.9%

Country (H)

$343,000

1.0%

0.0%

$350

5.5%

Country (U)

$202,500

-2.1%

-7.8%

$313

7.8%

NEW SOUTH WALES

While the spread of COVID-19 is slowing, values are starting to slip Restrictions to auctions saw a sizeable portion of vendors either pull the plug in the wake of April or resort to private sales, resulting in a 46.9% clearance rate as per CoreLogic data. The softening of social restrictions has since lifted this to 73.4%.

But while auction results are showing signs of recovery, CoreLogic notes that numbers are considerably down on the same time last year.

“Sydney’s [demand-to-supply ratio] bottomed in early 2019. Hope has been building since then but obviously took a bit of a turn recently,” says Jeremy Sheppard, head of research at Select Residential Property. “There’s been a steep decline in the average Sydney discount over the 18 months to April. The gap between asking price and sale price has halved. That’s a good sign of pent-up demand.”

Values held firm in April with a 0.4% rise as per CoreLogic’s Home Value Index, yet prices have started to pull back in some regions. Herron Todd White’s Month in Review for May says Sydney has transitioned into the “starting to decline” phase.

Area

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Metro (H)

$905,000

1.1%

-2.1%

$550

3.1%

Metro (U)

$703,500

0.0%

-2.8%

$525

3.9%

Country (H)

$490,000

1.1%

2.1%

$400

4.3%

Country (U)

$430,000

1.8%

3.2%

$350

4.3%

26

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SA SPOTLIGHT

ADELAIDE MARCHES ON Values in Adelaide nip at the heels of the late-2019 peak, but new listings pull back under the economic shadow of the health crisis, house values across Adelaide tracked upwards by 0.4% in April, according to CoreLogic’s Home Value Index. In the week ending 17 May, there was a further 0.1% rise.

The March quarter report from the Real Estate Institute of Australia (REISA) has underscored the capital’s capacity to experience stable market conditions during a time of broader economic disturbance.

“It is great news that the median price recorded this quarter is still the second-highest median price ever. While this quarter only partially captured some of the effects of COVID-19, it is nevertheless a terrific result,” says REISA president Brett Roenfeldt.

Although the number of house purchases settled in Adelaide – and across the state – in the March quarter fell short of the previous EVEN

quarter’s figure, both numbers were “significantly up from the same quarter last year”, Roenfeldt says.

Adelaide values hold as activity dwindles Unemployment across SA in March hit 6.2%, but the most recent data in Herron Todd White’s residential report for May reveals that property values have not slid. It also shows that the clearance rate of around 30% that month was on par with the same time last year.

However, there are a significantly lower number of new properties being debuted on the market – “down nearly 40% on the same time last year”, the report points out.

CoreLogic data for the week ending 17 May reflects this trend, indicating that while Adelaide’s clearance rate was 20.7% higher a year ago, total properties at auction that week had dropped from 83 to 10 since the previous year.

SA HOUSING MARKET AT A GLANCE Source: Real Estate Institute of South Australia, May 2020

3,871 houses settled across the Adelaide metropolitan area in March 2020

Big growth suburbs in year to March were North Adelaide (39.92%), Gawler South (39.38%) and Tea Tree Gully (34.29%)

Sales increased by almost 400 from the same period last year

Unit and apartment market showed a sustainable increase of 1.4% in median values compared to previous quarter

SUBURB TO WATCH: TORRENS PARK Median price (houses) $852,500

Median price (units) $302,500

12-month growth

3-year growth

Average annual growth

Indicative gross rental yield

7%

11%

3.1%

3%

12-month growth

Average annual growth

Weekly advertised rent

Indicative gross rental yield

3%

8%

$310

5%

AUSTRALIAN CAPITAL TERRITORY

Canberra remains anchored by a stable sales market and a long streak of growth The last seven years have seen Canberra’s house values on an upward trajectory, and the capital averaged 0.3% growth in the March quarter, according to Domain’s house price report.

The unit market, on the other hand, hasn’t been as prosperous. Domain’s report says prices softened by 5.2% over the quarter and “had their steepest annual fall in roughly two decades, down 4.3 per cent”.

“The ACT market tracks pretty closely with the Canberra–Queanbeyan market. And both are quite hot,” says Select Residential Property’s head of research, Jeremy Sheppard. “In fact, they have the highest average demand-to-supply ratio of any state or state capital in the country – both over 60.”

With the market remaining stable after a 0.6% rise in values in March as per CoreLogic’s Home Value Index, the fuller effects of the pandemic are yet to be gauged. However, Herron Todd White’s May residential report says agents have reported that “most purchasers are finance ready and able to compete with confidence in the market”.

Area

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Metro (H)

$695,000

0.7%

3.3%

$580

4.4%

Metro (U)

$444,500

0.7%

1.2%

$480

5.7%

NORTHERN TERRITORY

Low demand continues to hold Darwin back as it battles the pandemic

HIGHEST-YIELD SUBURBS IN SA Suburb

Dwelling

Gross rental

Median

Quarterly

12-month

Average

type

yield

price

growth

growth

annual growth

COOBER PEDY

H

19%

$49,000

2%

-35%

-2.1%

PETERBOROUGH

H

14%

$68,000

-7%

-9%

-2.5%

PORT PIRIE WEST

H

11%

$100,000

5%

5%

-3.3%

PORT AUGUSTA

H

9%

$141,250

3%

1%

-2.7%

ELIZABETH NORTH

H

9%

$156,000

-13%

-13%

-1.1%

KEITH

H

8%

$115,000

10%

-3%

-0.6%

WHYALLA NORRIE

U

8%

$147,500

2%

16%

-0.9%

SMITHFIELD PLAINS

H

8%

$184,500

-5%

2%

-0.7%

BERRI

H

8%

$184,000

-8%

-10%

1.1%

SALISBURY STREAKY BAY

U H

8% 7%

$165,000 $187,500

2% -18%

0% -31%

-1.9% -0.9%

While a 1.7% rise in values over April could point to Darwin possibly presenting a sturdier front to the coronavirus, problems with demand continue to hold back the capital.

As Select Residential Property head of research Jeremy Sheppard says, “Demand has been knocked out of this relatively small housing market by negative changes in the resources sector.”

“Darwin came back to a balanced market briefly in the latter half of 2017 but slid even further.

It could take a year or more for this market just to return to a state of balance,” Sheppard says, adding that “rent growth has been negative for most of the last five years”.

According to Herron Todd White’s residential report for May, while Canberra’s short-term rental market has been dealt a punch, in terms of the long-term market, “larger agencies have indicated [that] requests for rent reduction remain quite low and that rental arrears have not spiked”.

Area

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Metro (H)

$470,000

-0.9%

-4.9%

$480

5.4%

Metro (U)

$326,250

0.0%

-11.2%

$370

6.4%

Country (H)

$440,000

0.6%

-4.7%

$500

6.3%

Country (U)

$284,000

-4.8%

-6.3%

$373

6.5%

www.brokernews.com.au

27

DATA

QUEENSLAND

Brisbane’s rental market shows stability amid the health crisis The second week of May saw values in Brisbane lift by 0.1%, adding to the sun-swept capital’s 0.3% growth in April, as per CoreLogic’s Home Value Index. However, restrictions have meant that auction clearance rates have taken a hit.

They currently sit at 25%, compared to 40% in the previous year, but the number of properties taken to auction are also lower.

Despite the sweeping effects of the health crisis, vacancies sit at just 2.44% across the state, a 0.1% rise from the previous quarter, according to the Real Estate Institute of Queensland (REIQ). REIQ CEO Antonia Mercorella says Brisbane’s vacancy rate, which pulled back by nearly 1%, is “indicative of a fairly stable market”.

“Across Brisbane, vacancy rates have remained tight, which is a great reflection of a healthy market, albeit some more pronounced fluctuations within the apartment sector will inevitably be expected in future data,” Mercorella says.

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

Metro (H)

$535,000

0.0%

1.1%

$420

4.0%

Metro (U)

$385,000

0.0%

1.3%

$395

5.3%

Country (H)

$441,000

0.0%

1.1%

$400

4.7%

Country (U)

$380,000

1.1%

0.0%

$350

4.9%

This week, 867 capital city homes were scheduled for auction, with preliminary results returning a 65.9% clearance rate.

During the previous week just 612 homes were scheduled for auction, so the end of May saw a significant jump in the number of homes to be auctioned. A final clearance rate of 62.7% was achieved the previous week, which is in keeping with current market trends. One year ago, 1,661 homes were taken to auction – almost double the current number – and a 58.0% clearance rate was achieved. Although the number of auctions held remains low compared to pre-COVID, since the restrictive policies around open homes and onsite auctions have been progressively lifted in each state and territory, the trend has been towards more auctions held and a substantial reduction in the proportion of auctions withdrawn prior to the event. The number of auctions held this week was the highest since the week ending 19 April.

Total auctions

12

Cleared

8

Uncleared

4 66.7%

Clearance rate

PERTH Total auctions

9

Cleared

0

Uncleared

9 0%

Clearance rate

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental

rent

yield

$0

Sydney Melbourne Brisbane

Adelaide

Perth

Units

Darwin

$445,000

$720,000

Hobart

$467,500

$380,000

$516,500

$370,000

$433,750

$365,500

$100,000

$450,000

$200,000

$376,000

$300,000

$500,000

$500,000 $400,000

$552,550

$700,000 $600,000

$680,000

$800,000

$678,000

Hobart recorded a -0.1% decline in property values in April, and the median house price came in at $484,645, according to CoreLogic’s Home Value Index.

Meanwhile, with tourism suspended by the health crisis, a number of holiday rentals have entered the long-term playfield, which could be good news for the rental market.

“This may actually have a positive result in Hobart by easing the housing shortage with additional supply,” says Herron Todd White’s residential report for May, Select Residential Property’s head of research, Jeremy Sheppard, says, “Tasmania is in a healthy supply-and-demand situation.

Although the overall state looks inferior to the capital, Launceston is a notable exception with a [demand-and-supply ratio] in excess of Hobart.”

He adds that the Apple Isle’s vacancy rates of the past year or two are returning to “a position of normality”, but they are “still lower than most of the mainland state capitals”.

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

-0.3%

-0.5%

3.9%

14.3%

Melbourne

-0.3%

-1.0%

1.6%

11.7%

Brisbane

-0.1%

-0.1%

1.9%

4.3%

Adelaide

0.0%

0.5%

1.5%

1.8%

-0.3%

-0.5%

0.6%

-2.1%

-0.2%

-0.5%

2.6%

9.9%

Metro (H)

$540,250

3.1%

8.7%

$460

4.8%

Metro (U)

$399,000

0.6%

8.0%

$400

5.3%

Perth

Country (H)

$339,500

1.6%

8.3%

$325

5.2%

Combined 5 capitals

Country (U)

$289,000

1.5%

3.5%

$270

5.2%

www.brokernews.com.au

Houses

$900,000

$215,000

Offloading of short-term rentals onto market lifts some pressure off Hobart

28

ADELAIDE

MEDIAN HOUSE AND UNIT PRICES

TASMANIA

Area

WEEK ENDING 31 MAY 2020

$810,000

Area

CAPITAL CITY AUCTION CLEARANCE RATES

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

BRISBANE CANBERRA Total auctions

24

Cleared

17

Uncleared

7

Total auctions

44

Cleared

18

Uncleared

26 40.9%

Clearance rate

70.8%

Clearance rate

SYDNEY Total auctions

320

Cleared

218

Uncleared

102 68.1%

Clearance rate

TASMANIA

MELBOURNE Total auctions

192

Total auctions

0

Cleared

138

Cleared

0

Uncleared

54

Uncleared

0

Clearance rate

Clearance rate

71.9%

VICTORIA

Area

n.a.

Median

Quarterly

12-month

Weekly

Gross

price

growth

growth

median

rental yield

rent

While rentals suffer from vacancies, there’s still hope for value growth With incomes being lost and international students holding back in their home countries, empty apartments have pushed up Melbourne’s vacancy rate and rental oversupply, according to Herron Todd White’s residential report for May. CoreLogic’s Home Value Index shows that values across the capital recorded a dip of 0.3% in April. But while prices look to soften further, National Property Buyers director and senior buyer’s agent Antony Bucello says Melbourne “is resilient and growth will return, and it may return in a rush”. He adds, “In the longer term, reduced population growth and higher unemployment numbers may start to have an effect on property values. However, with government stimulus packages in place and confidence returning to the Australian people, it is still unlikely the market will crash.”

As the steam is taken out of the price race, now could be a good time to “still find a quality property and secure it for a good price if you are patient and focused”, he says.

Metro (H)

$725, 000

1.1%

0.4%

$430

3.1%

Metro (U)

$570,000

1.6%

7.1%

$430

3.9%

Country (H)

$388,000

1.9%

5.6%

$350

4.8%

Country (U)

$299,975

1.7%

9.3%

$280

4.9%

Source: Except where otherwise stated, all data sourced from CoreLogic, May 2020

NICK YOUNG: TRAIL BOOK SALE EXPERT Sell your trail book in part, or in full.

Release working capital. Keep your clients.

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

29

PEOPLE

IN THE HOT SEAT

A chance opportunity at a university careers day led Paul Herbert, MyState Bank’s head of home lending distribution, into banking.

Previously, a career in landscaping beckoned: ‘I still crave the creative aspects of seeing something physical from my efforts, so it’s an important outlet for me,’ he says

What was your first job before you joined the finance industry?

The day I finished high school I applied for two jobs: one at Coles and A one at a local French restaurant, washing dishes. I was fortunate to secure both jobs, and I worked in those roles before starting in the finance industry in 1993. Washing dishes taught me how each role in an organisation plays an important part in delivering a great customer experience. These days, it’s the dishwasher for me every time.

Q

What was your first job in finance, and how did you get into this industry?

I started as a teller at the Heritage Building Society. I was studying A business at the time, and the opportunity came up through a careers day. Banking and finance was a far cry from what I imagined [I’d be doing] while at school, thinking carpentry or the electrical trade would be my future. The move to the broking industry came in the early 2000s while I was at GE. Seeing the impact brokers had in helping customers and solving problems really resonated with me.

Q

What has surprised you most during your career in finance?

A The positive impact we can make on people’s lives. To see businesses start with great ideas, passion and energy and watch them grow through the economic cycles is fantastic.

The resilience of small businesses in the broker industry is also incredible. The speed at which many can pivot and adapt to change means customers can continue a long and productive relationship through all stages of their lives. The good, far-reaching energy created in our industry is incredible.

I couldn’t have imagined this when I started my career.

Q

What is one thing you wish everyday borrowers knew about finance, debt or brokers?

A The wealth of knowledge and information brokers have that helps them achieve what’s important. It’s only when you experience the problem-solving skills of a great broker that you truly appreciate the value they can add. There’s a common thread to the best brokers: they never rest and never accept that it’s the best it can be; they’re always striving to

Q

30

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improve their knowledge, service and experience to better their business for their customers.

Name one positive change, innovation or efficiency you think will come out of the COVID-19 pandemic?

A While nothing can replace the importance and value of building relationships in person, there is an incredible opportunity to build greater efficiency. As a lender, we’ve become better at servicing brokers remotely with video-meeting technology. Our BDMs can reach brokers in regional areas, or locally, more often with training webinars and accreditations, or to workshop scenarios by screen sharing instead of calling them on the phone. Brokers get similar access to all lenders, big and small, regardless of the size of the support team that was available to visit them face-to-face before COVID-19. AB

Q

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