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Fair prices Low valuations kill deals. What can you do to get yours over the line?


Going under MPA seeks out the warning signs of a partner going under

WEEKLY INVESTIGATIONS NOW ONLINE: SMSFs COVER STORY 26 | Australia’s next top brokers The under-35s who are the future of the industry

Professional bodies Segmentation » 





8 | Round-up The latest market intelligence from the world of property, economics and mortgages

44 | Angelo Malizis National Mortgage Company’s new CEO explains his big plans

12 | Product news A round-up of the latest rate changes and product launches to keep you up to date 14 | The Big Story A compilation of the top quotes from our weekly multimedia broadcasts and broker responses 20 | Analysis How wealthy do Australians think they are??





48 | The fightback Non-banks on non-banks 56 | Super size me How to maximise super and retire rich

60 | Warren Dworcan Rising star Dworcan talks about his meteoric rise

STATS 62 | Your Mortgage index Which state is on the march according to the latest data from our sister website? 64| The data This month’s statistics round-up looks at the key metrics for investors

LIFESTYLE 68 | My favourite things… Stephen Porges, Aussie 70 | A day in the life of… Aaron Milburn 72 | Motivation… executive coach Madeleine Shaw




BRIGHT YOUNG THINGS A good way to measure the health of any industry is to look at its next generation. After all, it’s not the leaders of today who will be in charge over the coming years – it’s those who are coming through the ranks, often at high speed. It’s reassuring, then, that if you look at mortgage broking with an eye to who will be the top brokers of tomorrow, the profession is in rude health. MPA’s annual Young Guns special report has scoured the nation to find the best and the brightest rookie brokers, and we’ve found them. What’s maybe even more encouraging is what these bright young things have in common. They’re not just about the transaction: they’re focused on the long game, building ongoing relationships with their clients and referral partners rather than just clocking up deals. Several of them are actively pursuing diversification strategies, looking to become more than just a mortgage facilitator to their clients. Finally, many of the 12 young guns we’ve identified have also hired staff or are planning on hiring staff in the next few months – whether that’s more loan writers or admin staff. That’s probably the strongest sign that the future of mortgage broking is in safe hands. Elsewhere, we’re investigating one of brokers’ biggest bugbears, valuations, and taking an in-depth look at the state of the non-bank sector – firstly canvassing those at the coalface for their views on the challenges and opportunities ahead, and also sitting down with NMC’s Angelo Malizis to discuss his ambitious plans for the company. Add to that the usual mix of interviews, columns, news and data, and it’s another packed issue with which to kick off the autumn. Kevin Eddy, Editor


Contact the editor:





CORPORATE CHIEF EXECUTIVE OFFICER Mike Shipley MANAGING DIRECTOR Claire Preen CHIEF OPERATING OFFICER George Walmsley MANAGING DIRECTOR – BUSINESS MEDIA Justin Kennedy ASSOCIATE PUBLISHER Rajan Khatak CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil Editorial enquiries Kevin Eddy tel: +61 2 8437 4793 Advertising enquiries Sales Manager Rajan Khatak tel: +61 2 8437 4772 Account Manager Simon Kerslake tel: +61 2 8437 4786 Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 Key Media Key Media Pty Ltd, Regional head office, Level 10, 1 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Hong Kong, Toronto 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 MPA magazine can accept no responsibility for loss

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Rate relief boosts refis


Get to grips with SMSFs – or else

Refinancing has received a major boost following successive RBA cash rate cuts. Data from the Australian Bureau of Statistics shows a 17% year-on-year rise in financing for the year to November 2011, and Loan Market COO Dean Rushton has predicted the trend is set to continue. Rushton said the company has itself experienced a 16% spike in refinancing enquiries over the past 12 months, and further rate cuts could continue to boost activity. “With expectations of more rate cuts by the RBA in the first half of 2012, we should see sustained growth in the refinance market, which – along with first homebuyers

– will be the strongest sectors this year,” Rushton said. Rushton said consumers held the “overwhelming sentiment” that rates would continue to move downwards throughout 2012, a sentiment which should drive refinancing throughout the year. “The key point for the refinance market has always been rates,” he said. A rise in refinancing may be indicative of a trend of homeowners choosing to stay put rather than upgrade. A recent RP Data report has suggested a massive increase in the time homes are staying on market for many capital city council areas, and Mortgage Choice spokesperson Belinda Williamson said homeowners will have to weigh carefully whether upgrading is feasible in a stagnant housing market. “It may be that for some homeowners the extra funds needed to purchase and relocate the family to a more ideal home could be better spent upgrading the existing property,” she said.


If brokers don’t skill up in self-managed super fund lending they risk future disputes with their clients. AAMC Training Group’s managing director Jeff Mazzini has said that the fastest growth area of lending in Australia at the moment is self-managed super funds. Commenting in response to an increasingly positive outlook for commercial property, Mazzini said brokers who are not considering SMSFs as an option could be at risk of a dispute. “In today’s age where Australians are now ranked second behind the USA for suing when things go wrong, I would strongly advise that everyone considers self-managed super funds as an optional area to fund the commercial or investment retail property through,” he said. Mazzini said brokers need to understand whether SMSFs, or stand-alone commercial/investor property structures will benefit clients more. He said training can answer the ‘what, hows and whys’.



$397bn Amount of assets held in SMSFs as of Sept 2011 Source: ATO


Aussie Home Loans is the latest broking franchise to announce it would be building a financial advice arm in an effort to boost revenue. “We have to write more mortgages but also have to generate a lot more non-mortgage revenue by leveraging the Aussie consumer brand,” John Symond told the Australian Financial Review. Symond’s expansion plans include recruiting dozens of wealth managers, as well as

boosting broker numbers to more than 1,000 by the end of 2012. According to Wealth Today CEO Michael Stephens it is a natural progression for mortgage brokers to start offering financial advice themselves. “Our business is built on the premise that there is a significant synergy between mortgage brokers and planners, and I think you’re going to see more brokers migrating to offer advice,” Stephens said.

Australians sunny about finances in 2012

75% of Australians believe their finances will improve in 2012

22% think they’ll be worse off

65% saw household finances hold steady in 2011

35% think the Australian economy will decline in 2012

Source: Financial Wellbeing Index, ING DIRECT


NSW, WA present broker opportunities Vow Financial has claimed brokers bucked the trend of a weak housing market to end 2011, and that 2012 could see strong volumes as well. Vow chief executive Tim Brown has revealed the company’s brokers saw a 25% rise in volumes over the final quarter of last year. This pickup was not just due to a flood of NSW first homebuyers, added Brown. He cautioned that while it may be too early to draw conclusions from the spike, it augurs well for the year ahead. “I was talking to a couple of brokers, and asked them where the majority of that was coming from. They said it was coming from investors and people upgrading,” said Brown. “I think we’re starting to see NSW pick up. It’s been in the doldrums so long.” Brown also expressed optimism that 2012 could see the Perth and WA markets turn around, as aggregators increasingly try to gain a foothold in the resource-driven state. CommSec’s recent State of the States report may lend credence to Brown’s claim, showing WA at the top of the pile in economic growth. “[WA has] finally seen the light in terms of growth. I think it was just a confidence thing, and now that interest rates have come off a bit I think it’s going to pick up,” he said.



Weston to depart Advantedge

Advantedge general manager of broker platforms Steve Weston has announced he will leave the company for a position in the UK. Weston will take up a role as managing

director of mortgages for Barclays Bank. NAB executive general manager of growth partnerships Antony Cahill praised Weston’s contribution to the aggregator. “Steve has driven a number of initiatives that have supported the strong gains we are making in broker satisfaction, including the delivery of innovative product and service solutions for our broker partners.” Weston is set to leave Advantedge around the end of March, and said he felt proud of having successfully guided the

company through the GFC. He also pointed to the broker platforms and support he introduced while he was the head of Advantedge. “I genuinely believe that what we have built and invested in Advantedge to support brokers will be a positive legacy. In this economic environment, it’s difficult for aggregators to support brokers, but we’ve been able to invest and will continue to invest to provide brokers with more support,” he said. Weston added that he had been headhunted by Barclays, who had specifically targeted the Australian mortgage market as “the most sophisticated and mature in the world”.

NEW BROKERS HIT THE STREET Seven new Loan Market brokers have begun building their businesses across NSW and Queensland since graduating from the aggregator’s training program. Loan Market National Sales Manager Mark De Martino said the trainees had gone through a rigorous program to prepare them for their mortgage broking careers and will join the ranks of some 60 already fully operational other Academy members. “We congratulate these trainees and wish them every success for the future,” he said. “The trainees are now fully accredited mortgage

brokers with a Certificate IV and affiliations with financial service and industry associations and are shortly to embark on their Diploma in Financial Services. Sunshine Coast-based Michelle Murphy, 38, is one of the recent graduates. While she worked as a broker seven years ago, she found it an invaluable aid to bring her up to speed on current best practice before re-entering the industry. “I knew the basics, but the academy was essential in learning about the new compliance rules and updated interview techniques,” she says. “It really drilled down into what’s expected of us now.”




New building stalls The outlook for Australia’s residential construction industry in 2012 remains far from rosy, with a turnaround in fortunes unlikely in the first half of the year. The latest Residential Land Report indicates that despite a modest increase in the number of residential lot sales in the September 2011 quarter, lot sales remain well down on mid-2010 levels.


Sydney dethroned as second costliest global city Sydney has been unseated as the second costliest city in the world in a new survey of housing affordability. The 2012 Demographia International Housing Affordability Survey has seen Sydney overtaken by Vancouver as the second least affordable housing market globally, with Hong Kong maintaining its top spot. The survey ranks markets based upon the multiple of the median house price divided by gross annual median household income. Demographia calculates that Median house prices in Sydney are 9.2 times median household income, while prices in Vancouver are 10.6 times median income. Hong Kong outpaced other world markets with median prices 12.6 times household income, the highest in the survey’s history. Even so, Sydney is still termed “severely unaffordable” by Demographia’s measures. Australia also performed poorly nationwide, ranking as the second least affordable national housing market. Ironically, the survey comes as new figures from the Real Estate Institute of Victoria show housing affordability in the state improved over the December quarter. Median house prices remained relatively stable for the quarter, and affordability received a boost from successive interest rate cuts.


Overall vs June 2011 quarter


Overall vs September 2010 quarter


Capital cities vs June 2011 quarter


Regional vs June 2011 quarter





The percentage of borrowers who are using savings due to interest rate cuts to pay off more of their loan principal Source: PRD Nationwide SUDDEN SPIKE WHICH MARKET SEGMENT HAS SUDDENLY STARTED LOOKING FOR MORTGAGES? CHECK OUT THE YOUR MORTGAGE INDEX ON P62 TO FIND OUT

Find out about the future of the property market at Your Investment Property’s Property Investors Forum on 26 May. Don’t let your clients miss out on this event, organised by MPA’s sister magazine, which will draw property investors together to hear from leading economists and industry experts. The conference will provide top tips on the best-performing suburbs for investment, capital raising strategies and investment opportunities, with hints on how to start building or reinvigorating your property portfolio. If you or your clients are seriously interested in making money through property then this is the event for them! To find out more, visit or contact


ASIC MAKES CBA CORRECT RATES Commonwealth Bank has agreed to change its advertised comparison rate for the Wealth Package home loan after credit watchdog ASIC raised concerns that the comparison rate did not include the loan’s $350 annual fee. The National Credit Code requires that credit advertisements that include an annual percentage rate must also include a comparison rate. Those comparison rates must include the fees, charges and interest relating to the loan so that consumers can see

the true cost of credit. “It can be difficult for people to compare home loans with different combinations of interest rates and fees,” ASIC Commissioner Peter Kell said. “This is why credit providers must include the comparison rate when they advertise a rate or a weekly payment for a home loan, and ASIC will be active to ensure compliance in this area.” ASIC has already provided general guidance on advertising financial products and will release a consultation paper on the subject later this year.

Recent research suggests that more than 40% of Australian properties are worth at least twice as much as their purchase price – while only 4.9% are in negative equity.

Source: RP Data, September 2011



PRODUCT NEWS A bite-size guide to the industry’s newest products and rate changes

Who: Better Mortgage Management What: Flexi access low-doc The spec: BMM has bolstered its range of low-doc loans with the launch of the Flexi Access loan, which gives self-employed borrowers the option of unlimited cashout up to 80% LVR. The cashout can be used for any ‘worthwhile’ purpose, including business purposes, as well as payout of ATO debt. BMM argues that this will assist many self-employed and small business owners. The new product complements BMM’s existing low doc and specialist range, which provide a range of features for the self-employed, such as an ABN requirement of six months, vacant land loans and loans in the name of companies and trusts from just 6.84%. What they say: “It’s been a difficult last 12 months for many small businesses: the reality is the major banks have moved away from this market, particularly at LVRs greater than 60%. We will continue to do everything possible to assist the self-employed with their finance needs and provide brokers and their clients with a genuine alternative to the majors.” – Murray Cowan, Managing Director, Better Mortgage Management


Who: LoanWorks What: LoanWorks KNX

Who: Stargate What: E-find iPad app

The spec: LoanWorks KNX is a marketing system that can be used standalone or integrated with your existing CRM or database. LoanWorks says that KNX supports email, SMS and direct marketing, including ‘slice-and-dice’ features providing hands-free marketing. Modules provide support for marketing to both mortgage customers (borrowers) and introducers/brokers. It also provides the ability to conduct customer surveys and plug-in website forms.

The spec: According to Stargate, eFind is the first dedicated iPad app enabling mortgage brokers to electronically complete a client needs analysis interview with a prospective borrower anywhere and at any time. The app features pre-populated Fact Find documents which can be completed on the fly at the time of interview without having to take the paperwork back to the office to be completed. It also includes an inbuilt stamp duty calculator – with more calculators to be added – and integration with third-party CRM systems.

What they say: “We’re excited about the power of this product. KNX will integrate with LoanWorks so that data will flow seamlessly through to the marketing system, while updates will populate back into LoanWorks – this is the holy grail for marketing managers in terms of an end-to-end marketing solution. “KNX also has the ability to integrate into in-house systems, and its unique hierarchical structure makes it ideal for aggregator and franchise environments. We’ve also had a lot of interest from independent broker businesses where they may be tied to their aggregator software but still need to manage their own marketing activities.” – Wayne Macartney, National Sales Manager, LoanWorks

What they say: “eFind represents a fundamental shift in the way that mortgage professionals work. By empowering brokers to be at the cutting edge of technology with easy to use software, we can finally begin to embrace new ways of doing business.” – Brett Spencer, CEO, Stargate Group Rates correct as of 14 February 2012


If you are launching or updating a product and want it to be considered for inclusion on this page, send the details to



Australian BrokerNews investigates the burning issues affecting the mortgage industry. Here are the biggest stories highlighted by our weekly newscasts – and uncensored feedback from brokers themselves

The story Challenges for 2012

The lowdown 2011’s but a distant memory, but how can you make the most of this year? Steve Kane, MFAA: I think the most

important asset you have as a mortgage broker is your existing customer base. Not only are they the source of your current revenue, they’re also a fantastic source of referral business if the relationships you hold with those customers is very strong. In a tight market, it’s your existing customers and the opportunities that might arise from those relationships which are important.

Peter Bromley, LJ Hooker: Existing

customers will still be your best opportunity going forward. Customers today are really looking for good, sound, independent advice, and that’s something we can all do. Brokers also need to understand how to become more efficient in their own business with the new regulation.

James Symond, Aussie Home Loans: It all depends on confidence. Confidence is driven by jobs, by interest rates, by many things… 2012 should be a stable




This month’s guests... Steve Kane, MFAA

Peter Bromley, LJ Hooker Look to your existing customers for profit, say our pundits

James Symond, Aussie Home Loans

Kim Cannon, Firstmac

Mardee Thomas, 1st Street Home Loans

marketplace, it all depends on what happens with Europe; interest rates look like they’re on their way back down, which is a good thing for confidence. On the other hand, if interest rates are on their way down, it means the economy’s a little more fragile than it would be if interest rates are on the way up.

Steve Kane: The relativities around John Kolenda, 1300 Home Loans

Steve Paterson, SAKS Consulting

Phil Naylor, MFAA

Mark Haron, Connective

investment property, the yields we’ve been seeing, will see a greater return to investment property. Plus the stock market and world market [volatility] will see a flight to quality, so I think investment will be an area of focus. It’s very important that in terms of relationships brokers have with their customers, it’s a holistic one.

James Symond: First homebuyers have been really prevalent through our business in late 2011 – that’s across the country, not just in NSW. First homebuyers have been a particular focus for us, but certainly in 2012 my recommendation for brokers, as what Aussie is doing, is ensuring their existing customers are having a health check. Ensuring they’re happy, they have the right loan, the right mortgage at any one time, is really important. Too many mortgage brokers look at the next sale and not enough look at their existing database.

From the forum Mark Moenting This is a great time to develop a business model that encompasses technology that caters for customers changing buying habits, but still maintains your core business values. The customer will always need professional help and as such we need to adjust for their needs. Emma Lockwood I believe I will write more business in 2012. I expect that my intensive efforts in social media and being able to provide a number of services such as personal loans, leasing and risk insurance will pay dividends.

The story Are brokers behind the times? The lowdown Should you be making more of an effort to build a web presence to compete with online lenders?



NEWS ANALYSIS / MULTIMEDIA Kim Cannon, Firstmac: The online space

is the market opportunity – we noticed that last year. How can brokers adapt to that? Well, they’ve just got to figure out how to. The aggregator groups are setting up white label programs at the moment. The white label programs the aggregator groups are setting up will become the online vehicles of those groups down the track. If you’re taking online leads and applications via those vehicles, what’s the use of a broker? Do they need a broker to sit down with a customer, or a much cheaper person?

Could ‘Occupy mortgages’ be the next step?

Mardee Thomas, 1st Street Home Loans:

White labelling has been around for quite some time, it’s not a new sensation. There is definitely a presence and a need for online products and people will still keep doing research online and finding out background on different products, lenders. But they’re still going to need there to be that face-to-face interview.

John Kolenda, 1300 Home Loans: The cheapest rate online has been around a long time, and a number of banks, aggregators, brokers have been chasing that business for a little while. But it’s a very small segment of the market, it’s certainly not going to detract from the broader broker offering.

Also, it’s one thing to have a website, and another thing to drive traffic. It could mean a large investment for a broker to increase their page ranking and drive traffic. When you’re spending $5,000– $20,000, it’s quite difficult to get traction. But, there are a number of people I’ve seen who do it quite well; in their local area, they’ve carved out a niche either online or with direct marketing.

Kim Cannon: Start learning the online

business in a hurry, otherwise you won’t be there in the future. Brokers have a big market share at the moment, but there again, what the consumer is doing… think of yourself. How much do you spend online shopping at the moment. That’s what the consumer is doing.

The story The borrowers are revolting! The lowdown A proposed class action by 18 | BROKERNEWS.COM.AU  

aggrieved borrowers has spooked the mortgage industry. But will it have any effect – and how can brokers protect themselves?

a transaction: I’ve seen too many brokers get caught up in these actions by customers where customers haven’t always been honest and truthful.

Steve Paterson, SAKS Consulting: This

Donut I am interested in how many of these 300,000 borrowers had the loan organised by a broker. I can’t imagine, under NCCP, that there would be too many brokers that would allow first homebuyers to overcommit.

debate is around the question of whether a loan is ‘not unsuitable’. Unfortunately, I think there is a lack of clarity in that regard: entities like the credit ombudsman and ASIC have perhaps not been as clear as they could in specifying what constitutes a loan that is not unsuitable.

Phil Naylor, MFAA: All I can say is that if brokers follow the law under NCCP, and follow the guidance that the MFAA applies they shouldn’t have any issues. Mark Haron, Connective: Clearly,

following NCCP guidelines and adhering to them is the best way to make sure you don’t get into trouble. You can go above and beyond that a little bit by keeping more thorough file notes, while communication to customers is key. If you’re communicating regularly to customers, you’ll be aware of any concerns or issues the clients may raise. If you feel a little bit concerned that the information the client has given you is not 100% correct or they’re not being 100% truthful, then clarify that, keep good filenotes, and if necessary stop doing the transaction. Advise the lender straightaway. Don’t be afraid to bail out of

From the forum

John I cannot understand how you can have a class action for 300,000 people when every loan application is different. Surely they have to be assessed on an individual basis? Viren Anand I think this should have been expected. NCCP puts all the responsibility and blame on banks and brokers. It’s an easy way out of a mess borrowers put themselves in, without understanding the implications of overcommitment.


To watch the industry-leading newscasts and have your say on the issues of the day, visit





PROSPER How prosperous are Australians? A new survey has revealed some interesting insights on how we view our levels of wealth. Kevin Eddy reports The Lucky Country. It’s a truism that’s been echoing around Australia over the last few years in particular, with the country escaping the worst of the GFC.


However, there’s an ever-present gloom that seems to be pervading the airwaves and newspapers, fuelled by global volatility, a slowing housing market and political uncertainty. Are Australians really battening down the hatches, or is the air of negativity just tabloid spin? A recent survey commissioned by ATM operator Cuscal promised to uncover the truth about how Australians are really feeling about their prosperity – and it seems that material wealth comes a poor fourth to health, family and true love. Yes, that’s right: out of the 1,525 Australians surveyed, 22% ranked health as the most important measure of prosperity, followed by family wellbeing (20%) then love and partnership (16%). There’s good news for mortgage brokers, though: the highest-ranked

financial indicator at 11% was home ownership. Home ownership also remains a popular long term goal for nearly half (49%) of respondents, with 15% ranking it as the most important long-term goal – suggesting that the Australian dream of owning bricks and mortar is alive and well. Respondents also highlighted home ownership as the number one choice in which to plough extra money (if they had it). Good news for the mortgage industry? Cuscal’s general manager, David Heine, thinks so. “Home ownership certainly remains a very important measure of personal prosperity,” says Heine. “Most importantly, half of Australians include it within their top three. That underlines the Australian vision of prosperity. Interestingly, it came out in two ways: in terms of the top three





Family wellbeing






Having a home/house


Stable home environment

Ensuring family is healthy and happy




Home ownership

35% Yes


About the same

items Australians could do without if their personal prosperity was at risk, home renovations was number two (after travel) – whereas home ownership was the third thing that Australians would give up. That just underlines the importance of Australian’s vision of home ownership.”

THE YEAR AHEAD In terms of properity, 2012 looks to be a mixed year. Only 35% of respondents said they thought they’d be better off this year, with 52% believing they’d remain ‘at the same level’. Only 13% thought they’d be worse off, though, suggesting Australians are largely optimistic – if conservatively so – about the country’s economic outlook. Gen Y respondents – those between 18 and 34 – were most confident about being more prosperous in the coming months.

9% Travel (domestic and overseas)

Queensland was the state in which most people thought they’d be better off this year, with 38% saying that they’d be more prosperous; either a symptom of the mining resurgence or a reflection of the annus horribilis many Queenslanders experienced in 2011 due to natural disasters. “I suppose the more optimistic data is the outlook for next year, with 35% believing that 2012 would be a more prosperous year,” adds Heine. “Lenders might take some optimism out of that forecast as well. It’s clear that world events and the dark clouds of the GFC and what’s happening in Europe are an important backdrop to the state of mind of Australians. “But the good news is that Australians are an optimistic lot, and we’re looking forward to a more prosperous 2012,” he concludes.





The demise of Refund Home Loans brings into sharp relief the risks of aligning your business to a partner such as a franchisor. MPA seeks out the warning signs BEFORE YOU SIGN Robert Toth, franchise partner at Wisewould Mahony, has dealt with several mortgage industry cases – including issues with RAMS Home Loans franchisees prior to its takeover by Westpac. “What we’re finding is because things are tougher there’s an increase in disputes,” he says. But in good times and in bad, there are several ways brokers can mitigate the risks associated with aligning their business to another organisation. STICK TO RECOGNISED BRANDS: “Whether it’s a RAMS or an Aussie Home Loans – connecting to a real recognised brand that’s had some longevity reduces risk,” advises Toth. While a new brand might be a great opportunity, it also brings with it a certain amount of risk, he says. KNOW WHAT TO LOOK FOR: According to Warren Scott, partner at Mills Oakley Lawyers, franchisors are required under the franchising code of conduct to provide information both about the franchisor itself, the

franchise agreement that is about to be entered into and also the history of the franchise system. COUNT THE MEMBERS: “The first thing I tell people to look at is the section in the disclosure document which sets out how many franchisees they’ve currently got,” advises Scott. If they don’t have many – if it’s a very early stage franchise system and with very few franchisees – then you’ve got to have a question mark as to how proven is the system. Brokers should also take note of how many franchisees ended as a result of sale or termination. Three or more in a year should raise a red flag. CONTACT FRANCHISEES: The disclosure document gives information about past and present franchisees, as well as their contact details. According to DC Strategy franchise expert Rod Young, questions to ask include: • Are you getting the return on your money and time that you expected? • How has it affected family life?



Robert Toth

Warren Scott

• If you could decide again, would you still buy this franchise? • Are you interested in selling – and how much? Young also advises potential franchisees to consider the type of people aligned with the organisation, as they reflect the quality of the franchise system. LOOK FOR A PROFESSIONAL APPROACH: “One of the warning signs is a very unprofessionally prepared franchise agreement or disclosure document, or some of the information that is supposed to be there is missing,” Scott says. For example, franchisors have to give their last two years’ worth of financial information, but if they don’t want you to see those they can give you an audit statement instead. As well, there is a requirement to give a marketing fund statement and to have that audited unless 75% of franchisees agree not to have it audited. “As soon as any of that information is not present that would be a warning sign for me,” Scott says. “Because you’ve got a franchise system which is choosing not to comply and is leaving out important information. Even if you get it after asking, I think the fact that it’s not there in the first place is a warning sign.” GET IT IN WRITING: With regard to any pre-contractual representations that are made, Scott advises brokers to get it in writing. RESTRAINT PROVISIONS: Another thing to think about is that insolvency of the franchisor normally won’t allow the franchisee to end the agreement and walk away. So that’s something brokers should consider when negotiating the contract. “The restraint provisions could say you can’t have another mortgage broking business during the term, and for a period afterwards as well, if you’re bringing your own business to a franchise system that can lock you out of rebranding and continuing to operate your business,” Scott says. According to Toth, the key is to look for “reasonable” restraints. “For restraints to be enforceable they have to be reasonable both in area and time. We’ve some restraints that go on from 12 months from the date of the end of the franchise and restricts the operator from effectively carrying on in the industry within not only the territory, but also within the

“If it’s a very early stage franchise system with very few franchisees then you’ve got to have a question mark as to how proven is the system” 24 | BROKERNEWS.COM.AU  

range of any other franchisor territory and that shuts them out of business for a certain period of time.”

DURING Once you’ve signed the dotted line, there is a tendency for brokers to focus on their own business. But it’s important to keep a look out for potential signs of trouble with your partners. Possible red flags are: LACK OF COMMUNICATION: “The good franchisors are transparent and actively support their franchisees, they’ll regularly come and visit, they have a good process of communicating with franchisees their business plan and what the business model is – it’s a very dynamic relationship in a sense,” says Toth. Are there state meetings and national conferences? These are the type of events where you learn more about the company. PROFITABILITY: From a franchisee’s perspective, profitability is the key issue in the relationship, according to Scott. “The best early warning sign of there being a problem in the system is an issue with the individual franchisee’s profitability – so they should look internally within their own businesses.” DISCLOSURE: Franchisees have the right to ask for a disclosure document once each year, so they can keep up-to-date on how many terminations and how many franchise agreements are ending by looking at the disclosure document if they’ve got concerns.

SHOULD IT GO BELLY UP? PUT IT IN WRITING: According to Toth, the best course of action is to put any issues in writing. “That’s the first thing, and try to deal with it directly and deal with it rationally and reasonably and not on an emotional level.” CLASS ACTIONS: Scott advises brokers involved in a dispute with their franchisor to consider recent changes made in relation to class actions that make these kinds of proceedings more readily available to franchisees than they were in the past. The benefits of class actions are they are quicker than having a series of individual proceedings and more cost-effective depending on just how similar the claims of the individual franchisees are. RIGHT TO TERMINATE: Many franchisees mistakenly believe that when the franchisor goes under it’s a breach of the agreement and therefore they can terminate their franchise. However, according to Toth, “the irony is where the franchisor folds yet the franchisee has got no right to terminate the agreement, and still has obligations to pay the fees”. He adds, “usually the franchisor rights are sold fairly swiftly and then usually what happens is the franchisee says I went into business with these other people and I’m forced to go into business with a third party that I don’t even know – but that is the reality or risks of being a franchisee.”




The future of broking is right here, right now. Kevin Eddy meets the brokers who’ll be leading the industry tomorrow – and who are already making waves today


roking is all too often characterised as a middle-aged profession. However, the stereotypical view of a former banker in his late 40s or early 50s in a baggy suit is one that’s increasingly inaccurate. Today’s broker is increasingly professional, savvy and, above all, getting younger. Over the last few years, MPA’s annual report on the top rookie brokers has uncovered many stars of the future, either recommended by their aggregator or franchise or selected due to prior industry recognition. The aim is the same this time around – although we have added an extra twist in 2012, imposing an upper age limit of 35 – reflecting, we believe, the new wave of young talent coming into the industry.

And what a wave of talent it is. The 12 brokers featured on the following pages have all come out of the blocks fast, writing significant business straightaway – regardless of whether they’re working in an established environment or setting up on their own. Despite having significant differences in geographical location, age, background and prior experience, they’ve all also got a few things in common: a laser-targeted focus on customer service, big ambitions and, most importantly, the drive to achieve those goals. Listen to some in the mainstream press, and you’d believe that mortgage broking is a dying industry. These Young Guns are the evidence that the reverse is true – and that the future is in very safe hands.

A word from our partners Now in its third year, the MPA Young Guns feature highlights a select few of the industry’s most outstanding young mortgage brokers. Each broker is acknowledged for their customer service, outstanding performance and business growth. To be recognised as a Young Gun is to be acknowledged nationally as talent on the rise; a potential industry leader or influencer. Each of these Young Guns is an example of success. They each have a story to tell and advice to give which may help many readers to be more successful in their own businesses. Commonwealth Bank is committed to the mortgage broking industry and encourages brokers to be professional in every way. Professionalism is a commitment to ongoing education and ethical behaviour, leading the way in customer service and constantly raising the bar in the industry. The future of our industry depends upon professional, young operators who are focused on building successful businesses. This feature highlights those who are doing it right and through the publicity hopes to encourage other young brokers in the industry to continue to strive to be the best in what they do. Kathy Cummings Executive General Manager, Third Party and Mobile Banking



Twenty-three-year-old Theo Chambers fits the definition of a rising star perfectly. Despite only joining Oxygen Home Loans last February and starting writing business in July, he had already racked up over $57m in lodgments and $20.7m in settlements by the end of 2011. Chambers’ talent for sales isn’t a surprise, however, even at the age of 19 it was clear that he was a sales gun. “I started off knocking on doors selling Foxtel: that was where I built some sales experience. It was quite intense!” he says. Within a month of starting that role, Chambers had already broken two sales records and had been promoted to team leader with his own company car. Doorknocking was also instrumental in his next career move. “After being there just under a year, I knocked on the door of a CBA executive. He liked the way I approached him and handled the situation, and offered me a job,” says Chambers. “I then worked for CBA for three years.” Even though he was rising through the ranks, Chambers was beginning to get ants in his pants – and found a solution in broking. “I like the commission-only system, it drives me,” he admits. “At CBA, I was on a decent base salary, but I once came second in the state for product sales and only got a small bonus that year. If I’m doing that work, I want the reward. I don’t mind staying back until 9pm if it means getting some extra pay that month. Commission only just drives me to work harder.” Chambers’ work ethic is impressive: he habitually works six days a week, and highlights Saturdays as the days when he picks up new business. His tactic is to team up with real estate agents at client meetings, open houses and auctions to meet clients – and estimates he picks up around two-thirds of new business this way. If that wasn’t enough, he’s also studying for a bachelor’s degree in finance and marketing, due to be completed this year. With all this on his plate, it’s no wonder that he’s aiming to spend a bit more time on the ‘life’ side of the work/life balance this year. Even so, he’s still got ambitious business goals. “One goal would be to settle $10m in a month, and another is to lodge $25m in a month,” he adds. “I also want to win AMA Young Gun of the Year, so being selected by MPA is right up there as well!”




Brisbane broker Hayley Grant’s only been a broker for 14 months – and it’s a career change that’s required her to eat some humble pie. “I used to work for Suncorp as a lending manager, and spent eight solid years bagging out mortgage brokers!” exclaims Grant. “However, I was recommended to Vantage Financial and they didn’t have a broker on board so they approached me – and I love being a broker!” Grant highlights the variety of banks, products and policies as one of the key differences – and strengths – of being a broker, and admits that she’s definitely changed her tune on mortgage broking. It’s no bad thing, either, as her settlements for 2011 sit at $18.9m – an achievement for which she was awarded Vow Financial’s Rising Star award at the aggregator’s 2011 conference in Fiji. Grant’s aims for 2012 involve significantly growing her total settlements to $35m: a target that will be aided by Vantage’s recent purchase of a Mackay-based financial planning business. She’s also planning on keeping up the marketing assault she’s been conducting since joining Vantage. “You have to have a marketing plan,” she says “At Suncorp, I was a lazy lender because everyone came to me and I had a massive database. Working for a new company in Brisbane city is more challenging: I’m always sending out email newsletters and staying in touch with existing clients. Service is the key to everything.” Anther plan for 2012 involves Grant getting out on her new Kawasaki Ninja motorbike. “I’m 34 and going through an early mid-life crisis, so six months ago I bought a motorbike,” she laughs. “I ride on weekends and into work every day – even so, my parents still refuse to discuss it!”





Having strong local links is the secret to 33-year-old Mohammad Hammoud’s success since becoming a broker less than a year-and-a-half ago. The former Commonwealth Bank employee took the leap because he wanted to get the rewards for his hard work himself, rather than just ‘a pat on the back’. However, it’s being part of his local community which has paid dividends since starting his own business. “I have a lot of connections with clients and I’m from the local area – often I’ll be walking in the street and people will come and ask me questions,” explains Hammoud. “Everyone talks in the local community and I try to give the best service – the service I’d want for myself – so I know that they’re happy.” Building trust is essential, he adds – more so than in a banking role. “When I used to work with the bank, I used to build a relationship, but that was more business-like,” says Hammoud. “When you have your own business, you need to build more trust, because it’s my business – it affects me. If I do something wrong by the client, that client’s not going to come back to me or refer anyone to me. If I do something good by him or her, more than likely they are going to refer, and down the track they’ll give me a call if they need something else.” 2011 saw Hammoud settle over $19m: 2012 promises to be a year of further growth, with Hammoud planning to write larger volumes than 2011 and diversify into personal loans, car loans and insurance. He’s also got his eye on going into commercial lending, too. This is one rookie broker with big plans ahead.






North Queensland broker Phil Rogers hasn’t yet clocked up two years in the industry, but is already settling amounts that would put many capital city brokers to shame. Previously in motor sales, Rogers started his broking career in a Ray White real estate office in early 2010. Since then, he’s opened his own shopfront, employed a PA, and has been elected to LoanMarket’s Queensland broker council. Above all that, he settled $17.5m in 2011 – a great result for a non-capital city market. Rogers puts his success down to a single-minded focus on customer service and a close partnership with his Ray White counterparts. “Customer service is a huge part of what we do: it’s that level of service that gives us the point of difference,” he says. “We market inwards to the database and work with the real estate agents. We don’t have billboards or $10m TV ad budgets, but we’re building a substantial business from referrals and word of mouth. We’ve progressed from using a table in the Ray White office in one of their interview rooms to having our own shopfront and tripling what we were doing business-wise.” Aims for 2012 include reaching LoanMarket elite performer level, which means writing $36m over the course of the year – however, Rogers believes that’s more than possible given the rapid growth Townsville’s going through. Rogers also credits the support from the LoanMarket group as essential to bringing him up to speed quickly. “I can’t give the guys enough praise – their support has been a big part of my success, to be where I am today – as well as the support of a fantastic principal here in the real estate business.”

Canberra broker Brad Quilty, 34, started his own Elders Home Loans franchise in December 2010 after a year-and-a-half with Aussie – and he’s gone from strength to strength. The former hospitality industry manager and car salesman took his first step into the mortgage broking industry back in 2008, when he started to get interested in becoming a property investor. “It seemed a natural progression to me that if I really wanted to understand how to be an investor, I should be involved in the industry. As I wanted to understand buying property using structures such as trusts, and doing developments, I figured I would need to understand how finance worked,” he explains. “The final straw came when we used a mortgage broker to purchase our current home.”

Quilty says that, despite coming into the industry with little experience, the ability to deal with people was “the key”. “I love making the process of buying a home easy,” he adds. “It shouldn’t be a painful process. I must admit that I also love it when I see a new client after they have been to their local bank branch and was told how hard it is and that they ‘probably can’t get a loan anyway’.” Quilty settled $14.5m in 2011 in a tough market, and has high goals for 2012. “I am really striving to crack the MPA Top 100 – that has been the goal since July last year. That would be a great achievement,” he says. “I also want to expand and start bringing on new brokers to train, start creating a little group of like-minded brokers.”


This isn’t the first time that 33-year-old Andrew Morel has been highlighted as a rookie broker to watch – last year, he took home two Australian Mortgage Awards, including the overall Young Gun of the Year award. He puts his meteoric rise down to solid partnership working and an investorheavy client database. “I work closely with investors – 90% of my clients are investors, the other 10% are owner-occupiers who are trying to get into investment properties!” says Morel. “We take a long-term view on wealth creation – you might be buying a house but let’s get you set up long term as well.” That investor focus means Morel has a steady stream of ‘repeat customers’ – he estimates 60% of the $20m he settled in 2011 came from existing customers. One key innovation that he’s also made great use of for building repeat business is a post-settlement budget tracker for clients. “I’ve designed budgeting software which we send out post-settlement to clients which allows them to do more thorough cash flow tracking and find out where their surplus funds are. We do a review after six months and know where that client sits: it also means that we’ve got the perfect tool for budgeting – which is what ASIC wants us to do, too – as we’ve got six months’ worth of spending, and we know exactly how much the client is able to borrow. There’s peace of mind for everyone concerned and we’re ticking boxes from a compliance standpoint as well.” Morel’s been busy outside of his core business, too: aside from barracking for AFL team Essendon, he was elected to the MFAA Victorian state council in November. Morel has also been laying the groundwork for two new ventures launching this year: a money and credit management program for Year 10 and Year 11 schoolchildren, and a real estate ‘aggregation’ business called Buyproperty, which aims to give other brokers’ clients easier access to property developers and wholesalers. Back to broking, Morel is aiming to settle an average of $4m per month in 2012 off his own back, and is also looking at expanding his Club franchise by adding more loan writers and admin staff – especially as he’s expecting his other ventures to take more of his time as they ramp up.





If it weren’t for a face familiar to regular MPA readers, Monica Van Riet might never have become a mortgage broker. “My first taste of mortgage broking came when I purchased my first home through Wendy Higgins’ office in Adelaide about 10 years ago,” explains Van Riet, 33. “I was working for a large multinational company in the travel industry. “While I loved the face-to-face interactions with customers, being a travel agent wasn’t something I wanted to continue with long term. Based on the positive experience with Wendy, my next career move and the decision to join the Mortgage Choice family was a no-brainer!” Van Riet started out as a broker in November 2010. With no finance experience, she built her business acumen and customer service philosophy from other industries and her own experience of investing in property – and resulted in $12.1m worth of settlements in 2011. She uses social media as a key sales tool, for a number of reasons. “I feel that social media is the way of the future, and more targeted for the demographic of clientele that I see. It’s also very cost effective and reaches a far wider network of people than traditional marketing activities,” says Van Riet. “Social media also helps improve my website’s search rankings, so I try to be as consistent as possible.” Real life networking is also essential, adds Van Riet. “I’ve joined two networking groups and a political party in an effort to get myself out and about in my local community,” she comments. Van Riet’s efforts are certainly bearing fruit, with the opening of a dedicated shopfront. Her targets for this year include averaging $4m in settlements per month, and having a loan book of $40m by the end of the year. And the advice she’d give to a prospective broker? The same advice that she was given at the outset. “Be persistent, don’t give up and try anything once. Do everything that you possibly can to build a pipeline and database in the first 12–24 months and then the rest will flow.”






Former motor trade group business manager Antony Muir took over the Burleigh franchise of Mortgage Choice in December 2010 – and in a little over a year has tripled its productivity. Muir, 31, might never have made the switch to broking in the first place if it wasn’t for his current business partner, however. “My business partner already owned a franchise in Miami: he refinanced my home loan for me and saved me a whole heap of money,” he explains. “We kept in contact and the opportunity came up for an existing book to be purchased and I couldn’t resist it.” Muir’s not been backwards in coming forwards since entering the industry: he’s got well and truly stuck into the community, becoming president of the local Business Networking International chapter, sponsoring the Runaway Bay soccer club and running property investment and SMSF lending seminars both locally and nationally. He’s also looked at the business from the ground up, and instituted some changes that have transformed its productivity. “When I took it over, we had a loan writer working in the business and two administration staff: the two admin staff were job sharing and that made things a little difficult,” he explains. “One of the staff members took another role, which made me think about how the office was set up.” Muir reorganised the structure to create a dedicated loan processing coordinator role, and then he employed an administration person to mine the franchises’ database and book home loan health checks. He also bought a loan tracking system to improve loan processing. As a result of the changes and his hard work, the business has gone from a monthly average settlement of $1.8m to $5.9m, and Muir’s loan book has increased by 40% over the last 12 months. Next up is acquisition of another franchise alongside the expansion of the Burleigh office – Muir’s hoping to hire another loan writer and two more support staff. If that wasn’t enough, he and two other franchisees jointly launched a financial planning business last October, so he’s also keen to ensure that it becomes a success. Muir attributes his success not only to excellent customer service, but also to having excellent staff around him. He also advises brokers not to be shy about asking for referrals. “Always ask for referrals,” he says. “I ask for referrals on signup, I ask for referrals on approval, I ask for referrals four weeks after settlement, I ask for referrals six months later… I’m always asking for business. I don’t want money, bottles of wine or beer – my present for doing a great job is someone else coming to see me on a client’s recommendation.”




Lachlan Cottee’s a native of Sydney’s Northern Beaches through and through – and that connection to the area was one of the key reasons he became a broker and wealth management advisor with Yellow Brick Road. “I loved the idea of living and working on the beaches, as well as being in charge of your own destiny but at the same time being accountable to myself and my staff,” explains 26-year-old Cottee. He’s been in and out of the finance industry since 2006, first as a credit analyst with Balmain Commercial, then as a loan processor for Mortgageport. After a short stint on the road in sales, he saw an opportunity with Yellow Brick Road. “I started with Yellow Brick Road in 2010 although didn’t really get going until half way through the year. Since then, things have really taken off.” They have indeed. In 2010, he and his business partner took home YBR’s ‘Rising Star’ award. Fast forward a year, and they’re settling $5m per month in loans, plus an average $10,000 per month income from the wealth management side of the business. They’ve also recently opened a second branch in Dee Why, to take advantage of what Cottee calls “a huge market” at the upper end of the beaches. It’s no surprise that he’s on the hunt for new brokers and administration staff. Cottee’s something of an evangelist for diversified wealth management models, firmly believing that every broker must diversify to stay in the business for the long term. “Not only does it create a second, third or fourth income stream, but it allows you to be the one point of contact for every financial decision your clients make,” he insists. “You are no longer a mortgage broker, but a wealth manager and local expert. Mortgage brokers in the past have applied a ‘set and forget’ mindset to business – I believe mortgage broking and wealth management is an ongoing relationship right through to retirement and beyond.”




Former personal trainer and gym owner Josh Bartlett’s no stranger to running his own business – and mortgage broking seemed to be the perfect fit when he decided to make a career change just nine months ago. “My wife owned a real estate agency, so real estate’s been a bit of a passion for us – it’s something that I’ve always wanted to be a part of, although not as a real estate agent,” he explains. “I attended a Young Professionals in Real Estate evening a while back, saw a couple of brokers speak, and the next day I approached a few people to get the ball rolling.” At the time, Bartlett, 32, had been a personal trainer for over a decade, owned and ran two gyms – which he sold within two weeks of putting them up for sale. He argues that, while they might seem very different, personal training and mortgage broking are actually very similar. “It’s all about people skills,” says Bartlett. “I kept the same clientele for 10–11 years while I was training: I thought that if you could do that in the fitness industry, then you can get clients for life in the mortgage industry.” That attitude is paying off already: since writing his first loan in May, he’s already moved into an office and had a banner month in November, submitting $7.6m, unconditionally approving $5.4m and settling $5.9m. His total settlements for the year stand at $11.6m. Bartlett’s absolute goal is to be settling $10m a month. “It’s a big ambition, but you’ve got to have big ambitions in this industry!” he concludes.




Shannon Lindsay may just be 22 years old, but he’s already writing amounts that would make established brokers green with envy, with $40m worth of home loans settled in 2011. Indeed, despite his tender age and the fact that he’s been a broker for a little over two years, Lindsay’s been obsessed with property since a young age: he started working for NAB at just 17, investing in property at 18 and joined his father’s Smartline franchise at 19. That passion for property that has seen Lindsay diversify beyond vanilla mortgage broking, also operating a property seeking service that involves establishing a client’s borrowing capacity, obtaining preapproval and, from here, sourcing house and land packages to suit their budget. Diversification is also something that runs in the family, with Lindsay’s father also operating as a migration agent. “Because of that, a lot of our clients are migrants – probably about 60%,” explains Lindsay. “It’s really rewarding helping people get their first homes, then coming back and buying investment properties, too.” Lindsay’s not done diversifying, either: having recently completed a Bachelor of Commerce degree in accounting, he’s currently studying for a financial planning qualification, with the aim of becoming a ‘one-stop shop’ for his clients’ financial needs. In the short term, he’s looking to sustain 2011’s performance throughout what could be a volatile year, and to continue to expand his book. Keeping his clients happy is priority number one, though. “When I first started, my dad said ‘whatever you do, look after your clients’,” says Lindsay. “Clients can call me at 11pm – I’ll still answer the phone. If you look after your clients, and look after their best interests, you’ll be rewarded for it, because they’ll refer you to their friends and family. That’s how you grow your business.”

Henan ‘Ben’ Gao, 28, has only been a broker since April 2011, but is already turning heads amongst those in the FAST aggregation group. Prior to setting out on his own, Gao worked as a marketing development and administration manager for a broking firm. In this short time, he has already established himself as a significant business partner to several major banks including Westpac and ANZ in particular. Indeed in December, Gao was FAST’s number-one ranked broker for settlements with ANZ. The volumes he’s writing are certainly impressive for a rookie broker: settled business as of the end of November 2011 stood at $26m, with a further $10m due to settle by February 2012. Gao is expecting to settle upwards of $50m by the end of his first year in business: he’s already employed an additional



two loan writers to cope with demand and has established office premises in the Sydney CBD. He’s also evangelical about the need to professionalise the broking industry. “Compared to financial planning, mortgage broking is too easy to enter,” says Gao. “Too many people are doing it part-time.” He recommends that prospective brokers take the time to gain both professional knowledge and experience before taking the plunge – and that patience is a virtue. Gao’s aims for 2012 including continuing to bolster his reputation within the Sydney marketplace and settling a staggering $150m by the end of the year. A tough target, to be sure – but Gao’s certainly the kind of broker who’s got the potential to achieve it.



If you’re ever stuck for conversation with another broker, try this party trick: ask them about valuations. Almost no other topic will generate a greater response than this hot potato. “I’ve had purchase prices come well under and haven’t been able to proceed with the deal even though they’ve been in good areas. It’s a real tough one. Most brokers I think would have some sort of beef with valuers at the moment, that’s for sure,” says Barry Miller, lending adviser with Kersley Financial Services. Low valuations no longer surprise Miller, who says about 80% come below his expectations. This translates into an approximate 20% drop-off in business. “It’s a bit of a double-edged sword with some customers,” he says. “You’re not getting the new business, but possibly you can retain that older trail because they can’t refinance into something else. But I think we’d all like to be writing more business.”

TOO CONSERVATIVE? A Loan Market poll conducted last October revealed more than 60% of the company’s brokers witnessed falling valuations in the September quarter. “Valuers have been trending on the conservative side when assessing what properties are worth,” remarks


Loan Market COO Dean Rushton. Of the 61% brokers who reported falling valuations, 30% said valuations were down more than 10%, while 31% stated they had fallen by up to 10%. Only 2% of brokers reported an increase in valuations. Online lender MyRate backed brokers’ accounts of conservative valuations, and stated that valuers were increasingly becoming cautious in an effort to avoid litigation from LMI providers. “If valuers ‘get it wrong’ they will often find themselves being sued by LMI companies who may be out of pocket after selling a property to recover funds lent on a loan that went bad,” the company stated. But deliberate conservatism among valuers is hard to verify. “It’s something you’d have a lot of trouble proving, but I’ve got no doubt it’s happening. I’ve had $70,000– $80,000 difference between two valuers, but proving that they’re deliberately low-balling reports would be difficult,” Miller says. He says the outcome of a valuation really depends on the valuer’s personal view of the economy. “There are a few valuers around that I shutter when they are doing the valuation because I know that they don’t have a very strong personal outlook on the economy and they think property prices are going to drop down.” According to Brendan Smith, residential valuations manager for WBP Property Group, the perception that valuers are intentionally conservative in their valuations has been around for years. “I definitely don’t agree. As far as being conservative for the banks’ sake – I don’t think it’s true at all,” he says. “I think you always tend to hear it more when the market is struggling or stagnant or even coming back a bit, opposed to when it’s a fairly

buoyant market. You probably get that more so when the market is weak.” Smith maintains that his company has never received instructions from banks or LMI companies to low-ball their appraisal. “We’ve never had any instructions from LMI companies and I don’t think that would ever happen – definitely nothing that I’ve ever come across.” Founding director of the valuation company JDMA, Jonathan Millar, contends that it doesn’t make sense for banks to pressure valuers to make a low assessment. “There are two factors here. In general, the banks want the valuation to come in as high as possible, because they want to win the business. But our job is also to minimise the risk for the bank and hence the LMI companies. It is our role to find the property’s fair market value. If the valuer has done his/her job correctly they shouldn’t have to be concerned about issues arising from the sale of a subject property in the future. Their job is to value a property as at the valuation date after analysing suitable/comparable sales evidence.” Millar does acknowledge that valuers are facing

Brendan Smith

James Casey

Challenging a valuation Gather evidence as to why the property is worth more – ideally sales data relating directly to the property in question Put your query in writing and submit direct to the valuer via email If your appeal is unsuccessful, you can order another valuation – either independently or through another lender. If obtaining an independent valuation, make sure the valuer is on the lender’s panel

Low valuations kill deals. Frustrated brokers blame valuers for being too conservative, while valuers contend the real culprit is a stagnant market. What can you do to get your deal over the line, asks Andrea Cornish? BROKERNEWS.COM.AU | 41  


mounting PI costs, which make it harder for independent valuation companies to exist. “This is very true. We know of four businesses that have closed their doors because either they couldn’t get PI insurance at all or the cost was exorbitant.” The reason why rising PI cover is important is because, according to the Australian Property Institute, an insurance cover shortfall could put pressure on some companies to make conservative valuations. “The cost of PI cover has gone up quite phenomenally over the last 12 months or so. At the same time there’s been a reduced number of insurers in the market, and also there have seemingly been issues around insurers not wanting to cover any firm with revenue not in excess of $1m. That’s impacted heavily on a lot of sole traders,” Millar says. API National President, Philip Western, adds that lenders are putting full liability for delinquent home loans back onto valuers. “A number of financial institutions are trying to get valuers to contract out of proportionate liability,” he says. The fear of liability could lead some valuers to err towards conservatism in their assessments. “Obviously within the API itself we have professional requirements as far as the minimum standards go, but potentially it could mean that valuers could feel pressure to be more conservative. That impacts on the whole market. Yes it reduces the risk associated with providing valuation advice, but it impacts on the public in terms of consumers’ ability to secure finance,” he says.

80% Barry Miller reckons that four-fifths of valuations come in below expectations

Barry Miller

CHALLENGING LOW VALS Regardless of whether there is an intentional

Managing expectations Lenders are increasingly introducing upfront valuations in an attempt to stop deals falling over. Macquarie’s head of mortgages – product, James Casey, indicates that the financial institution’s upfront valuations are all about improving efficiency. “By understanding the value of the security property at the outset, brokers can more accurately structure the loan application. When the application is then submitted with the completed valuation and with all supporting documents, our credit team can provide formal approval within 48 hours. This helps brokers to manage their clients’ expectations.” AMP Bank head of sales and marketing Steve Craig says that since the implementation of its upfront valuation process, the time taken to formally approve a loan has dropped by an average of two days. “This means a better experience for the customer, as they receive their formal approvals faster. It also means that loans don’t need to be re-worked after submission, especially on occasions when a valuation is returned lower than expected.”


conservatism or not, occasionally valuers do get it wrong. The question is, what can brokers do about it? According to Smith, WBP Property Group is more than happy to review files. “If a broker thinks their client’s property is worth more, if they can provide some evidence to show that – it might be a sale that we weren’t aware of – then we’re more than happy to look at that.” Of those they are asked to review, he says they will revise about 20%. “It might be a minimal change, but if it’s justified then we’ll definitely look at it.” Smith advises brokers to submit their query via email along with evidence. “It can’t be just because you don’t agree with it or my next door neighbour had a valuation some time ago – it actually has to be supported with sales. If you can give me specific evidence related to your property then we’ll look at it. A lot of times we just get an RP Data report of 40 sales but that’s not really addressing the issue, but if you can show that there’s sales there and put it in an email with reasoning we’ll look at it.” Millar advises brokers to bring something to the table that backs their claim that a higher valuation is in order. “They need to provide new information which the valuer has not already taken into consideration. Even if the client can provide one extra sale that supports a higher figure, this will be taken into consideration, but there may be four other sales that prove the property to be worth what the valuer has valued the property at.” But Kersley broker Barry Miller says he doesn’t bother asking valuers to make another assessment. “I’ve been back about five or six occasions, but I won’t do that anymore. Once they’ve set their figure, you won’t change it.” Instead, Miller works on massaging the deal to get it across the line. “We’ll go to another bank and try and get another valuation done. Hopefully we’ll get another valuer, but there’s no guarantee you will because a lot of the banks have a panel and a lot of the valuers now are pretty large companies and they’ll be the same valuers for Westpac, as CommBank or whatever. So you’ve just got to pray that you get another valuation that stacks up,” he says. “If it’s a refinance you’ve either got to go ahead and settle it or try and get them to go ahead with some lenders mortgage insurance or maybe not consolidate so much into it or rework it, some just fall over, so you have to try and massage the loan or deal as best you can.” Miller adds that he tries to manage clients’ expectations at the outset. “When we talk to people about consolidating or refinancing, we say be aware that the valuation is going to be the problem, so we implant that a little bit. Some decide to still try and some say they won’t bother.”  


MANAGED FUNDS Former Wizard man Angelo Malizis joined National Mortgage Company as CEO last October to drive its ambitious growth plans. He tells Kevin Eddy about the company’s expansion roadmap Q: You’ve been with NMC for a few months now – what was the attraction? A: I had been running First Chartered Capital Ltd, which was a 45-franchise branch aggregated business until we sold that organisation to Firstfolio. I stayed on with Firstfolio, helping them integrate the company and with NCCP. During that time, I got in touch with [NMC founder] Steve Dover. He wanted to be sure that, as part of his growth plans, the corporate governance systems in the company were tight. He asked me if I’d like to look at all stages of corporate governance. I did that for a couple of months, until he and I both thought ‘why don’t we use my experience in the marketplace to take the company to the next level’?

Q: What is that ‘next level’? A: I guess NMC has been under the radar for a long time. It’s been around since 1996, slowly building a good reputation in the mortgage management space, making sure the service proposition’s good. Steve’s prided himself on being able to control the whole origination process.


ING and Adelaide Bank, the two principal funders, gave NMC the ability to control that service proposition, and the company slowly ensured its name in the marketplace in terms of controlling that service proposition. When the GFC came along and funding lines were getting restricted, rather than simply battening down the hatches, Steve took the opportunity to invest in the company’s processes and systems – a paperless environment, improved workflow management and so on. The company came of the GFC and could clearly point out that it can process every loan on time, no exception. We realised we’d built something that was different to other mortgage managers, and that we could offer the capacity to do all this back office servicing for clients. We targeted a number of organisations – and still are – who might have access to a broking product, and said, “how about your own product, which we service in the background, delivering a cost of funds that allows you to earn three or four times what you’ve been making’? It’s fully white-labelled, we do all the processing, we guarantee turnaround times, and the ability to control the credit”. We’re in an ideal position to provide a white label process that is a true partnership program that allows total control from end to end. We don’t have to go back to our funders and check on our credit decision. They give us full delegated authority up to $2m, and give us the ability to provide flexible pricing. We allow each broker within our client companies to take whatever pricing they like. The flexible pricing concept has been very successful in terms of our relationship with our first major client, Connective.

Out of office I’ve been married 30 years to a wonderful woman, and I love visiting family and friends with her. I love rugby and cricket, and attending sporting events with friends or sitting in front of the TV with a bunch of mates having a glass of wine or a beer.



Q: NMC’s obviously taking a very proactive approach to white-labelling – really embracing it. That’s interesting in terms of the mortgage manager space, as there’s often an element of resistance there... A: Yes, we’re technically a mortgage manager, but our strategic focus is to build up our servicing facility to a base that we think is superior to any of our competitors. We are positioning ourselves as a servicer. We’re funder agnostic. We’ve built a model where we can plug in another funder, but we’re very particular about these funders. Our current funders give us the control over the way that we provide this offering. That doesn’t mean we won’t be plugging in a third or fourth funder, but they have to trust us to control the process. The difference is that most of the other offerings are single funder models. You go the Advantedge white label route, you get Advantedge funding. Another thing about positioning ourselves as a servicer is that we’re not out there competing with you. Most of the other white label clients/funders have got other group entities that they’re looking after. NAB – and I’m not trying to pick on NAB, they’ve got a very good offering – look after Advantedge, they’ve got to look after Unibank, they’ve got to look after their direct brokers… if inevitably service issues occur, where is the focus going to be? They’re going to focus on their own stuff first before the other stuff gets taken care of. Our view is that servicing is our business. We’re not going to be out there trying to scramble for the next broker. We see our distribution growth coming from our ability to provide servicing. It’s hard to build origination capability. But if we deal with large aggregation groups, real estate groups who have already built established distribution, all we have to do is provide good service and we get a clip of every single loan that goes through the system. Because we’re not a competitor, discussions are pretty easy. By definition, most of the white label providers are competing with the same people to whom they’re trying to sell a product.

Q: Is flexible pricing ‘the next step’ where brokers are concerned – being able to offer individualised rates? A: It’s certainly a significant and exciting part of our interaction with Connective. At the end of the day, Connective has put some parameters around that because its conscious that it’s got a brand to protect as well. It’s not an unlimited sphere where a broker can charge any price – that could potentially be abused. By putting a fence around it, by saying you can charge between x and y, you provide a number of alternatives within that sphere. You can have a mid-range front and a mid-range trailer, a high front and a low trailer, or a low/ zero upfront and a high trailer.


Malizis on… LICENSING It depends where you are in your business life cycle. If you’re an experienced broker who’s been around for a while, you’d probably want a licence to retain your autonomy. If you’re a broker who’s only been in the industry a short time, you’ve got to really think about what it will cost to get your own licence while you’re trying to build a business. COMMISSIONS Any broker who says he wouldn’t prefer a commission system to remain is probably lying. That said, brokers are also recognising that the ability to stay in this industry in a monoline type way is difficult without getting into the ‘trusted advisor’ space. DIVERSIFICATION Diversification is a must if you’re an independent broker. To be able to justify fee-for-service, you’ve got to be able to build up your ability to offer advice. Many brokers are already looking at building capability in the financial planning/quasi-financial planning environment. CONSOLIDATION It’s happening. Size is important: if you can’t grow distribution and you don’t want to play the discount game, you either consolidate or do something different.

Some brokers are new, want to build a business, and take a larger upfront to do so. Others are in a welldeveloped business phase where they’ll happily forego the upfront because they’ve got a business that supports itself with a portfolio under management, therefore they can offer a sharp price to the customer. To be able to offer that choice to the broker is a very positive thing, and brokers like that degree of control – within the parameters set by their aggregator.

Q: What’s your take on the current competitive environment, especially in the context of non-banks? A: I think scale is critical in this marketplace. You’ve got to get bigger by merging, or you run the risk of death by a thousand cuts. How can you compete against the four majors at the moment when they’ve got all the funding advantages? Playing the discount game if you’re a small player is only going to lead to disaster. What we’re finding is that smaller mortgage managers are struggling. They’re having to consider either merging or reinvesting in their business, or getting out. A lot of mortgage managers that were doing $7–8m a month in the old days are finding that the cost of maintaining a mortgage manager infrastructure is very costly. There’s a bunch of mortgage managers which have been let go by their major funders because they’re not reaching their minimum hurdles. Some of the traditional funders are saying to their mortgage managers “if you can’t give me $5m in business, we’re not going to support you” and then they cut them off. We’re appealing to those mid-size mortgage managers through one of our other offerings, our MortgageReady brand. What we’re finding is a lot of mortgage managers still want to have the ability to go to their clients and say they’re still a mortgage manager and provide competitive

“Scale is critical in this marketplace. You’ve got to get bigger by merging, or you run the risk of death by a thousand cuts” pricing, but don’t want to do the arrears any more. So we’ll do your arrears for you – you can still represent yourself as a mortgage manager, we’ll still provide delivered cost of funds pricing, a normal brokerage commission of 0.6 and 0.15, whatever upfront you want, whatever trail you want, but you won’t have to reach the same hurdles. To me, $2–5m a month is good business. The idea as well is that Mortgage Ready acts as an incubator for some of these mortgage managers who may get to white-label status. If we nurture them through the difficult stage and they re-establish themselves – when that $2–5m gets to $15–20m, then we’ll consider them for full white-label status. We’re snapping up a bunch of mortgage managers who are saying they still want their status as a mortgage manager, but can’t afford a full infrastructure now. It allows them to build their volume back up. We’ve got 15 mortgage managers on board, with another dozen in the pipeline. For example, we have Carrington National on board– that’s a typically-sized mortgage manager. That type of organisation, who is looking to maintain its position in the marketplace, needs to have somebody else provide as good a customer experience – if not better – than it was able to provide previously.





What are the issues occupying the minds of Australia’s non-bank lenders and mortgage managers – and what’s next for the sector? MPA finds out BROKERNEWS.COM.AU | 49  



t’s fair to say that non-banks and mortgage managers have been buffeted by economic headwinds over the last few years. The GFC, competitive pressure from dominant banks, regulatory pressures – not least the abolition of deferred establishment fees, a core tenet of many non-bank business models – and a funding squeeze have all taken a toll on alternative lenders. The sector might be bloodied, but it’s not unbowed. MPA has canvassed some of the key players in the industry about their prognosis for the months ahead.

CHALLENGES The view from our panel is that competing with major lenders in the current environment is going to be priority one – not least staying relevant on price without sacrificing margin. The ways in which market players propose tackling this vary – more on these below – but the consensus is that a race to the bottom on price is unsustainable. Provident Capital’s Michael O’Sullivan sums it up by commenting that not even the majors can sustain a price war – and that the real challenge is to find ways to appeal to borrowers on other factors that aren’t necessarily price-related. Barrie Gaubert from Iden Group highlights providing top-notch service as a key competitive advantage that non-banks and mortgage managers can exploit; AFM’s Clint Hawthorne points to making sure non-bank brands are top-of-mind. “The biggest challenge for all mortgage managers is to get brokers Australia-wide to consider our proposition,” he says. “If there is no perceived value by the broker then the chances of doing business are all the more difficult. “I believe another challenge for mortgage managers is to help educate brokers to sell our value proposition to the consumer. Selling a brand that is not a household name can be a barrier; alternative lenders need to get better at assisting brokers at the point of sale.” Self-managed super fund lending is an option that alternative lenders seem to be getting more involved with, with several providers launching SMSF-focused products. Wholesale funder Resimac’s COO, Alan Savin, also suggests that exploiting the niches neglected by the majors could well be the most profitable path. “Borrowers who don’t fit the traditional lending criteria have often been neglected, and as a segment offer great value and opportunity. By ‘traditional lending criteria’ we refer to those potential borrowers that may have been declined by a mainstream lender or mortgage insurer, have an impaired credit history, or are selfemployed,” he says. “Lenders need to have the ability to offer a solution when the opportunity arises.”


MICHAEL O’SULLIVAN, PROVIDENT CAPITAL Provident Capital, established in 1990, is a diversified finance and investment (funds management) group. Michael O’Sullivan is Provident Capital’s managing director.

Where do you see the opportunities in the current market? A: 2011 was the year of the deleveraging borrower. With the likelihood of further interest rate reductions and softened property prices in certain areas, 2012 appears to have the ingredients to encourage buyers to enter (or re-enter) the housing market. Opportunities lie for lenders who can respond both quickly and innovatively to this demand in 2012.

What’s your standout product? A: Provident Platinum is our low-doc/nonconforming lending solution designed to meet the needs of borrowers who do not fit the lending criteria of Australia’s traditional financial institutions or who choose not to borrow from them. Depending on the circumstances of the borrower and the nature of the security, borrowers pay a higher rate of interest than that of traditional lenders. Although we charge a higher rate than your ‘prime’ bank lending rate, Platinum rates are highly competitive within our specialist lending market.

What are your plans for the year ahead? A: Our plans are to continue to build on the fantastic feedback from our initial rollout of our revamped Provident Platinum product which is now available to borrowers looking to purchase or refinance residential investment property. Until recently, the Platinum product was only available for non Code-regulated loans, but is now open to the residential property market with further plans to widen its scope to include other Code-regulated purposes later this year. This will enable us to offer a much-needed solution to a market niche that is currently neglected.

Why should brokers come to you? A: We’re a specialist lender who can offer tailored solutions that aren’t available elsewhere in the low-doc, non-conforming space. We pride ourselves on fast settlements and even faster decisions, with no commission claw back and no LMI.


JOHN MOHNACHEFF, LIBERTY FINANCIAL Liberty was established in 1997, at a time when banks dominated the mortgage market. From its beginnings in specialty mortgages, it has expanded its business to provide prime home loans as well as specialty home loans, car finance for consumers and businesses, commercial mortgages, debtor finance and term investments for retail investors. John Mohnacheff is national sales manager.

John Monacheff

Where do you see the opportunities in the current market? A: At Liberty, we believe that the strength of the non-bank sector lies in its ability to offer more personalised, customised services, both for brokers, consumers and businesses. Smaller lenders are also able to offer faster turnaround times and greater product diversification, which is of particular benefit to brokers who want to diversify their own product offering and increase their income streams.

“Liberty has a product range as diverse as the majors, and all of our products are available to our brokers, enabling them to diversify” What’s your standout product? A: Our SMSF property investment loan, SuperCredit, is a loan that combines with the equity in a SMSF to enable SMSF holders to buy both residential and commercial investment property. Since its launch in December 2010, it has been well-received by our business partners across Australia because it was designed with the third party network in mind.

Why should brokers come to you? A: Liberty offers genuine personalised service, from support from our nationwide network of business development managers and our in-house sales and support team, to direct access to our underwriters across all our asset classes. We have one of the largest networks of BDMs of any non-bank lender in the country; in fact, we have more BDMs than most of the majors. Liberty has a product range as diverse as the majors, and all of our products are available to our brokers, which enables them to diversify their own product range to meet the needs of more of their customers. We are driving real product and service diversification through the one channel. We also offer very competitive rates and fees across all asset classes.




Clint Hawthorne

Established in 2003, Australian First Mortgage (AFM) is a wholly Australian-owned business offering competitive residential, commercial and leasing finance to the Australian market. Clint Hawthorne is national head of sales.

Where do you see the opportunities in the current market? A: Recent announcements from some of our bigger competitors already suggest that the tide could be turning in 2012. Product differentiation and policy niches are a proposition worth considering. Specialist lending and other niche markets are certainly an opportunity for alternative lenders to gain some market share in 2012. Service proposition continues to be a key way for alternative lenders to differentiate themselves from mainstream lenders. Alternative lenders are generally quicker to respond and can react much more efficiently, which we should use to our advantage. Engaging new technology and online trends could provide alternative lenders with the biggest opportunities in 2012.

What’s your standout product? A: We have a number of highly competitive products that cater for a large number of lending niches. Our recently launched Platinum range caters for purchases and refinances and is available to owner-occupied, investment or construction borrowers. Also included in our Platinum range is a market leading SMSF product.

What are your plans for the year ahead? A: Australian First Mortgage experienced a large amount of internal growth during 2011 with a number of key appointments and additions to the sales and credit teams. Throughout 2012, we’re looking to capitalise on our internal investment and increase our loan numbers and market share across all states and aggregator relationships.

“If your deal does not suit one funder’s policy, we can turn to other aligned funders for a solution – all with one application and one credit check” 52 | BROKERNEWS.COM.AU  

Our commercial lending proposition differs to the majority of our competitors. Rather than targeting experienced commercial brokers, we look to assist inexperienced brokers who have limited access to commercial lenders. We assist the broker along the way and help them place a deal which ordinarily they may not have been able to place. We are looking to promote and grow this side of our business this year.

Why should brokers come to you? A: With five different funders to choose from, we offer a very broad solution to mortgage brokers Australiawide. Furthermore if your deal does not suit one funder’s policy we have the ability to turn to other aligned funders to provide your customer with a solution – all with the use of one application and one credit check. We don’t have an abyss at Australian First Mortgage. The chances of your valued customer’s deal getting delayed or lost in the slow, grinding cogs of the big machine are minimal. You can call direct and speak with one of our highly experienced and friendly credit officers, all of whom hold delegated lending authorities with a cross-section of our funders. Furthermore, you can regularly call and speak with our friendly and highly experienced business managers.

GREG MITCHELL, HOMELOANS Homeloans was founded in 1985 in Perth by industry entrepreneurs Tim Holmes and Rob Salmon. The company was listed on the Australian Stock Exchange in 2001. Greg Mitchell is general manager of sales.

Where do you see the opportunities in the current market? A: The abolition of exit fees is not without its challenges. However, these are outweighed by the strong opportunities these challenges bring. Their removal will create a more level playing field with regards to mortgage product offerings. Together with the continuing channel conflict evident between the retail and third party distribution arms of the major retail banks, this provides far greater scope for brokers and consumers alike to engage with our business. We also see the continuing consolidation within the second-tier and non-bank sector as a positive for Homeloans. It means we are now the largest remaining publicly-listed non-bank in Australia – and with fewer brands in the marketplace it shores up our position as a true alternative to the major banks.

What’s your standout product? A: Homeloans’ signature product is the Homeloans Ultra, which is available as a fulldoc, low-doc, term loan or line of credit. A pro-pack option is available, offering a discounted rate in return for an annual fee, and discounted rates are also provided for LVRs of below 75% (or 60% on low-doc). As well as a range of features, this product boasts a very low rate, as low as 6.29% pa.

Greg Mitchell

What are your plans for the year ahead? A: To go back to the basics – ensuring that we provide a level of service that is at a consistently high level at all times. We will constantly review our product offering to ensure that at all times we are able to offer competitive products, both in the pricing and policies associated with our product range. We will also conduct quarterly reviews of those brokers and loan writers who support Homeloans, with the objective of providing incentives for those who continue to support and write Homeloans business.



BARRIE GAUBERT, IDEN GROUP Iden Group was born as HomeLoan Services 10 years ago and renamed as Iden Group in 2005. This rebrand also brought the company’s leasing business, Small Ticket Finance, under the Iden umbrella. Barrie Gaubert is director of Iden. Barrie Gaubert

Where do you see the opportunities in the current market? A: More and more brokers are finding our service proposition, our personal contact, and our problemsolving approach very appealing. Having outstanding and approachable credit managers and BDMs really has helped us engage with brokers.

What’s your standout product? A: We provide, I believe, the best offset loan in the business, complete with internet access, EFTPOS, and 100% offset on all funds – even when on a fixed rate. That, along with a $20,000 linked secured Visa card to top up funds for all purposes, including reducing or removing expensive LMI.

ANDREW CLOUSTON, NATIONAL FINANCE CLUB National Finance Club (NFC), an independent mortgage manager, was formed in 2002. NFC has a portfolio of $1.1bn under direct management and in December Andrew Clouston 2010 became part of the Firstfolio Group as part of the Club Group acquisition. Andrew Clouston is executive general manager of retail distribution at Firstfolio.

Where do you see the opportunities in the current market? A: SMSF lending is a great opportunity for the sector to form new relationships and increase volumes in a stable market sector. Rate activity over the next six months will also create a lot of borrower enquiry and mobility.

What’s your standout product? A: Our pro pack loan is sharply priced, has no establishment fees and is fully featured.

What are your plans for the year ahead? A: Massive – but I can’t tell all just yet! We have a

What are your plans for the year ahead? A: To push forwards into new sectors with a market

solid team of people in place ready for expansion, new systems, hardware and software in place. We have new products coming out, and some new services are also ready to push harder on our lead generation for our brokers too, after some testing this year. We will continue to generate the leads and pass them on to our accredited brokers for fulfilment.

leading SMSF loan.


Why should brokers come to you? A: We are focused on service to brokers and their customers, and offer a multi-funder product suite and flexible commission structures for brokers.


MURRAY COWAN, BETTER MORTGAGE MANAGEMENT Established in 1999 by current managing director Murray Cowan, Brisbane-based Better Mortgage Management has quickly emerged as one of Australia’s leading mortgage managers. BMM’s rapid growth in its formative years was also recognised with three consecutive top 20 rankings in BRW’s Fast 100 report between 2002 and 2004.

Murray Cowan

Where do you see the opportunities in the current market? A: We are noticing a lot of disenchantment with the majors at the moment, with borrowers and mortgage brokers more accommodating to placing their loans with non-bank lenders. The majors are slowly tightening credit policy again, particularly on low-doc loans, which presents an opportunity for lenders like ourselves who are prepared to work with this market segment.

“Every broker and their customer is important to us due to the smaller scale of our business compared to the majors” What’s your standout product? A: Our low-doc product range is very popular with brokers, particularly due to the unlimited cash-out on loans for selfemployed borrowers up to 80% LVR feature.

What are your plans for the year ahead? A: Our goal is to make a significant boost to our online resources this year, including the launch of our online application form which has been developed in-house to specifically meet the requirements of our mortgage brokers and their clients. We will also be upgrading our popular PAL (Place a Loan) online scenario search engine and redeveloping our website.

Why should brokers come to you? A: It sounds like a cliché, but every broker and their customer is important to us due to the smaller scale of our business compared to the majors. We have been built from the ground up with procedures and resources focused on providing and delivering excellent outcomes for brokers and their clients. BMM also demonstrates its commitment to the mortgage broker channel by not marketing our products to the direct public or cross-selling other products to our borrowers. Our product features and rates are comparable to loans offered by the majors and in addition we deliver some loan solutions not widely available in the market.




Would you – and your clients like to retire with $125,000 extra in your super? It’s not as hard as it sounds. Tim McIntyre from MPA’s sister title Your Money magazine investigates



If you are a low- or middle-income earner, you can make personal contributions to your super fund and the government will match them up to $1,000, depending on your income. To get the $1,000 maximum entitlement, you can earn no more than $31,920 a year. The entitlement decreases 3.33 cents for every dollar up to the higher income threshold of $61,920 a year, at which point you’re no longer eligible. You get free money from the government in return for showing dedication to saving. If eligible, just make the contribution and lodge an income tax return. Co-contributions are not subject to tax when paid to your super fund, nor are they included as income in your tax return.


2 SALARY SACRIFICE You can make an arrangement with your employer to forego a percentage of your future before-tax salary or wages and transform it into super payments. Your arrangement must be for earnings, rather than wages or entitlements already earned, and can’t include annual or long-service leave accrued before entering into the deal. Salary sacrifice contributions come out of your salary before it is taxed. The current limits for contributions in a year are $25,000 for under-50s, or $50,000 if you’re over 50. Exceeding these caps will lead to tax penalties of an additional 31.5%. You must keep relevant documents, including copies of your agreement and records of any expenses, for five years. Salary sacrificed into super is currently only taxed at 15% – usually less than the tax rate you would have paid had you taken the amount as income instead. Once retired, you get your sacrificed salary back, knowing less of it has gone to the taxman. Your employer does not have to pay Fringe Benefits Tax (FBT) on salary sacrificed amounts, as long as payments are made to a complying super fund. If you are under 75, your employer can claim a tax deduction on the amount of salary sacrificed contributions it contributes to your super fund. However, your salary sacrifice means your income is lower, which in turn lowers the 9% compulsory super guarantee paid by your employer.

3 SACRIFICE AND SPLIT Once you’ve salary sacrificed, you can then transfer some of that money into your spouse’s super to boost his or her retirement savings and (if they’re older) get access to your retirement savings earlier. You may transfer or split up to 85% of your own pre-tax contributions for the financial year into your partner’s super account. The maximum you can split will be $21,250 or $42,500, depending on your age. The receiving spouse must be under 65 and if over 55, not retired. You can’t split other forms of contributions such as after-tax or government co-contributions. Same-sex and opposite sex de facto couples are also eligible for spouse super splitting.

4 MAKE NON-CONCESSIONAL CONTRIBUTIONS Non-concessional contributions are made using income that has already been taxed. Instead of putting money in a savings account, you can add to your super. The non-concessional cap is currently $150,000 a year. If you wish to contribute more than this, you have the option to bring forward contributions for a threeyear period. You can then contribute up to $450,000, but must not add to that amount for the remainder of the



three-year period. (The ‘bring forward’ rules are only available if you are under 65, but the annual contributions cap is in place until you are 74.) There is no tax on concessional contributions; the money has already been taxed as part of your income. The returns on the money you put into your super fund are taxed at up to 15%, compared to the possible 45% if you invested it outside of super. Excess contributions tax is 46.5%, so stay on top of all potential contributions and make sure you do not breach the statutory limit.

5 SWITCH INVESTMENT OPTIONS WITHIN YOUR FUND Your super fund might offer a choice of investments, allowing you to select from shares, fixed interest, cash or property. If you do it carefully and for the right reasons, switching investment options can improve your super balance. Contact your super fund for details on how to switch as rules may vary. Many funds will let you switch for free, at least the first time. It is then a matter of deciding which investment option you want to switch to and instructing your fund to carry out the switch. You can tailor your fund’s investment options to your own appetite for risk and reward. If you prefer cash or property more than shares, the option is there to take charge. Some funds allow members to select a large portion of the underlying investments, while others let you mix and match types of investment.

SMSFs can continue after your death, benefiting surviving family members if structured that way 6 SWITCH FUNDS Most people are automatically placed in a super fund when commencing a job. Many do not bother to consider whether it suits them or not. Super is your money and if you don’t like your fund, you can jump ship. If you decide to switch funds, you must notify your employer and complete a Standard Choice Form (SCF), available from the ATO. After you supply the information, your super fund must process the transfer within 30 days. Your switch can get you access to better investment performance and lower fees.


If your fund is charging higher fees than a similarly performing fund, you will benefit from a move. You might also want to make the change to a fund with a better historical performance than your own. Fund performance can change at any time, as it depends on the assets the fund is invested in. Retail funds usually charge the highest fees, while not-forprofit funds charge lower fees.

7 A SELF-MANAGED SUPER FUND (SMSF) Self-managed super funds are growing in popularity in Australia, due to the freedom to diversify investments and actively manage money. You can set up an SMSF by yourself or with a maximum of three other people. The ATO recommends seeking advice from an SMSF professional before setting up. The administrative rules and regulations are many and the tax penalties harsh. You must then choose the trustee structure (corporate or individual), draw up a trust deed with the help of someone qualified, register with the ATO and open a bank account in the fund’s name (not your name). An SMSF allows you full control of your retirement savings. You can invest as much as you want in different areas and change paths as markets fluctuate so long as you stay within the rules. If you have a decent amount of money in your fund you can run an SMSF for less than the annual fees of a conventional fund. SMSF contributions are tax deductible and earnings are taxed at a maximum of 15%. SMSFs can continue after your death, benefiting surviving family members if the fund is structured that way. It’s not all roses, however. Setting up an SMSF means the onus is completely on you to ensure you comply with stringent superannuation and tax laws. Compliance equals a hefty amount of paper work and attention to administration. Your investment freedom may come at the expense of a professional’s know-how. You may have to seek help from brokers and advisors, at a price. Regular super funds often come with some level of insurance coverage. Opening an SMSF means you are responsible for organising any life, disability and income protection insurance you may need.

This is an edited version of an article that originally appeared in Your Money magazine, a Key media publication. Your Money magazine is available from all good newsagents. For more personal finance news and tips, visit




In just two-and-a-half years, Warren Dworcan has built an award-winning broking business. Situated in Osborne Park, Rate Detective Home Loans is already one of the top performing brokerages in Western Australia and not far off some of the industry’s more established players in other parts of the country. Being a relative newcomer, Dworcan grew his business substantially in a short time period. Dworcan more than doubled his settlement volume in 2011 over the previous financial year, and is on target to doubling his volume again in 2011/12. He says watching his base grow and “the referrals come flying in” has been very exciting, adding “it’s been pleasing to see organic growth from new, innovative ideas”. MPA caught up with Dworcan to find out how he has achieved this remarkable growth.

Q: How long have you been in the business? A: I have been in the business since August 2009, prior to which I was learning about the industry and trying to gain as much information and knowledge about potential clientele as well as enhancing all product offerings.

Q: What do you attribute your success to? A: I think a good mortgage broker is one who is good with numbers, has people skills and at all times keeps people informed and educated. One has to allow people to make decisions that suit their needs by providing them with as much information and advice as possible. To be successful, timing is imperative, not to mention the obvious – hard work. In order to be successful I have needed to become somewhat of an expert in the mortgage field. This has been achieved in the short time I have been in the industry through training, education

CLUED IN Rate Detective Home Loans’ Warren Dworcan experienced a meteoric rise up MPA’s Top 100 list, ranking 7th in 2011, up from 71st the previous year. He shares the secrets to his success 60 | BROKERNEWS.COM.AU  

and continuous reading of all new concepts. Having been blessed with relatively personable characteristics – and talking to different people and, more importantly, listening to successful people has enabled me to create opportunities and learn much in a short period of time. I am fortunate to be surrounded by members of staff who have a positive and infectious work ethic. My thanks to my father Tony, to Rael Bricker, Jill Lee, Yvonne and the rest of the team.

Q: What keeps you motivated? A: My desire to succeed and realise my full capabilities keeps me motivated. I also get a great deal of satisfaction helping people reach their goals. 

Q: What was the biggest turning point of your career? A: Deciding to venture out on my own and taking the bull by the horns was a huge risk, but one that has proved to be worth taking.

Q: In what ways has the industry changed for the better since you started broking? A: Uniform regulation across Australia. While it has been quite time-consuming, WA already had quite high standards in place, and so NCCP has been a less onerous transition for us.

Q: In what ways has it changed for the worse? A: Unfortunately, commission reductions; however, there have been signs that this will change for the better.

Q: What kind of advice would you give to a new mortgage professional?

A: Try and find someone within the industry who is


successful and learn from them. Always make sure that the client is at the forefront of every decision that you make, and provide them with unparalleled service at all times.

Warren Dworcan director of Rate Detective Home Loans ++ Total settlements 2011: $93.6m

Q: Have you embraced technology and social media in your business? 
 A: Yes, we have a Facebook page that is frequently

++ No. of loans: 220

updated. We are also on LinkedIn. These provide us with a medium to communicate with existing clients and enables us to create new opportunities.

++ Aggregator: FAST

Q: Do you diversify and if so, in what areas? A: We offer complementary insurance reviews for our

++ Education: University of Notre Dame, LLB, Law

clients as well as material relating to property and related areas.

Q: What forms of marketing works best for your business? 

 A: Word of mouth and internet marketing. Q: Do you feel fee-for-service is the way forwards in the industry? A: I don’t necessarily believe fee-for-service is the way forwards, however, it appears that a hybrid model consisting of a small fee as well as the current commission structure is the most likely outcome.

Q: What is the most challenging issue facing the industry at the moment? A: Consumer confidence and worldwide economic stability, as well as stricter lending criteria.

++ Achievements: 2011: MPA Top 100 – ranked 7th nationally; AMA – Small Brokerage of the Year finalist; MPA Young Gun; NAB Broker Top Individual Writer in WA; 2010: MPA Top 100 – ranked 71st AMA Young Gun finalist ++ Target for 2011/2012: Double volume of loans settled



First timers on the brink

More than 150,000 visitors use every month – and its user activity statistics provide a unique insight into Australia’s borrowing trends Purpose of loan 60% 50% 40%

Nov 10


Nov 11

20% 10%









How soon do you want a mortgage? 50% 40%

Dec 10


Dec 11

20% 10%





Enquiries from first homebuyers accounted for almost half of all enquiries to in December – continuing strong interest from the previous month. The latest Your Mortgage Index has revealed that enquiries from prospective first homebuyers were 5% higher than the same month last year, and just 1.5% lower than November 2011. Refinancing was the next strongest category, accounting for 22.8% of enquiries – a fall of 8.8% from December 2010. It looks like buyers are certainly poised to act, too, with 85% of mortgages either required straightaway or in the next few months. Could 2012 be the year that the market comes out of the doldrums? As usual, NSW still draws the lion’s share of enquiries with 35.2% of all searches, followed by Queensland at 22.7%. In fact, the Sunshine state pushes former second-place state Victoria into third position – a sign that there could be light at the end of the tunnel for the Queensland markets.

Buyer activity by state 35% 30% 25%

Dec 10 Dec 11

20% 15% 10% 5% 0% ACT








Type of loan 70% 60% 50% 40% Dec 10 30%

Dec 11

20% 10% 0% SVR






Is it time to invest? MPA checks out the key indicators

THE BIG PICTURE House price growth 2008–2011 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000





n Perth

n Melbourne

0 Sep 08

n Hobart

n Adelaide

n Brisbane

Sep 09

n Darwin

n Sydney

Sep 10

n Canberra

Sep 11

Source: Residex, October 2011

Unit price growth 2008–2011 $500,000




$100,000 n Perth 0 Sep 08

n Melbourne

n Hobart

Sep 09

n Adelaide

n Brisbane

n Darwin

Sep 10

n Sydney

n Canberra

Sep 11

Source: Residex, October 2011

2011’s been a tough year for Australian property markets. House price growth across almost every market has stopped dead in the last year, and has seen a definite downward slide in Melbourne, Darwin and Perth. Even Sydney, one of the more robust performers, is currently seeing a dip in median house prices. Unit markets have remained much more robust, especially in the NSW capital, where values continued to increase despite a mid-year lull. Units in Melbourne, Darwin and Perth also all followed the slide in house values, and units in Canberra have seen a slide after solid growth during 2011. Interest rate cuts may well see an improvement in confidence and a resurgence in activity across the country, which could arrest the decline in parts of the country: whether buyers will see this as a call to action or just a temporary respite remains to be seen, however.




Growth prospects POSTCODE















Chifley (units): -33% over 12 months Median price: $342,500
















FASTEST GROWTH Turner (houses): 37% growth over 12 months Median price: $1.125m



Canberra city (units): 6.95% Median weekly rent: $585


Source:, October 2011

Growth prospects POSTCODE















Peak Hill (houses): -45% over 12 months Median price: $58,250
















FASTEST GROWTH Beecroft (units): 42% growth over 12 months Median price: $770,000

BEST RENTAL YIELD: Boggabri (houses): 10.4% Median weekly rent: $290


Source:, October 2011

Unless otherwise stated, all figures sourced from RP Data, September 2011. DSR is a score out of 48 indicating the supply imbalance in a given suburb (and therefore capital growth potential). It takes into account eight property variables that drive prices, such as rental vacancy, days on market, stock on market, discounting, yields, auction clearance rates, proportion of renters and the number of people searching for properties online. For more information, visit




Growth prospects LOCALITY
















Driver (units): -18% over 12 months Median price: $313,000

















FASTEST GROWTH Darwin River (houses): 46% growth over 12 months Median price: $525,000

Araluen (houses): 6.84% Median weekly rent: $615


Source:, October 2011

Growth prospects LOCALITY




Mulambin (units): 42% growth over 12 months Median price: $229,000













Westcourt (units): -47% over 12 months Median price: $170,000

















BEST RENTAL YIELD: Dysart (houses): 13.42% Median weekly rent: $1,200


Source:, October 2011

Growth prospects LOCALITY
















Clearview (units): -34% over 12 months Median price: $260,000
















FASTEST GROWTH Brighton (houses): 45% growth over 12 months Median price: $840,000

BEST RENTAL YIELD: Carralickalinga (houses): 11.19% Median weekly rent: $780


Source:, October 2011


Growth prospects LOCALITY
















Sheffield (houses): -32% over 12 months Median price: $180,000
















FASTEST GROWTH Strahan (houses): 29% growth over 12 months Median price: $241,500

BEST RENTAL YIELD: Zeehan (houses): 11.45% Median weekly rent: $148


Source:, October 2011

Growth prospects LOCALITY





FASTEST GROWTH Sandy Point (houses): 49% growth over 12 months Median price: $435,000












Albert Park (units): -42% over 12 months Median price: $727,000
















BEST RENTAL YIELD: Dimboola (houses): 9.61% Median weekly rent: $145


Source:, October 2011

Growth prospects LOCALITY
















Norseman (houses): -45% over 12 months Median price: $60,000
















FASTEST GROWTH Derby (houses): 43% growth over 12 months Median price: $550,000

BEST RENTAL YIELD: Pegs Creek (houses): 12.81% Median weekly rent: $1,675

Source:, October 2011



Favourite things... Stephen Porges CEO, Aussie Place to be: With family and friends in

Sport: Rugby,

remote Australia or Africa

tennis and horseriding

Drink: Wine with friends

Music: Bob Dylan, for superb poetry – or Gregorian chants for ultimate calm and relaxation

Food: A good juicy steak

Vacation spots: Bendalong in NSW, New York or Kenya

Movie: Out of Africa

Books: The Old

Hobbies: Farming and gardening


Man and the Sea, by Ernest Hemingway; In Search of Excellence, by Peters and Waterman


A day in the life of…

Aaron Milburn is head of broker distribution at Citibank 8.15am

Meet with Matt Wood, our National Key Accounts Manager, to discuss recent focus group feedback and how we can incorporate the changes being asked for by our brokers into our existing process. As we continue to grow, it is essential that we regularly ask for feedback, ideas and suggestions from our stakeholders to constantly challenge ourselves. That way, we can ensure we are delivering what is required.

9.00am 5.45am

Alarm goes off. Wake up to another cracking Sydney day and take what can only be described as the world’s most pampered dog for a walk – she’s an RSPCA rescue dog, so I am guilty of overcompensating.


Due to a few early deadlines, I jump on the bus instead of my normal walk to work. I grab a seat next to a bloke that has the uncanny ability to snore louder than a jet aircraft all the way to Park Street.


Grab a coffee and go through the newspapers online and our internal Global News update so I am wellinformed of everything that’s happened across the world overnight.

“It’s another cracking Sydney day and I walk the world’s most pampered dog” 70 | BROKERNEWS.COM.AU  

Catch up with our Credit Operations area to check how deals are progressing, find out any common issues that require further training assistance and identify some opportunities to improve our service delivery.


Chair the daily state manager call: this is where we have our team of state managers dial in for a quick five to 10-minute update on plans for the day, appointment levels and what support they require from myself and the team to deliver for their brokers. It is always upbeat and gives everyone absolute clarity about what is happening across the business and industry for the day.


My favourite part of my role – hitting the road. As I settle into my new role at Citibank, I am spending as much time as possible out on the road. It’s so important to meet key brokers and hear first-hand feedback on our proposition. Today we are visiting some city-based brokers throughout Chinatown, giving me an extra walk to help keep my energy levels up!


Grab some lunch on the way back to

the office. Despite much mental resistance, I force myself to choose a salad from downstairs, regretfully reflecting on my holiday season indulgences.


Meet with our marketing team to discuss the various ways we can promote Citibank and support our brokers by increasing their individual community brand awareness. We have an exciting year ahead for marketing and events and the meeting gives me full confidence that we are on track to achieve our goals.


Meet with Vibha Coburn, director of mortgages, to discuss how we are tracking towards our plans for Q1. Vibha and I discuss the promotion of our Dining Program, marketing, building of broker bespoke management information, planning of broker luncheons and various other key issues. We are both passionate about delivering for our brokers so today’s meeting, as always, is very productive.


Catch up on the various emails that require more in-depth attention than a quick read on the Blackberry.


I am attending an aggregator function this evening so grab a cab to North Sydney and enjoy a superb networking evening. It’s great to be able to meet a number of Citibank supporters and have some interesting conversations with brokers who haven’t used Citibank before. After talking through our offering, especially our fixed rates, I leave convinced we may have some of those brokers submitting deals in the very near future.




Madeleine Shaw explains why it’s essential to make time to play every day

Madeleine Shaw is an executive coach and facilitator who helps people create and achieve success – in their careers and as flourishing human beings. As a former lawyer and business affairs executive with extensive experience in private practice, large and small corporate environments and the public sector, she has a unique understanding of the cultures in which her clients operate. For more information, visit madeleineshaw.

We all know about the basic human drives to eat, sleep and reproduce. These are essential for us – but they’re also essential for an ant. What is it that makes a human life well lived? Increasingly, scientists think there is a fourth basic drive: the drive to play. We spend a lot of time – perhaps all our adult lives – busily ‘doing’ and ‘achieving’. When that’s all there is, though, life is pretty grim. A leading researcher in this area, Stuart Brown, thinks the opposite of play isn’t work – it’s depression, a life without pleasure or joy. What is play? Imagine a dog ecstatically chasing a ball on a beach, kids jumping on a trampoline, an artist absorbed in her painting. That’s play. It’s a state of curiosity and fun, with no immediate purpose other than itself. Being fully in the moment, not worrying about the past or the future.

1. Find your key to play This is to get us back in touch with the joy we have all experienced at some point in our lives. Think back to what you did as a child that you really loved, that swept you away, gave you joy. Re-live it: see what you saw, hear what you heard and, most important, feel what you felt. That feeling is your key to play. Where can you get more of it in your life now?

2. Play outside work Schedule in time for play just as you do for anything else. It might be tennis, horse riding, painting, learning the piano, gardening, playing footie with the kids. It doesn’t matter, as long as it’s fun. And prioritise: when you’re with a client, you don’t constantly read emails or take calls – so treat this the same way.

3. Playfulness at work Play will actually improve your efficiency and productivity. It’s amazing what happens if you simply bring a playful attitude with you to work. You smile more; people respond in kind. Work is still important, but doesn’t seem so crushing. You are energised,


But you live in the real world of targets, client demands and deadlines. Why bother with play? The research shows that play actually fires up our brains, setting us up to thrive. Better decision-making, more creativity, more joy. People who don’t play tend to be more rigid. They are less able to cope with the challenges of daily life – hardly a recipe for triumph. How can you incorporate play into your working life? Here are five tips to set you up for some fun... and for success. Have fun! imaginative, switched on. You can be more structured about triggering the play state at work: friendly competition, internal games, brainstorms, exploratory states. Paradoxically, real success comes from more than focus, drive and determination. It comes to those who love what they do – for them, work is play.

4. Press pause on the world Several of my clients have found it useful to imagine ‘pressing pause’ on the world while they choose to play. I do this myself – when I’m playing with my young daughter, I visualise the whole world temporarily freezing around us. It’s just me and her. I’ve found that even two or three minutes of fully-focused play like that is much more rewarding for me, and satisfying for her, than an hour of scattered, diluted attention.

5. Read the book If you’d like to know more, I highly recommend Stuart Brown’s book, Play: How It Shapes the Brain, Opens the Imagination and Invigorates the Soul. If that doesn’t get you away from the desk and outside with a smile, nothing will.


Mortgage Professional Australia magazine Issue 12.03  
Mortgage Professional Australia magazine Issue 12.03  

The magazine for mortgage professionals in Australia.