www.brokernews.com.au issue 9.6
ever changing credit policies!
ervice is at 20 year low
provide an even playing field what about MFA
Adelaide and Citibank have gone the "extra mile" worsening service, incompetence and poor attitudes s poor service
Brokers on Banks 2009
CBA has the best BDM is the industr
what about MFAA? what do they do for us?
more work and less money TAX ADVICE 30 JUNE SAVINGS TIPS
train your staff to read brokers' n
BUYING LEADS WHAT SHOULD YOU PAY?
PROFILED St.Georgeâ€™s Steven Heavey
9. 06 issue
It seems no one, least of all the major banks, was truly prepared for the extent to which borrowers would flock to brand quality. Ninety percent of all lending is now going through the Big Four, which is in part a shocking outcome of the global financial crisis. But popularity does not come without a price, as MPA’s annual Brokers on Banks survey revealed. Many brokers – still feeling the sting from last year’s commission changes – took this opportunity to vent their disappointment for seemingly having to do more for less. The survey, taken at a time when service levels were blown out way beyond normal time frames, elicited frank criticism from brokers. Not surprisingly, banks took a beating on loan approvals and turnaround times. But there were some highlights for banks, particularly those players that demonstrated consistent policy implementation and open communication. But if Australian brokers feel they have got it tough, perhaps they should read about how their northern UK brothers are surviving, where brokers receive no trail fees and an average upfront of 0.35%. Also in this issue are tax tips that will help brokers minimise their tax obligations and maximise their business potential. All the best,
Andrea Lavigne Editor
MPA 2.0 Our multimedia edition features on-camera interviews with the industry’s biggest players. Visit Brokernews. com.au/MPA to hear their thoughts on the hottest issues facing mortgage brokers.
42 tax advice
Some tips to save money with the end of the financial year approaching
28 Brokers on banks They have most of the lending market, but what kind of service are they providing? We asked brokers to rate them.
9. 06 issue
Look for extras in MPA's 2.0 eMag edition. On-camera interviews with...
8 Kym Rampal
8 Mark Haron
20 Steven Heavey
24 Murray Kent
28 Brokers Said What?
features 40 Does negative gearing make sense for your customers in the current environment? Margaret Lomas looks at different strategies 44 Lead generation: Tim Neary investigates how brokers can get the leads they deserve
50 News: A review of news in the world of non-bank lending and mortgage management 54 Leader profile: Clive Kirkpatrick, head of franchise business at RAMS 58 Industry profile: Mortgage Ezy
PROFILES 20 Leaders: Steven Heavey 24 Brokers: Murray Kent
62 Restaurant review: Efendy
64 My favourite things: Steve Sampson
Margaret Lomas is the director of Destiny Financial Solutions, a qualified financial advisor and author of a number of books, including 20 Must Ask Questions For Every Property Investor. For more information visit: www.destiny.net.au
director of The Quinn Group, is an experienced lawyer, accountant and educator.
JOURNALIST Tim Neary
SALES MANAGER Rajan Khatak
PUBLISHER Mike Shipley
PRODUCTION EDITOR Tim Stewart
Account MANAGER Simon Kerslake
DIRECTOR Claire Preen
DESIGN MANAGER Jacqui Alexander
HR MANAGER Julia Bookallil
REGIONAL MANAGING EDITOR George Walmsley
DESIGNER Ben Ng
MARKETING MANAGER Danielle Tan
SENIOR WEB DEVELOPER Storm Kulhan
MARKETING COORDINATOR Jessica Lee TRAFFIC MANAGER Stacey Rudd
was admitted as a solicitor in the Supreme Court of New South Wales in December 1992. He is the principal of Bransgroves Lawyers. He has practiced exclusively in the field of mortgages since 1998.
18 News analysis
SALES DIRECTOR Justin Kennedy
EDITOR Andrea Lavigne
MANAGING EDITOR Larry Schlesinger
MPA’s website reviewer is from Finance Tools, which specialises in website development, copywriting solutions, mortgage calculators and newsletters. Finance Tools provides support for members of the financial services industry.
Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as MPA magazine can accept no responsibility for loss Subscriptions tel (02) 8437 4731 fax (02) 8437 4753 firstname.lastname@example.org Advertising enquiries tel (02) 8437 4772 email@example.com tel (02) 8437 4786 firstname.lastname@example.org Editorial enquiries tel (02) 8437 4790 fax (02) 9439 4599 email@example.com Key Media Pty Ltd Level 10, 1 Chandos Street St Leonards, NSW 2065 www.mortgagemagazine.com.au
This magazine is printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry
Home loan rates: Where are they headed? Your Mortgage magazine asked itâ€™s panel of economists and mortgage industry experts where they thought the average standard variable rate would be at the end of July 2009, and whether borrowers should consider fixing or staying variable. After recent rate cuts by the RBA and major lenders, we calculated an average standard variable rate of 5.82% as at April 2009. These predictions by no means reflect where the rates will be for the banks or other lending institutions surveyed, and are instead intended as a guide. Forecasts may have changed since the survey was taken on 8 April 2009. End of July 2009
Property and Share Investment
BT Financial Group
AMP Capital Investors
Loan Market Group
Inspired Finance Group
Access Loans P/L
Source: Your Mortgage
30 / 06 / 2010 the date that all brokers must be licensed by
licensing: WA brokers to be streamlined A history of strict licensing will stand WA brokers in good stead when it comes to obtaining the new Australian Credit Licence. WA brokers, along with banks, credit unions and other ADIs, will undergo a much easier process to obtain the new Australian Credit Licence as part of the proposed new legislation. Under the National Consumer Credit Protection Bill 2009, finance brokers who have met the requirements to hold either an 'A' or 'B' Class licence under the current WA licensing regime can be streamlined to a licence without having to again demonstrate their competencies and qualifications. Explaining this streamlining, the bill said such participants "have been subject to sufficiently rigorous levels of supervision". "Streamlining will mean that the application procedure will be simplified. Applicants will be able to apply for a licence without having to provide detailed material to ASIC. However, once licensed they will still have to meet the same obligations as all other holders of an Australian Credit Licence," the bill explained.
Lawfund's admin fee to ex-brokers slammed Firstfolio’s decision to charge ex-Lawfund brokers a monthly administration fee is a blatant money-grab, said Connective’s Mark Haron. The Connective principal backed comments made by Finconnect’s general manager Tanya Sale, who said Firstfolio “punished people for leaving”. Firstfolio announced that it will be charging ex-brokers a $150 fee (plus GST) to disperse trail payments starting this month. Haron added that this is exactly why brokers should read their aggregator agreements carefully. “They’re doing it because they can. A lot of aggregators have got brokers over a barrel. And even when a broker leaves an aggregator, they think ‘OK, I’m out, I’m alright now’, and some aggregators just turn around and hit them up more.” Connective placed third in MPA’s Brokers on Aggregators survey, due in large part to the integrity of its agreement, Haron said. “It’s quite clear what brokers get within our agreement structure. And one of those is the capability for brokers to reassign or transfer their trail book in the business from under our platform. It’s not dissimilar from the financial planning services industry. And with the focus on customer service, brokers that are truly servicing their clients should continue to get their trail no matter where they are.”
NAB favours four-star brokers NAB has introduced further changes to favour its four-star rated brokers. All brokers who fall below the lender’s four star rating no longer have access to LVRs over 90%. Additionally brokers who rated below four stars are no longer able to access online client information. A communiqué sent to broker partners said: “NAB understands that this matter needs to be managed effectively and your NAB Relationship Managers will work closely with you to assist in moving your rating up to the four star rated level.”
Intellitrain launches tech-tools Intellitrain launched tech savvy web products to assist brokers. To give brokers a leg up in meeting their ongoing education requirements, Intellitrain combined the launch of its new website with the launch of its monthly ‘webinar’ program. The webinar is a web seminar which presents a different topic live over the internet each month. It makes use of tools such as a whiteboard, PowerPoint slides and interaction with participants who are able to ask questions and discuss topics via text or audio. Topics range from soft skills such as sales, communication and lead generation through to technical sessions on compliance and lending products. Each session runs for two hours which means participants receive 1.5 CPD points towards their annual requirement for membership with mortgage industry bodies. “Brokers can now obtain almost their entire year’s CPD points without leaving the office. This is not only great for the environment, but comes at a fraction of the cost of other training options,” said Paul Eldridge CEO at Intellitrain.
See the interviews live at Brokernews.com.au/MPA
Loan Market expands in NZ
Principal Mark Haron discusses what makes Connective different from other aggregators
The opening of a new office near Auckland marked the Loan Market Group’s expansion across the Tasman. The new branch is located in the seaside town of Orewa on the North Auckland Peninsula. Loan Market Group executive director John Kolenda said the group was seeking opportunities to expand its presence in New Zealand. The new branch will be owned and operated by Trevor Tiplady, who joined the Loan Market following the withdrawal of Wizard Home Loans from NZ in December 2008. Tiplady was approached by "all the major aggregator groups in New Zealand" before choosing the Loan Market. The broking group has over 75 shopfronts in both Australia and NZ.
Managing Director Kym Rampal argues good aggregators come in small packages
Government and regulation
Govt boosts hardship assistance The government has increased the hardship threshold to $500,000 in an attempt to help consumers struggling to pay their mortgages. The Minister for Superannuation and Corporate Law, Nick Sherry, said the government will be introducing further regulation of consumer credit contracts in order to allow consumers to request a change to certain terms of their credit contract on the grounds of hardship. Consumers will also be able to request a postponement of enforcement proceedings. The threshold to access the hardship arrangements is 110% of the average loan size for new dwellings in NSW, as determined monthly by the Australian Bureau of Statistics. The threshold was lifted from $312,400 to $500,000 on 12 May. Nick Sherry Sherry said that as a result of this threshold level many families may currently be missing out on the help. "We don't believe that either the current amount or the way it's calculated are in the best interests of hard-working families, so we're increasing the threshold to $500,000," he said. “We're also putting in place a new, simple and clear way of adjusting the threshold upwards in future, if we need to." The changes are contained in the National Consumer Credit Protection Bill 2009, and will take effect on 1 November.
stimulus package aids borrowers Consumers are benefiting from the Federal Government’s economic stimulus efforts, according to market researchers. According to Fujitsu Consulting’s April 2009 Mortgage Stress-OMeter, the number of households experiencing mortgage stress fell by 2.8% compared with March. 568,000 households were in some degree of pain, compared with a peak of 900,000 in August 2008. Severely stressed households (those facing a potential sale or foreclosure) rose by 3%, despite lower interest rates and government payments. At least 101,000 households are still at risk of having to sell up or lose their homes thanks to higher unemployment levels. Mild stress fell by 4.9%, thanks to the second round of stimulus payments. Martin North, the managing director at Fujitsu Consulting, said: “The additional government intervention has had a significant positive impact on mortgage stress and this will continue for a couple more months.” According to Fujitsu, falling investment returns are severely impacting some households, especially at the more affluent end of the market. “Falling income from bank deposit accounts and superannuation is stoking Affluent Stress,” North said. North said if unemployment reached 7.5% by December 2009, this would translate into over 1.2 million households experiencing some degree of stress, “of which nearly 400,000 would be close to the edge”.
Treasurer advises borrowers to "shop around"
1.2 million the number of households that could be experiencing mortgage stress should unemployment reach 7.5% by December 2009
Federal Treasurer Wayne Swan can’t give borrowers advice on whether to get a variable for fixed rate loan, but he does urge borrowers to "shop around". "My advice would be to shop around. That's what my advice would be – for people to go out there and compare the rates from the various banks," Swan said in an interview with breakfast TV host Karl Stefanovic on Channel 9. During the interview Stefanovic called the treasurer a "smart bloke" who understands the economy. He also forced the treasurer to reveal that he is someone not directly affected by mortgage lending rates. Swan said he was in the "fortunate" position of no longer having a mortgage, though he had had one for 20 years.
Breaking grants down by state and territory Each state and territory has its own local rules for the FHOG and boost. For example, the Northern Territory offers a boost to non-first homebuyers and NSW offers an additional $3,000 to first homebuyers who build a new home. The details are listed in the table below.
New South Wales The First Home Plus scheme gives exemptions or concessions on stamp duty for first homebuyers, including vacant land upon which you plan to build your home. The rule is that if your home is purchased for less than $500,000, you pay no stamp duty as a first homebuyer. This is one of the larger stamp duty concessions in the country. The following calculations take that into account, as well as the additional $3,000 to first homebuyers building a new home. Queensland Similarly to the situation in NSW, first homebuyers in Queensland pay no stamp duty on property valued up to $504,999. Otherwise, the FHOG follows the standard offering nationally.
This information was correct at the time of going to print. It may change subject to state government budget announcements.
Victoria In Victoria, a first homebuyer pays stamp duty, but does receive a First Home Bonus (FHB) of $3,000– $8,000. The latter figure applies to building a new home in a regional area.
Total savings Total savings on a $400K est’d without the home FHOG boost
Total savings on a $400K new home
Total savings without the FHOG boost
Total savings on a $350K est’d home
Total savings without the FHOG boost
Total savings on a $350K new home
Total savings without the FHOG boost
Total savings on a $385K est’d home
Total savings without the FHOG boost
Total savings on a $385K new home
Total savings without the FHOG boost
Western Australia The basic FHOG is available in Western Australia, along with a stamp duty concession for properties valued up to $500,000. No other concessions are available. Australian Capital Territory The ACT offers a slightly more complicated version of the stamp duty concession, requiring those applying to satisfy an income test. For example, a buyer with no children can’t earn more than $120,000 annually. South Australia In South Australia, first homebuyers can qualify for a $4,000 bonus if the property does not exceed $450,000. There is no stamp duty concession. Tasmania The rules are slightly different from the norm in Tasmania, where the median value is also lower. Thus, a $400,000 home doesn’t qualify for anything more than the standard boost, but a home purchased under $350,000 is eligible for up to $4,000 in stamp duty concessions. Northern Territory Like Tasmania, first homebuyers in the Northern Territory who keep their purchase below a certain threshold, in this case $385,000, are eligible for a stamp duty concession. In the Northern Territory, that bonus equates to up to $15,515 savings on a $385,000 home.
Westpac’s new maximum LVR for new customers
St.George shortens service delays St.George enlisted the help of its branch network lenders to bring service levels back within normal time frames. Over the month of April, the bank utilised its branch network lenders to process 2,000 PAYG files. The broker processing unit oversaw the files and retained contract ownership. St.George assured brokers that the branch network lender would not contact customers but would only communicate with the broker involved should more information be needed for the file. It also promised to recruit lenders to cope with growing demand and maintains that its broker processing unit is working overtime. St.George advised brokers to use Atoms Online Tracking for loan status enquiries and ensure that all required supporting documentation is submitted as outlined in its home loan checklist. Brokers can also check service levels on the bank's broker website which is now being updated daily.
Brokers said what? This year, MPA received more than 300 responses to our Brokers on Banks survey and many took the time to not only rate banks, but comment on their performance. Indeed, not all of the commentary was fit to print! To read more from our survey visit Brokernews.com.au/MPA where we have compiled a list of most “insightful” (ie, colourful) comments. see the Survey online At Brokernews.com.au/MPA
Westpac lowers LVR for new bank clients In line with moves by the other majors, Westpac reduced its maximum LVR for new borrowers who are not already a client of the bank. In a communiqué sent out to brokers in April, the bank said it found it necessary to implement some changes to its existing policy given the current climate. As part of the changes, Westpac's maximum LVR was dropped to 92% (inclusive of LMI) for non-Westpac clients. A maximum LVR of 97% continues to be available for Westpac customers. The bank has also scrapped its non genuine savings policy. Going forward 5% in genuine savings will be required for LMI deals, and rent will not longer be accepted as genuine savings.
Mortgage Choice cuts staff Mortgage Choice names Russell as new CEO Former Choice Aggregation Services head Michael Russell is once again heading a major organisation in the mortgage industry. Russell, who left Choice in July 2008, commenced his new role as CEO of Mortgage Choice in late April. The move wasn't Russell's first foray back into the mortgage industry – he joined the board of mortgage loan lead generator Ratesonline.com.au as a "nonexecutive" director in early April. Mortgage Choice has undergone some key personnel changes in the last 12 months most recently former managing direction Paul Lahiff announced his resignation on 1 April. Russell is well-known throughout the industry, having spent seven years with Choice – the last five of which were the helm. He also held positions at ANZ Banking Group and National Mutual Royal Bank in the 1980s and 1990s. Mortgage Choice chairman Peter Richie said "we are extremely confident in Michael's ability to lead our Group and State Offices staff in continuing their enthusiastic support of our extensive franchise network, encouraging solid growth and profitability of their businesses and the company as a whole."
RAMS survey: Family key source of advice Perhaps not surprisingly, a RAMS Home Loans survey found the majority of first home buyers look to family first when it comes for loan information. According to its First Home Buyers' Pulse Check report, 75% of first homebuyers mentioned family as a key source of advice, while 59% said they would turn to friends. Internet property websites were popular with half of the survey respondents, while only 23% of first homebuyers said they would turn to a mortgage broker. RAMS head of brand and marketing, Lynne Wyatt said the results were not surprising, as many first homebuyers may not have an existing relationship with a mortgage provider. "Although first homebuyers recommended consulting a professional, they are not likely to shop around. In fact, only 60% of first homebuyers contacted a mortgage provider more than three times before making a decision and for most, it was the same provider every time," she added. However the findings were in contradiction to a first homebuyer survey conducted by Mortgage Choice earlier in the year. According to the Mortgage Choice First Homebuyers Survey, 20.36% of first homebuyers consulted family as their favoured point of advice, a mere 8% turned towards friends and 17.59% researched the topic on the internet. The Mortgage Choice survey found that 29.35% of first homebuyers sought brokers as the favoured point of advice.
It didn’t take new CEO Michael Russell long to make his mark at Mortgage Choice. The listed franchise group revealed today that five staff had been retrenched while another vacant role had not been replaced. The retrenchments, along with the restructuring of a number of departments “for improved alignment”, were the result of a “reassessment of staffing” by Russell and his executive team. The latest job cuts follow four senior staff being retrenched in September last year, and the surprise decision of long-standing CEO Paul Lahiff to stand down in April. The new round of cuts reduce the Mortgage Choice’s Group Office workforce by 7%. As a result of these job cuts, the company will save approximately $997,000 in the 2009/2010 financial year while making a saving of $348,000 in this financial year. Explaining the decision, Russell said: “After much deliberation and careful consideration, the executive team and I agreed that this restructure was the responsible move to make for the company. It is one that re-aligns and refocuses our resources for robust growth”.
Sydney the best for housing investment: expert Primed for growth after years of flat prices and with the largest dwelling shortage in Australia, Sydney offers the best location for property investors this year, said Residex CEO John Edwards. “Sydney has at last reverted to positive growth … and it’s presenting as if the worst has passed,” he said. After a previous downward trend, Residex data shows that both house and unit prices in Sydney had increased between February and March, at 0.91% and 1.07% respectively. Quarterly, house prices were up 0.78% in Sydney from January through March, and 2.93% for units. But the positives in Sydney were still not enough to erase an overall picture of falling prices in Australia as a whole, according to Residex. For the quarter, house prices in Australia were down 0.84%, and units down 0.18%. The national median “is being negatively affected by the very poor results that are now coming out of the previously booming resource states, with Brisbane and Perth showing losses of 1.89% and 3.95% respectively,” said Edwards. All other capitals showed positive quarterly growth for houses, led by Darwin at 3.05%. But Edwards said Sydney will be the best housing investment market this year. “It will be further along in the correction phase and it presents as having the largest potential housing shortage,” said Edwards. But while first homebuyers have been a strong force in Sydney, Edwards advised investors stay away from properties that group tends to favour – for now. “There is a risk that after June – when the government may wind back the grant – properties in this segment will move back to prices that were in place before the benefits came along,” he said.
of MPA survey respondents feel they will never escape the rental trap
renters feel trapped More than half of Australian renters are giving up the dream of ever owning their own home. A nationwide survey sponsored by the Master Builders' Association found 57% of respondents do not feel they will escape the rental trap, while 21% of those earning between $40,000– $70,000 have given up the ‘Great Australian Dream’. Despite the pessimism, Australia has relatively high rate of home ownership compared to many parts of the world with 70% either already owning or paying off a home. However, the age of homeowners has significantly increased year on year. The association blamed planning permit delays as contributing to the problem.
Steady vacancy rates defy boost Despite the influx of first homebuyers into the market, vacancy rates across the country have held steady according to an independent researcher. SQM Research said nationwide city rental vacancy rate stands at 3.5% in March, with Sydney recording the highest vacancy rate at 4%. Strong rental demand have made Perth and Canberra the tightest rental markets in the country with vacancy rates at just 1.1%. Louis Christopher, SQM Research founder and head of property with ratings house Adviser Edge, noted that there have been a number of similar patterns with regard to vacancy rates across the country. “The upper end properties are struggling to be rented out in what appears to be a collapse in demand from executives and expatriates, while at the affordable end there is still considerable tightness with a large number of cheaper localities recording vacancy rates under 2%, Clearly, upper end property investors are facing the harsh reality of property value declines and falling rents,” Christopher said.
Big banks dampen RBA stimulus efforts Gerald Foley Lisa Montgomery
Brokers hoping to deliver good news to mortgage clients following the RBA’s 0.25% rate cut in April were deflated by the news that the major banks had ignored calls for lenders to pass on the full rate cut. The move not only severely blunted the central bank’s attempt to stimulate the mortgage and property sectors (in effect a wasted opportunity), but it followed just days after the government said it had reached agreement with these lenders to help struggling borrowers cope with mortgage stress. NAB passed on nothing to borrowers while the CBA, ANZ, St George and Westpac only passed on a meagre 10bps. These moves were tantamount to a slap in the face to the government, which had called on banks to pass on future RBA rate reductions in full. It also added to the anger of non-banks and smaller lenders – who had already slammed the publicity given to the banks over their hardship pledges – as it was yet another free leg-up to those lenders already enjoying the benefits of cheaper access to funding and large deposit bases. To add insult to injury, it emerged soon after the April rate cut decisions that the major banks were making as much as $450 a year more from each mortgage than before the global financial crisis (this was according to an analysis conducted by Fujitsu Consulting and reported in The Australian). This in spite of the banks having cried poor, declaring they cannot afford to pass on the full benefit of the interest rate cut because they were suffering from increased cost of funding. Lisa Montgomery head of marketing and consumer advocacy at Resi called it “predictable”
that lenders would seize an opportunity to hold back some or all interest rate cuts. She said in the past it was only government and consumer pressure that had held them back from doing just that. “We do know that most loans are being written underwater and understand the commercial realities of that, but banks and other lenders are still making considerable dollars on their existing books. And we do know that as well,” she said. Furthermore, consistent with their frugality she felt it likely that banks would continue to hold back on any further rate cuts announced by the RBA. Gerald Foley, managing director at National Mortgage Brokers, said by retaining margin – albeit in varying degrees – across all of the recent RBA rate cut cycles, banks were making more money, and that there was now a disconnect between what the RBA was trying to do to stimulate the economy and how the major banks had responded to it. “Everyone understands and appreciates we want a strong banking system, but equally we want consumers to be able to get confidence to borrow money and make decisions to ease some of the stress and pressure that is on them,” he said. Meanwhile, the Australian Bankers Association denied any suggestion that banks were ignoring the plight of customers and simply fattening their margins. Instead it said banks needed to be profitable in order to maintain their high credit ratings. “Otherwise their cost of funding will rise even more,” it added.
see the interview live brokernews.com.au/mpa
backing brokers As the man responsible for navigating St.George’s third party channel through commission changes, service level challenges, new lending criterion as well as its merger with Westpac, Steven Heavey, has a very long to-do list.
irst up, Heavey wants to make it clear that brokers are extremely important to St. George Bank – particularly in the areas outside of South Australia and New South Wales, where the bank is looking to grow its market footprint. “To do that we need to rely on intermediaries,” he says. As far as making further changes to the commission model, he says the bank has no plans to do anything substantial in the immediate future other than simplify it. “When we implemented the commission structure some time ago it was designed to achieve a few objectives concerning electronic lodgements and so forth. We have achieved those goals. However, the feedback from brokers is that it can be a little complex and difficult to understand – so simplification will be the focus,” Heavey says. But some reactions from brokers have been very positive about the new commission model. Heavey says St.George undertook a fundamentally different approach to most other lenders when it introduced the new model. This was because the bank looked at individual brokers regardless of which aggregation group they were part of. He felt that by focusing on the individual broker St.George would achieve a better result, since brokers would be more willing to back themselves in terms of meeting some of the required performance measures – and so far this has proven to be the case. “When their own individual performance is linked to their commission, brokers are comfortable not be lumped into a larger group where they might be meeting the performance measures while others in the group aren’t.” As far as trail is concerned, Heavey sees it a little like he sees fee for service. In that it is up to the industry to demonstrate it can add value in that regard. Remember, he says, the reason that St.George pays trail commission in the first place
is for brokers to manage client relationships on an ongoing basis. So assuming brokers are able to add value in that area Heavey confirms that St.George will continue to pay trail. “A couple of issues that we have started to discuss with brokers are looking at their own individual portfolio arrears, looking at runoff, and things that directly link to trail commission payments,” he says. Declining service levels Heavey acknowledges that a significant market share shift towards the top five banks has lead to increased volume, and resulted in a ‘differential in service levels’ being provided by the St.George branches. “It is unfortunate that we are not able to gear up as quickly as we’d like to, to deal with that sort of volume. We had a very successful campaign recently that has culminated in our largest ever period of lodgements in dealing with third parties, so to be able to get through all of those applications has been quite a difficult process with the staff we have at the moment,” he says. The current processing numbers are around three to five days for what he calls their Flame and Gold brokers, and 10–15 days for Silver brokers. This, he says, is reasonably consistent with the rest of the market from a service level perspective. But it hasn’t stopped him from undertaking a range of initiatives to address the workload backlog. These include employing new assessors and putting them to work over the weekends. So are brokers right to feel aggrieved or frustrated in the delays in processing applications? “Yes, it is a difficult situation,” Heavey says. He recognises that a lot of brokers pride themselves on delivering great service to their customers, and it can become ‘quite frustrating’ when they are not able to do so because of the service levels that the banks are providing today. brokernews.com.au
“ Brokers pride themselves on delivering great service to their customers ”
see the interview live MPA interviewed Steven Heavey at St.George’s offices in downtown Sydney. Visit Brokernews.com.au/ MPA to watch an in-depth video recording of it
But he feels that when faced with the prospect of not delivering on recent product promotions to brokers for fear of creating a processing log jam the decision was easy to make. “[I believed it] was important to maintain that offer in all distribution channels because I see that as a core component of what St.George Bank is all about, and that superseded any pain that we are going to experience as a result of increased volumes,” he says. Heavey maintains it is important that the broker focus remains on quality. Loans will be processed far more quickly, he says, if all supporting documentation is in place when the deal is submitted. “What goes in and what comes out – in terms of time lines – is sometimes dependent on the information that is provided up front. If a broker can really focus on getting that documentation to us as quickly as possible, we will be able to improve service levels. In busy times it is a lot more difficult to chase documentation. So if we can get applications complete it will help at our end.” Priority servicing When asked to explain the reasons behind St. George’s decision to offer priority servicing to brokers that lodge more frequently with the bank, he said the bank is trying to develop advocates for the brand and the segmentation approach attempts to reflect that advocacy by the rewarding consistency. “We find that brokers in our Gold or Flame segment tend to send us customers that are willing to embrace a whole banking relationship and that is important to us. We understand that there are certain brokers out there that don’t use St.George as a main financial institution, and we accept that. We’ve built what we call Mortgage Central which is a support area for those brokers to be able to provide the necessary information, but the service levels that we are offering through our Silver segment are reasonably consistent with what is being offered in the market place.” Furthermore, he makes the point that most other banks have a similar top tier segment – also isolated from large campaign volume periods. So what about brokers who submit less frequently – will they receive poor service? Not according to Heavey. “During busy times certainly our top level segments achieve a better service outcome than what we would call our Silver brokers. That said, the Silver brokers are still getting a consistent service in comparison with what other lenders are
offering out there – so I don’t see them being disadvantaged,” he says. The key component, he says, is that every Silver broker at St.George Bank has the ability to be upgraded to Gold status. The primary qualifying criteria primarily revolves around volume, conversion rates and – for that holistic banking relationship – products per customer. Lending criteria and product mix Heavey says the impact of the global crisis on the banking industry’s lending criteria is already well documented. “A lot of the major banks in the industry are currently reviewing their current loan to value ratios, and we are no different in that.” However, St.George will continue to look after first homebuyers where possible, but as a responsible lender the bank needs to ensure it is not putting its customers into difficult situations. “On top of that we’re also looking to implement a deposit product – what we’re calling our Homebuyers Savings Account where people can demonstrate genuine savings by submitting their deposits into that account in preparation for settlement.” Westpac merger Heavey says there probably has not been a high impact on third party operations as a result of the merger with Westpac. “Its business as usual for St.George Bank third party. We’re running a multi-brand strategy and that has been very well documented, and only last week Gail Kelly spoke to all of the senior people within the group and talked about the importance of being true to the brand,” he says. In addition, he has found there to be minimal crossover between the active St.George and Westpac brokers, which goes to show that brokers themselves have an allegiance to one or either of the brands. Top priorities for the rest of the year revolve around ‘utilizing the distribution network’ – which is another way of saying: getting brokers to do more than simply home loans. “We think there is a great opportunity for diversification, that the channel is under utilised from a deposits perspective. We are going to explore how we can partner with brokers to achieve those deposits,” he says. In addition, Heavey says another focus of St.George’s is ‘products per customer’, and that it intends to continue to do everything it can concerning pipeline management to ensure that service delays going forward are minimised. MPA
service Emulating Murray Kent’s success is a tall order, but the Brisbane broker insists the only secret to doing good business is strong customer service
ine years ago, Murray Kent’s wife passed along some very influential words of wisdom to him. She told him that when he looked back on his life, he would probably regret the things he didn’t do – rather than the things he did. It was exactly the advice Kent needed to help him switch from his relatively safe position at the National Australia Bank and open his own mortgage broking business. “And thankfully it’s worked out,” he says. That would be an understatement. Kent’s success as a mortgage broker has been well documented. In 2007/08 financial year he settled more than $109m, a feat which placed him fifth on MPA’s top 100 broker list. He has also been a consistent performer on MPA’s Top Dealmakers list, placing 6th in 2007 and 1st in 2006. Evolution Kent’s move into the mortgage industry was a natural progression from his career with NAB. In his 11 years with the bank, Kent moved up the ranks from roles in retail banking into management. But as the world drew closer to the new millennium he started to notice growing opportunities in mortgage broking. By 2000, he
saw enough to be convinced and decided it was time to give it a go himself. Kent opened his office in Redcliffe – an ‘undiscovered’ seaside suburb about 30 minutes north of Brisbane. “I think it’s got a lot of potential to grow because of its location on the water,” he says. While Redcliffe’s current demographic is mostly retirees, he says it is changing – more unit developments are being built and younger families are moving in. The change is probably not quick enough to cash on the recent boom in market segment, but it is coming. Regardless, Kent doesn’t restrict his business to Redcliffe and spends much of his time travelling throughout Brisbane. Kent has three staff members on the broking side of the business, while six work on the financial planning side. The majority of his business is residential, although he does do about 10% commercial. Despite pressure to diversify, Kent says he prefers to stick to what he does best. “With our ownership of the financial planning practice, we let them do the insurance. I’m still not convinced that a broker can perform both functions properly. I’m more keen on focusing on broking itself and letting the financial planners do proper insurance, rather than me trying to do both – and clients probably
“ A lot of people might ask you for three referrals when they come to an appointment, but I like to invest time with people, sit down, listen to what they need, make sure that we do plenty of after sales service ”
see the interview live brokernews.com.au/mpa brokernews.com.auâ€‚â€‚
Fact file + Company: Pacific Home Loans/ Borrowers Choice + City/state: Redcliffe, QLD + Amount settled 2007/2008: $109,468,511 + No. of support staff: 3 + Years as broker: 9 + Memorable deal: “One of the funniest interviews I can think of – or that I’m prepared to talk about – is one morning I met some clients just after breakfast and we sat down and were talking about their details. I knew them before luckily. But we were drinking a coffee and I had paper spread out all over the desk and for some reason I took a mouthful of coffee and coughed and coffee just went all over the table and all over the paper and we just sat there covered in coffee looking at the table, thankfully they started laughing. But they’re still clients.”
see the interview live Murray Kent has witnessed the boom and bust years of the mortgage industry in his 10 years as a broker. Visit Brokernews.com.au/ MPA to hear his hopes (and fears) for the industry.
get a better experience. Also it’s more time effective for me,” he says. The partnerships and word of mouth has been Kent’s best sources of referral. “Around 90% of my work now comes from referrals from past clients, or is repeat work for previous clients,” he tells MPA. “As our client base has increased, our business has matured, and our regular contact points such as quarterly newsletters have been adjusted and improved to reflect that.” Kent says he prefers not to use the hard sell approach. “A lot of people might ask you for three referrals when they come to an appointment, but I like to invest time with people, sit down, listen to what they need and make sure that we do plenty of after sales service.” Kent has been sending his clients quarterly newsletters for the last nine years and tries to maintain regular contact by phone, sometimes just to say ‘g’day’. “I think people are impressed when you can actually remember a few details about their life. It’s good to show you’re interested in how they’ve been doing, it’s not just a transaction that’s been and gone.” Kent modestly maintains that his business doesn’t have a huge point of difference from other brokerages. “I just think we do a good job. I’m extremely proud of the staff we’ve got. They’ve really embraced the customer service effort that I want to see.” He only employs people that he knows and has worked with before – some were actually headhunted from NAB. “I knew how they worked, what their beliefs were in the workplace and that’s been an enormous asset to the business because I’ve been able to service the client really, really well and that helps with referrals as well,” he says. A strong referral network means Kent does not have to spend money on advertising. “We’re not a name – we’re not Wizard, Aussie or Mortgage Choice. So I don’t think there’s any point in spending big dollars externally. A bit of investment in advertising within our client base is money well spent and community-based to a degree – we do a bit of that, but otherwise there’s no better bang for your buck than within your own client base.” Industry challenges Kent has taken the commission changes in his stride. While he understands there is concern that commissions are on the decline, he is fairly certain
Australian brokers have seen the last of sliding profits. “I’ve heard it from some reasonably high authorities in the bank that this was a ‘once in seven years’ type of event. So if you’re going to believe what they say, things should stay on a pretty even keel for a while.” Trail commissions should also stay, he reckons. “That trail income represents that time that we spend with those clients and our ability to provide some loyalty to whichever bank we’ve promoted at the time. So trail is very, very important and I think it’s a very minuscule part of the margin that the bank enjoys out of us giving them the business, so to take that away I think would be the death of the industry.” Despite not using many non-bank lenders or mortgage managers, Kent sees the lack of competition in the marketplace as being a major issue. “I’ve personally been a lot more comfortable with the known lenders and I think that certainly helps when you’re sitting in front of the client to talk about a known name; it helps them feel a lot more comfortable as well. If you break it down fee-wise, interest rate-wise, despite the bad press that the banks might get, their products are the best anywhere.” Future Murray’s short-term goal is to just keep the mortgage business ticking along as it is. For the moment he has no aggressive expansion plans, although he says he would be interested in buying another book at the right price. However, he is expanding the financial planning business. “We’ve got a couple of ideas there with some acquisitions, so that will expand the number of people we can talk to and grow the mortgage business as a result.” As for his long-term goals, Kent is a little more vague. “Long term, I’d like to be able to make some financial choices at a reasonably young age. I’d like the freedom to do some other things – who knows what, but I’d at least like to have that choice. I’m certainly enjoying what I’m doing now, and I’m certainly going to keep doing this for a little while yet. And I’m very conscious that the people who are loyal to me work-wise have certainly got some opportunities in the future as well. So they’ve got some comfort in knowing the business is going to be around for the long term.” MPA
Brokers on banks
game? Industry consolidation has meant that more loans are now being funnelled down a narrower pipeline, creating the severest processing crisis in the industry’s history. Against this backdrop MPA’s seventh annual ‘Brokers on Banks’ survey reveals which banks are still on form and which ones have dropped the ball
he overriding sentiment of brokers taking part in this year’s survey is that reduced competition from the non-bank sector has negatively affected the whole mortgage industry. Brokers complained that banks are more arrogant than ever and that their service to the broker channel is as poor as it ever has been. Brokers also complained that banks have made little progress during the year in coping with the onslaught of mortgage business that shifted their way from non-banks, and as a result the poor turnaround times and communication of last year has continued this year. Often in the survey brokers anger spilled over and they didn’t hold back in giving MPA the details. As one broker said: “The last six months has seen a significant deterioration by all the majors on service to the point now where they, and therefore us, are not meeting client
expectations. [To] the industry bodies representing brokers…where are you? You need to make the banks accountable for their deplorable service levels.” While another was more succinct in his comment: “Bank service… what’s that?” But among the half empty glasses, the survey revealed some players in the market who are providing value to brokers and their customers. MPA is pleased to reveal which banks these are. The survey In this year’s survey in which more than 350 brokers took part, 13 banks were rated on a scale of one (very poor) to five (very good) on nine criteria: approval/ loan turnaround times; BDM support; broker support; interest rates; IT; overall service levels; product range; satisfaction index on overall credit policy; and transparency of commission structure. The results were calculated and banks were ranked in each category, as well as given an overall score. The majority – nearly 96% – of brokers who responded to our survey have at least two years experience in the industry, while more than 40% have been active as a broker for longer than five years. A fair few have batted on both sides too – more than 60% said that they had worked for a bank in
the past. And of those, a little over 90% had done so for longer than five years. As you might expect in the current environment, our survey also revealed that the amount of respondents who put at least 50% of their loans through banks on average each month was up from 88% last year to an incredible 95% this year. Respondents were also asked to comment on how the recent commission changes had affected their business and how they might evolve in the future; what the biggest service challenge was that they had faced in the last twelve months; what they would like to see change in the next 12 months; what the best thing banks had done for their business during the year under review was; and how the banks valuation process had affected business. Lastly, MPA would like to thank all the brokers who participated in this survey. We trust that you will find the results illuminating. Approval/loan turnaround times Yet again this year, over half of our survey respondents ranked this category as being the
Brokers on banks
Approval/ loan turnaround times 2009
most important element in their business. Alarmingly, in spite of it being ranked as a top priority, brokers indicated that this category was the banks’ single worst performing area – in the end earning closer to a ‘poor’ ranking rather than ‘satisfactory’. Criticisms on this issue popped up time and time again throughout the survey. “There seems to be little or no accountability for info given on turnaround times by the bank staff. Sometimes, it seems that we are wasting their time by calling for an update on files,” one broker said. “I think it’s about time the major aggregators started to use their power to back the tens of thousands of brokers they have on their books and talk to the banks about improving the turnaround times.” But on the reverse side of the coin a number of brokers told MPA about some of the good things banks had done for them and their customers. One respondent was pleased with the turnaround service he received. “[The bank] recognised my ability to structure deals and assess the true quality and conversion, and therefore has given me priority of service and turnaround in this current period.” And another said: “[The bank] rang me up personally within 24 hours to thank me for how nice and accurate my loan application was, and as a result gave me an unconditional on the spot. – very impressed.” And still another: “[The bank] called me and went over the loan scenario to give me a full approval.” In the end, leading the pack in broker satisfaction this year was AMP, the bank that took over the top spot from last year’s winner ING Direct. “AMP really helped a client in desperate need of an increase, and settled it within three days – well done,” wrote one broker. AMP earned a satisfaction score of 70% – up from 58.6% last year, indicating a significant improvement in this area. Citibank and Adelaide Bank rounded out the top three, earning broker satisfaction scores of 66.4% and 61.4% respectively. One broker praised both Citibank and Adelaide Bank for having gone the “extra mile to ensure two loan client files were settled within a very short time frame.” Both ANZ and AMP experienced the sharpest rise in this category, both climbing four spots. “AMP Bank has provided consistent support,” one broker said of AMP. And of ANZ another said:
Brokers on banks
“ANZ went from application to settlement in eight days.” In addition, to make the falling turnaround standards worse, many brokers pointed to falling support for brokers and increasing incidents of channel conflict as their biggest challenges with banks. As this broker said: “Turnaround times are much slower via brokers than via the banks’ actual branch network.” While another gave this example of how banks support for brokers had dwindled: “Lenders are not even looking at a loan application until 30 days after it was submitted.” BDM support BDMs should actually return calls and assist you rather than hide under rocks when times get tough, wrote one broker in the survey. While the perceived importance of BDM support has been dropping in our survey – from 22% in 2006, to 15% in 2007 and 12% last year, in 2009 the trend reversed and the figure increased to 16%. This – one suspects – reflects the increased sense of confusion brokers have with the myriad of changes in the bank lending space.
Consider the sentiments of this broker in Adelaide. “One of the things important to a good broker-bank relationship is the service provided by the banks’ BDMs. I can tell you stories of good BDMs giving great assistance to brokers and their clients. I hardly see any of that now. I haven't heard from many of the banks BDMs in months, if not years. Having a good BDM improves the image of a bank's service, if not the actual service itself.” MPA scoured the survey for positive comments about BDMs, and a number were found in the comment section following our question: “What is the best thing a bank has done for you in the last 12 months?” Many left their comments vague, for instance praising ‘one BDM’ that helped them on occasion. But others were more pointed in their praise. Here, CBA seemed to fair well; with a good few of its BDMs attracting individual praise. Angelique Glasson, senior loans consultant at Territory Loans in Alice Springs, said: “We get great support from CBA both locally, and with credit and support of BDM and staff.” A loan writer in Victoria said: “CBA assisted me in winning a deal where I had two weeks from
Brokers on banks
loan submission to settlement. My BDM was what won me the deal. His support was above and beyond and he restored my client’s faith in banking.” To be fair, others attracted commendation too. As this broker told MPA: “ANZ has given me the best BDM I have experienced in five years performing this role.” Another commented that “BDM service at Suncorp [was put] at our disposal rather than just a call centre that most banks provide.” And yet another said of her Homeside BDM; “Her overall support is priceless.” But some of the feedback on BDMs was indicative of them needing a wake-up call. This respondent warned that BDMs are becoming increasingly less relevant. She said: “Call centre staff are becoming more knowledgeable and able to track deals and liaise with the various departments. They can usually escalate more effectively then BDMs.” On average, lenders received only a slightly lower broker satisfaction rating in this category – down from 57.6% in 2008 to 57% this time last year. Citibank took top honours in this category, climbing from second in 2007 to first. The sharpest rise came from AMP, which climbed from sixth position to third. One respondent to the survey said of a recent interaction with her BDM at AMP. “One day I had an issue with a client and I rang her. She got back to me even though she was at home and very sick. Now that is support.”
match report: must try harder Despite a big fall in turnaround time ratings, the big five have managed to slip less than other lenders where the interest rates they offer are concerned, leaving them a score of 0.1 behind the rest overall.
THE BIG 5 BANKS Approval/ loan turnaround times BDM support Broker support (training, information seminars etc) Interest Rates IT and electronic/ technology Overall service level to brokers Product Range Satisfaction Index on Overall credit policy Transparency of commission structure Overall Standings
Some brokers gave special mention to their BDM, like this Victorian broker: “Don Kitto of CBA helped incredibly to push a deal through in a very short period of time.” While another broker in SA, said the after-hours availability of Bankwest BDM, Ian Jeffries, had made all the difference to her business during the year. Broker support This category has declined in importance in the eyes of brokers in the past year. Less than 1% of respondents felt it was the most critical area of their business, down from a round 1% last year and 6% three years ago. Brokers felt banks were running at 51% efficiency in this category, second only to turnaround times as the worst performing of the categories rated. However, banks that earned top marks here garnered positive comments from brokers about their willingness to think and take action ‘outside the square’. As one broker put it: “[The bank] escalated some assessment decisions and settlements in the week coming into Christmas which made my client's life easy.” Another activity that found favour with brokers was transparency. This broker said: “The bank held a session where they advised of upcoming changes to policy and products which enabled me to assist my clients in a timely manner.” Channel conflict reared its head again, and those banks that did not score well in this category found themselves falling foul of brokers’
THE REST Approval/ loan turnaround times BDM support Broker support (training, information seminars etc) Interest Rates IT and electronic/ technology Overall service level to brokers Product Range Satisfaction Index on Overall credit policy Transparency of commission structure Overall Standings
Brokers on banks
perception that they were guilty of promoting it. As this one said: “The bank took five weeks to top up an existing loan and then the branch manager approached the client in the street to say they should have dealt directly with the branch.” Also, training – or the lack of it in bank staff – was a consistent source of frustration for brokers. As this broker put it: “The biggest challenge I have had is dealing with credit staff and front-end staff with little or no knowledge of lending. When I worked in banks I was paid to train staff. Now, I am an unpaid trainer.” Once again ING performed best in this category, scoring 59.6%. One example of ING’s commitment in this area was presented by a broker who indicated the bank’s willingness to keep the lines of communication open to brokers. “[It] created more open communication and alternate income options.” Yet another respondent agreed that having access to the lender was an important element in being able to have difficult loans approved – which she said was a key to delivering an efficient client service. She said that the best support any of the banks had provided for her in the year under review was simply ‘being available to discuss difficult loans’. AMP experienced the greatest leap up the leader board in this category, climbing three places to fourth overall. And judging by some of the positive comments made of it there is good reason for the improvement. This was one: “AMP had no trouble in taking an increase from application to settlement in under a week.”
Broker support 2009
IT and electronic/ technology systems As has been the case in previous surveys, many brokers continue to receive IT and electronic support from their aggregators, making it difficult for them to properly assess bank lenders in this capacity. Therefore it is little surprise that for the second year running less than 1% ranked it as being the most important cog in their business wheel. Which is not to say that the systems lenders employ are altogether unimportant in the process. Last year the CBA announced a four year plan to overhaul its processing systems to create efficiencies in the back office with real time straight through processing, and MPA was keen to get feedback from brokers on its impact. Among the comments we found some compelling feedback for the CBA’s Connect
Brokers on banks
program. Witness what this broker had to say: “The CBA implementing the Connect Program has opened up our service level so much to clients and they love it. It has helped us reach ‘satisfaction plus’ for clients and earn some of our missing first-year trail back.” And another broker in South Australia said this: “While the loan is progressing the CBA Connect Program is setting up the client’s account, making them feel valued.” But this is an area that still has plenty of room for improvement across the industry. A brokerage director in New South Wales told MPA he would like to see improvement with electronic lodgements to cater for true conditional approvals rather than the quasi conditional approvals that need to be assessed. His comments were echoed by several other brokers who would like to see technology used to streamline the process and eliminate duplication. One broker made the point that: “Now that we have entered the 21st century let’s reduce the duplication in the application process. It’s crazy that a deal is loaded electronically then a whole series of things are done manually.” Overall, broker satisfaction suggested banks could improve their delivery; scoring them less than satisfactory on average at 2.93 out of five, although up marginally on last years score of 2.78. In this category, ANZ made it a hat-trick of top billings with a score of 3.30. Hot on the heals of the major lender was the CBA and AMP both up on their last year’s performances. Calling it ‘market leading’ that same respondent praised ANZ for its capability to allow brokers to order valuations directly. In other instances it seemed it was not always how well the system worked that earned it accolade, but how well the bank responded when it did not. As this broker said: “CBA helped when both our systems stuffed up and a FHOG was not sent in. We found out 24 hours before settlement. The forms were couriered in and the loan settled two days later.” Interest rates As interest rates drop to unprecedented levels, banks continue to cop flack aplenty over their apparent dwindling willingness to share. And while banks continue to point the finger at the global financial crisis – saying it means higher
“ Banks are making the margin they need in interest rate retention, and this should mean there is no reason for them to talk about further commission cuts ”
funding costs for them – brokers and other industry players say their misery stance has more to do with self interest, than it does with commercial self-preservation. Either way, the record will show that after passing on more than 90% of the four percentage points cut since last September, the banks generosity has dried up with three of the four majors passing on just 0.1% of the 25 basis point cut in April this year, and the other (NAB) passing on zero. As one industry commentator told MPA: “The savings for consumers from that isn’t enough for them to buy a pizza.” Also, a number of brokers told MPA that another worrying impact of the financial crisis has been the continued reduction of competition in the market – giving banks unprecedented levels of power. As one broker put it: “Collectively they have a great deal of control in the current market. They are failing to fully pass on interest rate reductions, reducing competition and increasing fees.” Yet despite the controversy surrounding interest rates, only 3% of brokers rated this category as being the most important to their business. This indicates that price alone is not dictating the industry, and brokers continue to look for the overall service proposition. The CBA leapfrogged over subsidiary BankWest in this category to edge ING out of the top spot, with a score of 3.75 out of five. This is not an unfamiliar spot for CBA, as they were the highest rated bank two years ago in 2007. ING finished in third spot this year while Westpac slipped out of the top three completely. Its place was taken by newcomer Bank SA who scored a healthy 3.61 score.
IT/ technology 2009
Brokers on banks
Gerald Foley, managing director at National Mortgage Brokers made the point that the upside of banks retaining interest rate reductions for themselves was that it took the pressure off further reductions in commission payments for brokers. “Banks are making the margin they need in interest rate retention, and this should mean there is no reason for them to talk about further commission cuts,” he said. Product range For the third year running, only 3% of brokers rated product range as the most important factor to their business. While product range might not outweigh approval turnaround times in brokers’ minds, it nonetheless plays an important role, especially for those dealing in niche segments of the market. Low doc loans, for the time being anyway, are a thing of the past and bank credit rationing has seen banks systematically lower LVRs to the extent that certain market sectors have become ‘no go’ areas. Ian Connell, director of Tasmania Finance in Glenorchy, gave most banks that he dealt with an average score in the product department, but gave the CBA an 80% score, saying: “CBA provided me with product options for clients when there seemed there weren't any, making my clients' lives a lot easier.” This was the best performing category in the survey and brokers gave banks an overall rating of 3.26, only marginally off the 3.3 result they scored them last year. Overall, the category attracted little movement save for one stand out performance. Bank SA hit the ground running in this category as well
and slotted nicely into second spot behind the CBA; which held onto the top spot it earned in 2008. ANZ slipped a gear year-on-year to finish third overall. As the market continues to contract, product range has grown in importance for brokers. As Roger Ruhle who manages the Cooper Financial Connections brokerage in Caloundra, Queensland told MPA: “We're more selective with the lenders who offer an overall better package to the client and broker, but ultimately, the client will choose the lender they prefer to deal with. This is also subject to that lender being able to meet deadlines with finance clauses and the appropriate product for the client.” Broker commissions are secondary, but we make sure that the clients overall needs are met.” And while not specifically a comment on the banks’ product range, many brokers responded that increasing their own product ranges had become an economic necessity. This respondent said: “I have broadened my product range and am also looking at further diversification into other areas.” Overall service As is often the case, the ‘soft’ issues – a friendly voice or willingness to help after normal hours – really made a difference again this year to brokers in how they perceived their interactions with bank lenders. And while it is still a relatively new category it certainly has hit a nerve with brokers – 27% saying it is the most important criteria in their business. This is up from 20% last year; although their overall rating on banks has fallen from 2.97 to 2.61 out of five. It is no real surprise that brokers feel banks are fairing poorly in this
Broker’s biggest gripes Turnaround times Poor Service Changing/ inconsistent credit policies
91% 72% 38%
Brokers said what? This year, MPA received more than 300 responses to our Brokers on Banks survey and many took the time to not only rate banks, but comment on their performance. Indeed, not all of the commentary was fit to print! To read more from our survey visit Brokernews.com.au/ MPA where we have compiled a list of most “insightful” (ie, colourful) comments.
see the Survey online At Brokernews.com.au/MPA
Product Range 2009
Brokers on banks
“ It is unacceptable that we spend up to seven hours longer on every file because of the constant babysitting that is required ”
Overall service 2009
Overall satisfaction index on credit policy 2009
Transparency of commission structure 2009
category, judging by some of the comments we have received in the survey. Linda McIntyre, director of Linda McIntyre & Associates in Geelong, told MPA that simply getting the phone answered was the biggest service challenge she would had with the banks in the last 12 months. Meanwhile, brokerage owner Gary Cameron in The Basin, Victoria said he’d like to see banks stop retrenching staff at a time when they were not able to keep up with service levels: “If there is a surplus of staff in one area then bring them over to credit unit to get through backlog and keep on top of current deals.” It was the usual suspects that offered a better service to brokers, and little changed at the head of affairs in this category. AMP moved into top spot from third and ING slipped to second from first. And Citibank moved into third spot from fourth last year. Satisfaction index on overall credit policy It is no secret that the lending landscape is particularly fluid at present. Often, understanding the rationale for making changes, especially when they are unpopular, makes accepting the change easier. So MPA was interested in finding out how well banks had communicated their credit policy rationalisations by introducing the first of two new categories in the survey this year – a satisfaction index on overall credit policy. While it did not attract a great deal of interest – in fact only 5% of respondents pointed to it as the most important aspect of their business – it did indicate that on average all the banks were performing at a satisfactory level here, with the CBA, AMP and Citibank fairing the best. Transparency of commission structure This is the second new category in the survey this year, and it certainly presented brokers with an interesting result. While very few – only 1% – of respondents felt this to be the most important part of their business, nearly all had an angry response when asked about how the commission changes had affected business in the last year. This broker said: “My income has suffered. And why have commissions changed? Profits and Greed.” Leah Blackford with LoanMarket in East Brisbane had this to say: “I wasn't going to let it affect my business, and realise that the only real way to increase your income, is to write more
Brokers on banks
loans. However, the banks have completely dropped the ball with service levels. It is unacceptable that we spend up to seven hours longer on every file because of the constant babysitting that is required.” A broker from New South Wales was perhaps a bit more measured in his response: “The commission changes have resulted in a reduction of income of approx 40%. This has been further impacted by the softening market so not only is business harder to get but once you do, you get less for it.” Podium places in this category were keenly contested and in the end Citibank took top honours with a score of 3.66 out of five. AMP and Adelaide Bank followed in second and third places – with scores of 3.65 and 3.46 respectively. This certainly be a category to keep an eye on when we carry out the survey again in a year’s time. Overall standings Overwhelmingly, the surveyed brokers told MPA they wanted more than just lip service from banks. Many brokers said banks should recognise them as actual working partners. Others spoke of wanting quicker response times to loans submitted. And others still felt that banks should not distinguish between brokers and branches, pointing out that banks should focus on the client in the deal not the channel it came in through. Perhaps AMP’s consistent performance – it scored a podium finish in no less than six of the categories – or its superiority in the overall service it delivers to brokers, is the reason why brokers ranked the lender first overall this year. AMP moved up the rankings an incredible four spots, taking over first place from last year’s ING who picked up the silver medal this year. AMP also topped out in loan approval and turnaround times, as it did last year. And considering the relative importance brokers place on turnaround times, it is not surprising that AMP has catapulted up the rankings from 9th in 2007 to 5th in 2008 and now 1st in 2009. One Queensland broker had this to say about the 2009 broker’s bank of the year: “AMP have been wonderful – always getting back to me with any info I need ASAP.” And in spite of ING dropping one place to finish second in the survey this year, it might be this lender’s ongoing lack of channel conflict that has kept it in the top three for three consecutive years. ING ranked first in broker
“ AMP have been wonderful – always getting back to me with any info I need ASAP ”
Brokers on banks
support and second in all of the other support categories: BDM support and service to brokers. It also narrowly missed out on a top three place in the commission transparency category. By way of confirmation one of the respondents confirmed ING’s consistent appreciation for its broker partners: “ING, in spite of processing delays, worked tirelessly to have my applications approved.” While another said: “ING meets realistic turnaround time frames that allow us to meet first date settlements.” Citibank accelerated its improved showing last year to pick up the bronze medal in the 2009 survey. The two categories it scored best in were BDM support and transparency of commissions. By way of tangible evidence of the bank’s support structure one respondent told MPA: “Citibank went the ‘extra mile’ to ensure two loan client files settled within a very short time frame.” Special mention should be made of BankSA. In the mix for the first time in 2009 the bank put in a good showing and finished ninth overall. The bank performed well in interest rates and product range. Like last year the survey results were somewhat anti-climactic for some survey respondents. Mark Dwyer director at Dragon mortgages in Benowa, Queensland felt that all too often mud gets slung, instead of problems being fixed. “Every lender has it problems from time to time. There is too much blame and not enough ownership being taken. Brokers blame the bank and the bank blames the broker, and all too often the customer is in the middle.”
Importance of Criteria Transparency of commission structure
Product Range Interest Rates
Overall satisfaction index on credit policy BDM support Overall service Approval/ loan turnaround times
Feedback The comment section of the survey was most enlightening. MPA asked brokers to share positive experiences they have had with banks over the last 12 months. A number of brokers shared specific examples of banks that highlighted their ability to be flexible, expedite service when necessary and use common sense. Overall, brokers were pleased when banks referred clients back, acknowledged the quality of their submissions and assisted in getting borderline deals across the line. But with the sweet came the sour – and this year, like last, there was plenty of discontent evident. The survey revealed an increase in the impression that banks have lost respect for the broker channel. Slow turnaround times and poor BDM support came up frequently, and with plenty of venom as highlighted by this comment by Kevin McCann owner of the Mortgage Choice franchise in Mt Waverley, Victoria: “I cannot understand why lenders continually find it difficult to provide acceptable lending service levels. Why do they not understand that brokers live and die by their products? I cannot believe they continue to do this.” Commissions This year, MPA asked brokers how the commission cuts had affected their business in the past year – which is exactly what brokers had said in the 2007 survey would be the worst thing that banks could ever do. The report indicated most brokers didn’t understand the banks’ commission policies. An enormous 82% said they found the changes and payments confusing. And as you would expect most responded in a similar fashion saying that it had reduced earnings, some by as much as 70%. As one broker put it: “Recent commission changes have devalued trail book prices and also stolen future income by banks failing to care for the broker channel.” However, others made the point that it has had a material affect on their way of doing business. As this East Maitland broker explained: “I had to cut things back to basics. I hesitate before making house calls now – instead I ask clients come to my office.” And others were more pointed in their response, like this particular respondent: “It pissed me off. They pay us less and provide a worse service for the privilege.” Another broker simply said: “Stupid question.”
Negative gearing in the current market Margaret Lomas, founder of Destiny Financial Solutions, looks at different gearing strategies and explains whether negative gearing still makes sense in the current environment
ith a property market behaving in a way we are yet to understand and the future of property as an investment largely unknown, more investors are asking me about negative gearing and its place in their property investment strategy going forward. Specifically, the question I am asked is: “Does negative gearing still work in the current market climate?”. This question shows that few people understand what negative gearing means, how it is applied, and how it can work. While the term is usually associated with property, in fact negative gearing is not actually a strategy at all. It is an outcome that can result from an investment in any asset, and it depends on factors like your personal tax bracket and the deductions available for the asset you have invested in. What is gearing? Gearing is the term used to describe the process of increasing the size of your investment through borrowing. Typically, when you gear an investment, you use that investment as security to access more funds, which in turn buy more of the assets. When you gear an investment you either receive a negative outcome (negative gearing) or a positive outcome (positive gearing). It is important to note that both outcomes are based on borrowing and both outcomes are based on the amount of tax that you pay as an individual, and so the amount of tax break you can receive. Negative gearing Most people believe that negative gearing is a strategy that explains how people on high incomes get back more tax. In fact, negative gearing means gearing your investment so that the costs to maintain it outweigh the income produced,
leading to a reduction in taxable income. In other words, negative gearing happens where the total yearly costs of any investment outweigh the total income and you are allowed to claim a loss against income earned elsewhere. For example, John buys a property that gives him $10,000 a year. He pays out $13,000, losing $3,000. As he pays tax at 40 cents in the dollar on his salary, he is allowed to claim this loss of $3,000, which, for tax purposes, essentially ‘reduces’ the amount of salary he has earned by $3,000. He can now ask for the tax that he paid on that $3,000 ($1,200) to be returned to him. Now his loss is only $1,800 ($3,000 less $1,200). The reason it is believed that negative gearing is used mainly by high income earners is that, obviously, the higher your income the more of the loss you can have paid by your tax refund. However, you can never get more than 45% of the loss back, as this is the top marginal rate of tax, and you will always have to pay the 55% yourself. The pay-off for meeting this commitment is considered to be the rise in value of the asset you purchased. If it does not rise in value, then the exercise has a cost for you. If it does rise in value, then your return is considered to be the yield on your commitment. For example, if you committed $2,000 a year after tax back and the asset went up by $10,000, then your yield has been 500%. Example 1
Positive gearing Positive gearing occurs when the income on an asset you invest in exceeds the expenses. For property, this would occur if you purchased a property which had a high yield for your purchase price. With interest rates becoming lower, and so reducing the yearly costs of holding an investment property, and with rents coming under pressure in
Property income via rents
Tax @ 40% Total loss
many areas and so increasing, more incidences of positive gearing are being seen and some people who initially negatively geared are seeing these properties now returning a positive income. Sandra buys a property that pays her $15,000 a year, and her costs are $13,000. As she makes $2,000 profit, this amount is tacked on to her other income and so she has to pay tax at her marginal rate. If this was 40 cents in the dollar, she would pay $800 in tax and keep $1,200. If the $2,000 pushed her into a higher tax bracket, she would pay the higher tax amount on the $2,000. What about positive cash flow? Positive cash flow is a natural result of positive gearing. The fact that the income is higher than expenses will always mean that you end up with money left over, even if some is lost in tax. Even a negatively geared property can have a positive cash flow, if the on-paper deductions provide enough tax back to close the gap. On-paper deductions are those we can make where money has not actually been paid out as an expense but part of the asset has lost value. In a nutshell, each dollar of lost value of the claimable part of the asset can be received as a refund against your marginal tax rate. John has $10,000 income and $13,000 of expenses, but the building loses $3,000 of its value in a year, and fixtures and fittings lose $4,000. In total, he can claim $7,000 in loss of value. He is in the 40 cents in the dollar tax bracket, so he gets a further $2,800 of his tax back. As this is added to the $1,200 he receives for the actual loss, he gets back $4,000. However, he lost $3,000, so he is $1,000 ahead. This is his positive cash flow. On-paper deductions like this can also reduce the amount of tax paid in a positively geared situation. As an on-paper figure, these deductions can eliminate the gain made and raise cash flow. From these examples, you can see that even when you negatively gear you may not end up with a negative cash flow, so it is very important to understand that negative gearing or positive gearing is not the issue. The final result, or bottom line cash flow after all tax claims are made, which becomes most important to you as an investor. Should I negatively gear? Given that we have now established that the phrase ‘negative gearing’ doesn’t describe the final cash flow at all, the question should be rephrased as two different questions.
1. Do I aim for a positive or a negative cash flow? The reigning school of thought is any property that has low income and higher expenses (and so a negative result) would exist in a city and attract higher growth and an ultimately better yield; and that any property with a positive result would have a higher income and a lower growth rate, and be in a regional area. What this means is that you can no longer use the excuse that you are buying property with a negative cash flow because it will grow better, or that you are buying property with a positive cash flow because you want cash now and are prepared to forgo ultimate gain to get it. Instead, you must take more time to establish the drivers likely to provide a property with the greatest chance of strong and growing rental yields, and the best chance of future growth. In addition, you must be aware that both of these can be delivered regardless of where the property is. Look for areas with a growing population, developing infrastructure, economic vibrancy and a median household income that is growing faster than inflation. These will also be areas where large companies are relocating and employment opportunities continuously exist. 2. Should I gear at all? Remembering that gearing means ‘to borrow’, now is the time to estimate your personal capacity to maintain a loan should you not see the cash flow outcome you hoped for. Given the state of our economy, you must consider your job stability, current commitments to personal non-taxdeductible debt, and the ability of the area you’ll buy in to continuously attract tenants and so an income stream. Gearing increases the return (the higher the loan, the less of your own money you need and so the greater return on your personal contribution) but it also multiplies both the risk and the loss if you make one. Being able to increase your exposure to growth assets can mean you reach retirement in a better financial position. The ability to select good assets, be they property or any other kind of investment, is crucial at this time. Where property is concerned, make all of the tax claims you can, but do not invest just because you want to get a reduction in the tax you pay. Choose your property carefully and determine the areas most likely to weather the storm, deliver good rental yields and retain their values in the coming few years – and consider your personal financial circumstances before beginning any investment plan. mpa
Example 2 Property income
Tax @ 40%
Example 3 Property income
Tax @ 40%
($10,000 x .40)
Total tax deductions
Total: Loss less deductions
Margaret Lomas is the director of Destiny Financial Solutions, a qualified financial advisor and author of a number of books about investing in property. Visit www.destiny.net.au
Education tax advice
Tax Tips In an economic downturn every penny counts. Michael Quinn gives brokers sound advice on minimising their taxes
s much as we try to avoid thinking about it, 30 June is just around the corner and it will soon be time to start thinking about all things tax. In these times of economic downturn, business owners are continually looking for opportunities to save money wherever possible. There are a number of things that mortgage brokers, as business owners, can do before 30 June which may assist in legally minimising their tax obligations. Consider some of the following: • Contribute the maximum to retirement/ superannuation accounts: Super funds have taken a battering of late, but they remain a solid long-term investment strategy for funding a retired lifestyle and should not be discounted. They can grow to a substantial sum over time and can result in future tax-free income, exemptions from CGT and protection from creditors. By contributing up to the annual age-based limits you can potentially reduce the taxable income of your business, and therefore decrease the amount of tax you are liable to pay. • Prepaid expenditure: If you are eligible (that is if your business has an aggregated turnover of less than $2m) then it may be possible for you to pre-pay for items such as rent, insurance premiums or advertising up to 12 months in advance, and then claim those payments as an immediate deduction. Businesses that are not considered small business entities (that is, with aggregated turnover greater than $2m) may still be able to claim a deduction for prepaid expenses but must apportion the deduction over the service period or 10 years (whichever is shorter).
• Realise capital losses to reduce capital gains tax: To save on CGT and free up money for more suitable investments, you may wish to consider selling poor performing assets that no longer suit your circumstances. By doing this, you can use the capital loss you have incurred to offset a realised capital gain from another asset in the same financial year. • Purchase equipment: If your business revenue is less than $2m, then any assets purchased costing less than $1,000 can usually be claimed as an immediate deduction. If you think that you may be making such purchases in the near future it would be wise to do so before 30 June in order to receive the benefit in this year’s return. Additionally, the government’s proposed Small Business and General Business Tax Break may also bring additional tax benefits to some business owners. • Defer Income: If you believe that you will be in the same or lower tax bracket next year, then it may be in your interest to consider deferring some income until the following year. By doing this you can potentially save yourself from being pushed into a higher income tax bracket and being hit with a bigger tax bill. Perhaps one of the most important tax-related issues to be aware of is that in the past, mortgage and finance brokers have been intently scrutinised under the audit microscope of the ATO and are often highlighted as professions to watch in relation to tax compliance and conduct issues. As with most tax problems that are identified, this is not necessarily a reflection on the workings of the entire group, but the identification of a few bad eggs does increase the scrutiny. For this reason it is extremely important for brokers to maintain accurate business records and to also adhere to their tax lodgement and payment obligations. This not only makes the job easier come tax or BAS lodgement time, but it makes the business dealings transparent. And should the
time come that you do get audited, you can be confident that everything is in order. Cash flow also seems to be a common issue for many brokers as income and commissions can fluctuate greatly from one period to the next. It is important to have, and regularly review and update, a cash flow budget. This will help you to see the money coming in and going out of your business and will help you to plan for those major expenditures, such as GST or income tax, to ensure that you are not left short. Cash flow problems can rear their ugly head in many forms. Some signs that you may need to take action on your current cash flow situation include steady declines in profit margins, heavy reliance on borrowed monies and the inability to pay creditors and meet tax payment obligations. Keeping accurate records and regularly producing and analysing reports allows business owners to identify problems and initiate rescue procedures before the problem gets out of control. There are a number of tax benefits that are available to business owners and knowing your entitlements can significantly reduce the amount of tax you are liable to pay. Some of the ideas above may bring considerable tax advantages to your current business situation. Remember that it is important to seek professional independent advice to come up with the tax plan that will help you to legally minimise your tax obligations and maximise your business potential. mpa
Michael Quinn, director of The Quinn Group, is an experienced lawyer, accountant and educator. If you would like further information or assistance, Michael and the team of legal and accounting professionals at The Quinn Group can be contacted by calling 1300 QUINNS or visiting the website www.quinns.com.au
Education Lead generation
to make money With it growing increasingly difficult to generate a reliable flow of leads through referral networks, even established brokers are purchasing leads from lead providers. Tim Neary asked those in the know how to buy business without breaking the bank
here are as many ways to buy a lead as there are to skin a cat, but unless it is likely to convert into an application the lead may cost far more than it is worth. And while buying leads is a good way to bring business through the door, according to Dr Adir Shiffman, CEO at Miston Holdings – host to the website Helpmechoose.com.au and Mortgageleadsaustralia.com.au – the golden rule in this business is: the more reliable the lead provider, the more reliable the lead. “While better lead providers provide everything from the financial history to the purchasing time frame of the lead, there are still a lot of unscrupulous operators out these. These operators ask consumers to fill out a form thinking that they are getting one thing, but what actually happens is their details are sold to a broker,” he says. He says brokers must assess what the lead is worth based on the information it provides. “The importance of the data is actually increasing in the current economy on account of the tightening lending criteria. Getting a lead, for example, for a first homebuyer with no deposit and no savings is useless to a broker today,” Shiffman says. Do the maths First up, Shiffman says, ask yourself what you think a reasonable amount of money is to pay for closing an approved loan application. Then work backwards from there.
“A broker might say ‘I think $500 or $700 is appropriate, given that I might make $2,000 in upfront commission, plus a trail’.” The arithmetic will go like this: how many leads to get an appointment; how many appointments to get an application; and how many applications to get an approval. And then the broker can work out what an appropriate amount of money to invest in those leads is. “Understand that better leads cost more, but you’ll need less of them to work back to that $700 budget for one sale.” While lead providers charge up to $400 for a firm appointment, normally the cost of a lead ranges from $25 to $70 depending on the nature of it and its likelihood of closing. Value for money Differential pricing occurs mainly for two reasons. Shiffman says brokers should expect to pay more for leads that have a higher likelihood
of closing, and more still for the ones that will result in substantial commission income when they do. For instance, he says the most expensive leads are for people looking to refinance since they tend to close very well. “Generally, they have an existing line of credit with the bank, and no issues with things like deposits and credit approval,” he says. The other extreme is the first homebuyer with a small, or zero, deposit. “It will take more of these leads in order to get a closed application. And the value of that loan and therefore the commission that is going to be earned is likely to be lower,” he adds. Andrew Clark, CEO of Financial Services Online, says you never really know for sure what a lead will be worth until you get your hands on it. But what he does know for sure is that one lead can have a differing value – depending on whose hands it finally does land up in.
Education Lead generation
“ Getting a lead for a first homebuyer with no deposit and no savings is useless to a broker today ”
“The small operator is going to do better with the leads than the big aggregator, because the closer the broker is to the person that pays the bill the better the result will be,” he says. Clark agrees with Shiffman that brokers must be able to look at the form that the people are filling out to qualify the lead before agreeing to buy it. “I am aware that there are some organisations that are simply asking people to complete a calculator which asks them how much they can afford to buy,” he says. New business, new blood There may be lots of ways to do it, but when business is tight there is a high premium on being able to generate new business. Clark says relying on your own network for referral business gives you more control, but outsourcing it will deliver better results every time – as long as it is done correctly. Peter Green, a broker who set up lead generator Property Match Up, agrees with Clark’s assessment and adds that brokers generally rely on leads from two primary sources: referral partners and client referrals. “But there are times when these leads can run low or even dry up,” he says. Furthermore, he adds that no matter how well brokers take care of their lead generation activity, it remains the lifeblood of any broking business. Brokers are particularly vulnerable to a slowdown after a boom period as all their time is taken up with client meetings, so prospecting is neglected as a result. “But by using a professional lead generation service brokers can control their activity levels, so that could mean bolstering enquiry levels when referral activity drops off or otherwise increasing enquiry levels when a broker is looking to grow their business,” says Green. Eyes wide open Green adds that a number of options exist out there for brokers, but you need to have your wits about you before signing on the dotted line. Some aggregators may offer their brokers leads either for a fee or for reduced commission. Leads
can also be bought from a number of lead generation companies on a fee-per-lead basis – but just be careful, Green says, not to let the fees get out of control. “Sometimes [the fees can be] hundreds, even thousands of dollars once you take into consideration all associated costs,” he says. Also, if you are paying for leads but not converting them it will effectively reduce the return on the leads that do end up as settled loans. To this end Green’s advice is: “Always monitor your conversion rates as well as the quality of the leads that you receive to be sure of the true value to your business.” In the beginning Leads are usually generated according to three different categories. Shiffman says the oldest and most traditional way of getting a lead is via referral – typically from either professional service providers or from real estate agents. “We’re seeing that in this market any real estate agent of any real significance has a relationship with a broker, and is providing those leads to a mortgage broker,” he says. The second comes from call centres set up to cold call consumers. What they are trying to do in most cases is set an appointment for a mortgage broker to come and see them – and then they sell that appointment. In the third category leads are typically generated online where a consumer comes to a website looking for information about mortgages. “That website provides info about mortgages, and in return they generate a lead which is then sold,” Shiffman says. mpa
mpa lender news
contents 50 A review of news in the world of non-bank lending and mortgage management 54 In profile:RAMS head of franchise business, Clive Kirkpatrick 58 Secrets of success: The rise of Mortgage Ezy
Govt relief plan could add further hardship
While in early April the government sealed a deal with the Big Four to secure mortgage relief for borrowers who lost jobs, Challenger has warned the government’s enthusiasm could be dampened if promises aren’t met. CEO of Challenger Mortgage Management, Drew Hall, said the government’s announcement in early April of this year was positive but had left the industry slightly confused. “To our knowledge, the bank sector has always been similar to the non-bank sector in that it already had clear and effective arrangements in place to identify and assist borrowers who are facing financial hardship, so we were somewhat surprised that they were repackaged and restated in this fashion,” he said. “The announcement was also silent regarding banks outside the top four, and didn’t address whether the restated common
principles equally applied to banks’ securitised loans,” Hall added. He went on to say that Challenger has had “flexible arrangements” for borrowers facing unemployment and other financial difficulties for some time and had recently extended these policies further to take into account movements in the economic cycle, regulatory requirements and the MFAA’s Code of Conduct. “However, the only thing worse than losing your home now is losing it in six months’ time – and owing thousands more because you’re in negative equity,” he added. As a result, Hall warned that while the government’s announcement may help some consumers to “sleep easier at night”, and be ignored by others, many would “hold the Big Four and the government accountable when the rejection stories eventually surface.”
Allstate continues fight against bank dominance Queensland-based lender, Allstate Home Loans, has released a new variable product in its ongoing fight against the domination of the Big Four. General manager of Allstate Home Loans, Tony Shield, said the new ‘Home Smart’ loan series was specifically designed for “mum and dad borrowers”. He said the loan also offered an alternative for brokers, who will receive 0.7% upfront and 0.25% trail commission with the product. “This is part of our commitment to brokers. Brokers should be rewarded.” The ‘Home Start’ loan has a 5.24% variable rate, online banking facilities, a 100% redraw offset, fortnightly or monthly payment options, no monthly or annual fees and is for owner occupiers or investors.
The months Firstfolio is planning to take to triple site traffic to eChoice, its online lending platform
mpa lender news
RAMS addressing processing backlog
The amount one Wizard borrower said they would be required to pay in break fees if they do not refinance with Aussie
$$ $ $$ $ $$ $ $$ $
A RAMS spokesperson has assured MPA sister publication Australian Broker that proactive steps are being taken to address a severe processing backlog affecting applications submitted by brokers. This follows an automated email sent out by a RAMS BDM, which revealed that the lender was in some case a full month behind on assessing deals. The email, which was forwarded to Australian Broker, responded to an enquiry from a broker over a mortgage application submitted on the 3 April saying: “We are currently assessing deals from 3 March and I cannot escalate files at this stage.” The proactive steps include the introduction of “preference processing” where full applications are given preference over pre-applications “to better serve broker clients.” RAMS has also taken on extra staff to manage the workload. In addition, the team is working additional hours and weekends while additional lending managers have been added to the credit operations team. Other enhancements include the reorganisation of credit roles to gain greater processing efficiencies and the ordering of valuations are being prioritised where the contract of sale has been received. Valuations are also being ordered before loans are assessed. The spokesperson was hopeful of a return to normal processing times on full applications in the “near future”. RAMS blamed the delays on a high demand for its home loans in the recent months due to “a surge in activity especially from a large number of deals coming in from brokers seeking to look after the needs of first homebuyers”.
litigation threat against securitisers unfounded Submissions made by brokers, lenders and borrowers to the ACCC as part of its public consultation on whether to allow GE subsidiary Australian Mortgage Services (AMS) to waive exit fees on existing Wizard borrowers on condition they refinance with Aussie have condemned the Peter White proposal in the harshest possible terms. The ACCC received submissions from a broad spectrum of the mortgage industry as well as from Wizard customers. Richard Pengelly, a borrower with five Wizard mortgages, was told he would be required to pay break fees “in the region of $17,600” if he did not refinance with Aussie. “I believe this to be very unethical and suggest that to all intents and purposes it also constitutes third line forcing,” he added. The FBAA was equally damning it is submission “greatly opposing any support of the notification”. National president Peter White said GE Money had already shown its “anti-competitive intentions” by passing on interest rate cuts to some borrowers under the Wizard Brand and not others under other mortgage management programs. A joint submission made by 13 Wizard franchisees set the “offending conduct” within the context of 20,000 Wizard home loan customers already subject to high interest rates. “While the waiver of the deferred administration fees (DAF) may initially appear beneficial to the customers”, the franchisees said it was in fact “detrimental to the public and anti-competitive”.
mpa lender news
Firstfolio envisions aggressive expansion Firstfolio is planning to triple site traffic to eChoice, its online lending platform, in the next 24 months. The goal coincides with the mortgage finance company’s move to new Melbourne-based headquarters in Surry Hills. Commenting on the move, eChoice and Firstfolio chief executive Mark Forsyth said a strategic redevelopment plan for eChoice had been mapped out and involved significant investment in the core structure of the business to support its growth over the next two years. “A major fit-out of the Surry Hills premises has been undertaken to house the eChoice team, and
we anticipate staff numbers to grow as we continue to invest in specialist sales and management expertise.” According to Forsyth, more than 80% of Australians are online today and eChoice is attracting more than 50,000 visitors each week. “Our vision is to double, if not treble, site traffic in 24 months following the integration of Firstfolio’s business into the eChoice platform,” he said. “Our long-term strategy is to offer Australians living at home and abroad a one-stop financial services portal for all their finance and financial planning needs.”
Challenger Homeloans Ltd woos prices RMBS unhappy bank customers issue Phrases like ‘Ya nothin’ but a bunch of bankers’ Non-bank wholesale lender Challenger Mortgage priced a $632.1m issue of prime residential mortgagebacked securities (RMBS), signalling a possible return to greater competition in the banking sector. The government bought $500m of the offer, called The Challenger Millennium Series 2009, as part of its $8bn RMBS investment scheme announced in October. It is the fifth RMBS issue to attract investors this year with government as a cornerstone investor. The trust is backed by prime mortgages and jointly led by Barclays Capital, Deutsche Bank and NAB. In keeping with AOFM rules, the pool was comprised of less than 10% of low documentation loans.
and “Ya banker” will form part of an irreverent marketing campaign by non-bank lender Homeloans Ltd targeted at unhappy customers. The campaign will feature “striking and stark display advertisements” in the mainstream press, industry magazines, outdoor billboards and online, and will initially run in Victoria and WA. While clearly taking a tongue-in-cheek approach, Homeloans executive chairman Tim Holmes said there was a serious message behind the campaign. “The new campaign is aimed largely at customers of the major banks. Our own research, plus constant customer complaints through the media and anecdotally, point to the fact that most customers are not happy with their bank. In the main it gets down to service, and the fact that customers feel they are being ignored or taken for granted by the major banks. There is no question that the level of personal service from these banks has declined over the years,” Holmes said.
The qualifying size of a loan that would require institutions to have a hardship program
Cop credit union has clean record The Queensland Police Credit Union (QPCU) has revealed its squeaky clean loan portfolio to show you do not have to be one of the big boys to save customers from defaulting. QPCU CEO Grant Devine said all loan repayments in the lender’s mortgage portfolio are either current, or less than 14 days overdue. He attributed this to QPCU’s approach to hardship relief, saying members were aware that the lender would help them get “back on track” if they found themselves in difficult circumstances.
“As mutuals we always put our members’ interests first, and they are incredibly loyal as a result,” he said. Furthermore, Devine said that QPCU had achieved these results despite not having the same set-up as Australia’s four big banks to review approaches to financial hardship cases. However, he said, the implementation of a new Mutual Banking Code of Practice on 1 July will soon enable mutuals to make a positive commitment, over and above legal requirements, to members facing financial hardship. QPCU’s home loan book currently exceeds $410m.
mpa lender news
Resi: Non-banks already offering relief Resi’s head of consumer advocacy, Lisa Montgomery, has slated the government’s spruiking of its ‘mortgage relief for the unemployed’ deal with the Big Four banks, saying such help is already offered across the board. Montgomery said that most lenders – bank and non-bank – already provide the same help, allowing customers in financial hardships to defer payments. “The announcement is nothing new and it is unfortunate it was couched that way,” she told the Australian Financial Review. “We hope this won’t affect consumers’ choice of lenders, because there is flexibility across the board.” The sentiment was backed by Consumer Action Law Centre co-CEO Catriona Lowe who told the AFR that currently, under the Consumer Credit Code, institutions lending up to $320,320 were obligated to have a hardship program. “We are concerned that the announcements have focused on the Big Four, because those rights apply across the board to all types of consumer lending,” she said.
GE increasing lending exposure Despite fleeing from the mortgage arena late last year, GE has announced it is ramping up its presence in corporate lending. GE’s Australian chief executive, Steve Sargent, told The Australian that the company was looking at capitalising on the gap being left behind by the retreat of foreign banks at a time when domestic banks were struggling to cope with the demand for credit. According to The Australian, GE is planning to use its global balance sheet to push deeper into the corporate market – an area not heavily
represented by local banks, but one that will deserve attention during refinancing next year. “There’s a lot of refinancing out there. My guess is that we are going to be in an environment where there is a shortage of capital for quite some time,” Sargent said. He went on to say that the scope of potential new lending for GE was “fairly broad,” however that the corporate loan space was an important market. “Most of our businesses play where the banks are not strong or aren’t there at all,” he said.
The variable interest rate on Allstate Home Loans’s new ‘Home Smart’ loan series.
In just six months, Clive Kirkpatrick has been positioned in two key roles at RAMS Home Loans, proving that sometimes you just have to grab life by the horns and go with it
live Kirkpatrick is on the move. Just three months after joining RAMS as head of broker in early January 2009, he was shuffled into a new role – head of franchise business. The new title comes with new responsibilities, and topping his to-do list is an aggressive growth strategy that will potentially see the franchise network expand from 44 businesses to more than 100 in the next couple of years. “It’s a bit like driving a car and changing the tires at the same time,” he admits, though his impeccable 25-year career in banking and finance is demonstrative of his ability to adapt. Rise up Kirkpatrick embarked on a life in banking shortly after completing his BA of Economics at Sydney University by starting as graduate trainee with Westpac. In his 20 years with the bank, he moved up the ranks and secured his MBA from Macquarie University along the way. He also did a three-year stint offshore in London working as an economist. In 2004, Kirkpatrick left Westpac to join Clearview Retirement Solutions (part of the MBF Group) as head of financial services and third party distribution. After putting in four and a half years there, he joined BankWest’s financial planning, retail division for a brief period before being lured to RAMS, which Kirkpatrick describes as a “homely brand that is trusted by the typical affluent person”. With regard to now being part of
the RAMS family, he says “I feel more comfortable in that end of the market than I do in the institutional level”. And the change is something of a homecoming. While the non-bank remains independent, Westpac’s acquisition of the RAMS brand and franchisee network in January 2008 means Kirkpatrick is in familiar hands. Broker head Kirkpatrick entered his role as head of broker relations at RAMS at a very stressful time. By January 2009, the popularity of First Home Owner Grants was starting to impact business and increased volumes really put pressure on the company. “The pull-out of a number of lenders and funders has really forced larger volumes upon lesser players. So we’ve seen service standards across a number of players really deteriorate, and some of the credit criteria has tightened up across all lenders.” Kirkpatrick devoted much time to communicating with brokers and aggregators, but his ability to steer the company through the period was cut short. In fact, he had barely passed his probation period at RAMS before being shifted to his current position. Franchise head Working with franchisees is new for Kirkpatrick, but not dissimilar to working with financial planners, he says. “Financial planners are self-motivated people and very similar to our franchise channel, which is comprised of small businesses that are run by people driven to succeed.” There is also a correlation to be drawn between the regulation changes that financial planning underwent and the impending regulation for the broker industry. “From a professional point of view, I think there will be a confluence between financial planning and mortgage broking in terms of regulation, so I think I can use my experience to suggest what might happen to this channel,” he says.
For Kirkpatrick, communication has been a key skill in both his previous role as head of broker and his current role. “In the broker space, the volumes from first homebuyers have really put pressure on us to maintain our service levels. So it’s been important for us to be communicating with the aggregators. On the franchise channel, it’s been about getting to know the franchisees and how they run their individual businesses and getting to know them as people.” Kirkpatrick has spent the better part of his first few weeks in the role on the road, meeting franchisees in NSW, Victoria, NT, WA and Queensland. “That’s the best part of the job. As the saying goes, the worst day in the field is better than the best day in the office.” His main responsibility is to ensure that current franchisees have enough activity to be successful, in turn making RAMS successful. Part of that is putting in adequate educational processes to help loan writers write better business. Kirkpatrick is also overseeing a pilot program on risk and general insurance sales that will help franchisees diversify their income flows and increase RAMS’ revenue flow. While some in the industry have questioned whether brokers and franchisees can successfully sell both insurance and home loans, Kirkpatrick maintains that it comes down to the individual. “There are a couple in the pilot that have come from a financial planning background. Whether they’re equipped to offer insurance depends on the model they are looking at. Some are looking at a separate business and employing financial planners, while some are looking to do it themselves.” In addition to shepherding the growth of current franchisees, Kirkpatrick has been assigned to more than double the number of operators across the country in the next couple of years. While NSW, Victoria and Queensland will continue to be the main areas of expansion, Kirkpatrick is hoping to open franchises in two new territories – Tasmania and SA.
Fact file Clive Kirkpatrick, head of franchise business + Key responsibilities: growing existing franchisees’ businesses and expanding RAMS franchise footprint + Key challenges: Improving service levels to franchisees, implementing electronic loans processing + Economic outlook: Optimistic + Hobbies: Biking
RAMS recently altered its model, which had remained unchanged since the inception of its franchise business. The new “more flexible model” has smaller territories. “We’ve done a fair bit of homework and involved a couple of contractors to help us out with some of the science behind the structure of the territories, so we’re pretty convinced there’s sufficient business within the territories to make the individual franchisees successful.” Potential franchisee owners have come from varied paths – some are ex-brokers or ex-bankers, while others are former small business owners with franchise experience. “We’re very confident in our recruiting process. We put a lot of time and effort into our training and education regimes, so we should be able to get people in relatively quickly. And a more flexible model means they should be able to grow at a faster pace.” One of the issues RAMS is facing is improving its loan processing. “In the franchise channel we’re about two and a half days outside of our service standards, which is one day,” Kirkpatrick says. “So we’ve doubled the number of credit writers upstairs in the last couple of months. The credit changes which came through on the 9 April certainly had an impact on the number of applications coming through in the short term. But the electronic loans processing will help speed things up there.” Half-full Optimism would also have to be a key trait of anyone looking to open up a new business and it is something that Kirkpatrick has in spades. He describes the current state of the market as “extremely buoyant”. “What doom and gloom?” he says. “In March, the US stock market grew at its fastest rate since 1933.” “One thing I’m surprised at is there’s still a lack of investor interest, which amazes me because interest rates are at an all-time low and rental rates are relatively high. So most properties you buy would be positively geared.” But Kirkpatrick recognised the negative impact rising unemployment could have on the market. “Doesn’t matter where interest rates are or LVRs are, if you’re unemployed then people can’t move can they?” While RAMS has gone through enormous changes due to the onset of the global financial crisis, the subsequent acquisition by Westpac has brought greater stability to franchisee owners. “Overall, Westpac’s acquisition of RAMS has been positive,” Kirkpatrick says. “The first thing is we’ve now got the consistency and stability of funding. Franchisees are saying it’s great to have a strong parent behind them. It gives them a lot more confidence in their businesses. From a corporate perspective it helps us gain some scale, using what Westpac can provide us in IT, cars, marketing, adhoc back-office services – we now have access to their purchasing power.” RAMS maintains franchisees now have the best of both worlds – it can offer customers an alternative to the big banks, while still having the security of being a brand backed by a major. MPA
mpa lender business profile
A desire to compete against bank dominance and an impregnable commitment to the broker channel has seen this innovative mortgage manager carve out an enviable niche. Tim Neary talks to CEO Garry Driscoll
Garry Driscoll (left) and Peter James
t was Napoleon Bonaparte who originally said that if you want something thing done well, you have to do it yourself. And this was precisely what Mortgage Ezy’s executive chairman and cofounder Peter James decided when it first struck him as a good idea to pass leads on to mortgage brokers. As a financial planner at the time, he felt the service his referred clients were getting was a bit ordinary. So to give them the attention he felt they deserved James began operating as a loan writer himself, and began to organically grow the new business division into an independent mortgage management operation. These days Mortgage Ezy is still very brokerfocused, with all of its business procedures geared towards the broker channel. “We have absolutely no retail presence and have been focused on the broker channel since the get go,” says Garry Driscoll, CEO at Mortgage Ezy.
And to demonstrate that he is as good as his word, one of those business procedures stipulates that leads generated from any direct contact – such as a client’s anniversary call – are referred back to the originating broker. “That is a little bit different from the approach adopted by most of the majors at the moment, where as soon as a broker walks a loan into a branch, it then becomes their loan. Instead we see ourselves as going in as partners with the broker,” says Driscoll. In Driscoll’s own words Mortgage Ezy is committed ‘to being different’. “All that we do revolves around making us different from anyone else. Peter [James] didn’t want Mortgage Ezy to model itself on someone else. He thought it should be as individual as possible,” he says. Business unusual Mortgage Ezy’s business has been as hurt by the global credit crisis as everybody else has been. Yet, Mortgage Ezy has used the challenging economic conditions as a platform to be more aggressive in growing its business. The lender is advertising more, increasing sponsorship, and even introducing new products. Recently Mortgage Ezy introduced its YZ3 product. It offers both a variable and competitive fixed rate, and attracts zero fees. “Brokers tell us they love the product because they needed a like-for-like program to compete with the banks – and we have been delighted with the response,” says Driscoll. At the time of launching Driscoll wanted around 20% of total wallet from it. And, so far, the new product has done better than that. Also, Driscoll attributes an overall increase of around 50% in total applications at Mortgage Ezy to this product. In addition, its fixed rate product – launched a short while ago courtesy of the government support package for the non-banks – attracted interest in the mainstream media.
“At 3.99% fixed for one year, it was probably the lowest rate in the market for 20 years. Nowadays 3.99% is not exactly normal, but it’s not quite as sexy as it was a couple of months ago,” he says. Rates and products aside, giving brokers flexibility is a key feature of its distribution model. Mortgage Ezy pays commissions according to a wholesale model. A broker gets a rate, and they can determine from that how much they get upfront and how much in trail – within certain parameters. “It’s up to them to decide the best way to go,” says Driscoll. And Mortgage Ezy makes a point of paying out commission cheques quickly – a source of pride for the mortgage manager. “We pay 98% of upfront commission within three days of settlement – and 34% of that within 24 hours of settlement,” he adds.
“ We have absolutely no retail presence and have been focused on the broker channel since the get go ”
Sharing the load Many hands do indeed make light work – but only when they are diligently selected in the first place. Finding the best people possible is the first key to managing a successful financial services company, according to Driscoll. “Employ them, train them and motivate them with a career path they can follow,” he says. In addition he focuses on two more strategic drivers: the first is found on the profit and loss statement of the company financial statements. “It’s really important to know what your margins are and where your expenses are – particularly in the current environment,” says Driscoll. The other involves active listening. “You need to know what your customer wants. Not what you think they want – what they actually want,” he adds. To this end Mortgage Ezy constantly monitors its performance. It takes regular feedback from business partners to make triple sure of what its partners really require. It’s all about communication, says Driscoll. “We do a newsletter to keep them up-to-date with brokernews.com.au
mpa lender business profile
“ Yet if the applicant goes into a branch with the same deal, they can get it done in three days. Why is that? ”
products and changes in the market, and have online surveys and small focus groups to constantly engage with our business partners.” Good publicity There’s little value in delivering a world class business if no one knows what it is, or where to find it. So to spread the word Mortgage Ezy style, Driscoll relies on a four part marketing plan. He advertises in trade publications, sends out newsletters and regular SMSs, seeks out referrals from brokers, and participates in industry events. “We’re strong supporters of the MFAA conference and any other brokers’ forum or convention events. It is a great way of getting our brand out there,” says Driscoll. So which is the most effective? Actually, no one is better than the other, says Driscoll. “Success depends on what you are trying to achieve. Trade publications are effective if you’re looking for brand awareness, SMSs are the most effective call-to action-campaigns because they are immediate and personal, and industry conferences are a great way of establishing new business partners because you get the opportunity to have a proper conversation with somebody who has the time to enquire about your business’s products and services.” David vs. Goliath When your arch rivals have a longer reach than you do, it’s a smart idea to know where to locate their vulnerable points.
Mortgage Ezy wants to compete with the bank lenders head-on and Driscoll feels their Achilles heel has got to be in the service space. For instance, he knows it will take him just three days to complete tasks that the banks draw out over three weeks. “Often loans submitted to Mortgage Ezy are submitted, approved, settled and have the commission paid out before the bank has even come up with a conditional approval.” Driscoll feels he hasn’t seen service levels this poor in all his time in the industry – so much so that he questions the banks’ long-term commitment to the broker channel. “Consider that loans submitted by brokers to banks can take three weeks to get assessed. Yet if the applicant goes into a branch with the same deal, they can get it done in three days. Why is that?” he asks. Back to the future Yet, it is this poor service that spells out the brightest future for the mortgage management industry. Driscoll has no doubt about it: it is simply because people will still want an alternative to the banks. “Right from the very beginning the co-op housing societies competed with the banks. And while their market share was reasonably small, those co-op housing societies developed over the years – through building societies into the mortgage management industry today,” he says. However, limited access to flexible funding sources still is a major concern for mortgage mangers. “Flexibility in products has been one of the great advantages non-banks have had in the past, but with the lack of liquidity in the RMBS space this flexibility has been cut back somewhat – making high LVRs and low doc loans no longer available.” But the reality is there is a huge amount of money tied up in superannuation funds. When this money starts looking for a new home the opportunity is open for it to find its way back into residential securities. Driscoll’s hope is that funding will free up by the end of this year – although even if it does herald the return of buoyant trading conditions he can’t see the market returning to the glory days of “180 point spreads and high value products”. “What will come out of the crisis is that there will be fewer mortgage managers. But those that come out the other end will be a lot stronger, and a lot smarter.” And that, he says, is certainly something to look forward to. MPA
turkish delight If you’ve never ventured further than a kebab or pide before, prepare for a shock. Iain Hopkins enters the world of fine Turkish food – and likes what he finds
Efendy Meze Bar Cuisine: Turkish Prices: Meze $4–8; Mains $24–44; Dessert $12–19 Address: 79 Elliott St, Balmain Phone: (02) 9810 5466 Website: www.efendy.com.au
Unlike surrounding suburbs Leichhardt and Haberfield – which have a glut of Italian dining establishments and little else – Sydney’s Balmain has always benefited from a diverse range of culinary pleasures. Nestled between Balmain and Rozelle is Efendy, a Turkish restaurant flying the flag for an often overlooked cuisine. The Efendy Meze Bar has been designed as a more laid-back – and economical – cousin to its downstairs restaurant, and like all good restaurants, the experience extends far beyond just the food. The meze bar decor transports diners into an Ottoman world. Hand-made Turkish talismans, artefacts and symbols from Anatolian villages furnish the room. Ethnic Turkish textiles are draped over the walls and a traditional Turkish wishing tree completes the setting. The key to Turkish food is to enjoy a range of bite sized dishes called meze, which range from $4–8 each. Much like Spanish tapas, the idea is to share these around the table. My dining partner and I ordered (and struggled to pronounce) a range of meze including: mucver – zucchini puffs with garlic and mint yoghurt; gozlame – spiced lamb, feta and yoftha pastry; ezme – spicy tomato, fresh herbs and isot pepper; and cacik – a side dish of garlic, mint suzme and yoghurt – similar to the Greek tzatziki. In addition, we ordered one of the daily specials, softshell crab crumbed in spices.
Despite the simple descriptions, each dish was surprisingly vibrant and extremely tasty, with the winning vote being cast for the gozlame. If good things come in small packages, the meze option is certainly a winner. Dessert was berries and chocolate cake baclava topped by a wafer. Possibly the highlight of the evening was the sweet-tasting apple tea, which had the added twist of being sipped through a cinnamon stick. The result was simultaneously vibrant and refreshing. The waitress even tracked down the best place to find it in Sydney. Alongside an extensive wine list, including boutique wines by the glass or 500ml carafe, Efendy also offers Efes Pilsen Turkish beer. For the more adventurous, try raki – the preferred Turkish spirit. Efendy is also BYO. The service was exemplary, with smiling owner Somer Sivrioglu a warm and gracious host and the wait staff helpfully providing tips on what to order and explanations of each dish. The water and wine glasses were never empty. Although the meze bar also offers main courses (ranging from $24–44), four or five meze dishes were more than enough to satisfy two diners with big appetites. In these tough economic times, it is rare to get away from a restaurant paying less than $35 per person for mains. With smart ordering at Efendy, you can walk away fully satisfied for around $25.
contact Raj Khatak 02 8437 4772
Steve Sampson + general manager + Provident Cashflow
Favourite things Book Reading some Barack Obama stuff at the moment, plus 50 Places to Surf Before You Die (but I think I would die if I surfed some of them!)
Star Nelson Mandela: “It always seems impossible until it's done.”
Music/band Elvis, The Stones and the Chili Peppers Drink Love Cognac after dinner (bit dangerous to have it before!)
Movie Slumdog was good, but I love Peter Sellers in The Party
Sport Coaching my youngest kid’s soccer team at the moment, and I love rugby
Vacation spot Hawaii Place to be Anywhere together with my family (or the beach)
Food Good, fresh, fat Coffin Bay Oysters Hobby Surfing