Mortgage Professional Australia magazine Issue 11.2

CELEBRATING 10 YEARS

www.brokernews.com.au ISSUE 11.2

2011 predictions from industry heavyweights

EDITOR’S LETTER

Crystal-ball gazing As well as making resolutions on New Year’s Eve that are usually broken before February arrives, another practice we all like to undertake as we usher in a new year is predicting what the next 12 months will bring. Rather than rely on our calculated guesswork, we’ve asked some of the mortgage market’s most recognisable figures to look into the tea leaves in our cover feature this month.

To get a fair idea of what the RBA cash rate will be at the end of the year, learn which companies and individuals to look out for and see what the biggest issues are likely to be, head on over to our predictions special on page 38.

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2011 also marks something of a landmark year for MPA. With our first issue landing on desks at the tail-end of 2001, this year marks our 10th year of publication, a milestone we are rightly proud of. Often imitated but never bettered, we continue to be the industry’s leading title for in-depth analysis, hard-hitting features, comprehensive and renowned surveys and profiles of the leading lights. Look out for special anniversary coverage in future issues of the magazine as we cast our eye back over a decade of broker brilliance.

Back to the current issue, and we take a look at how disappearing exit fees and cash rate increases can actually benefit you as a broker, examine the differences between intermediaries operating in urban and rural areas and tell you how you can be happier at work. We also take time out to chat with new ING recruit Peter Hayward, Wealth Today’s Tony Pennells, AFG’s Lisa Bevan and Pepper’s David Holmes.

Enjoy the magazine and all the best for a successful 2011.

Barney McCarthy 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.

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CONTENTS

cover story

26 The refinancing rush Interest rate rises caused consumer despair, but it’s not all bad news for brokers

38 The futurists

MPA invites the industry’s visionaries to give their 2011 predictions

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STEPHEN MOORE IN PROFILE Visit our website to see the newly appointed CEO of Choice give his first in-depth interview since taking the reins, including his take on: »» how the role of brokers will continue to evolve »» the fee-for-advice debate »» learning lessons from financial planners www.brokernews.com.au

CONTENTS

EDITOR Barney McCarthy

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COPY & FEATURES CONTRIBUTOR Andrea Cornish PRODUCTION EDITORS Jennifer Cross, Robin Hill ART & PRODUCTION

NEWS ANALYSIS

12 Making a connection: MPA reports from Connective’s annual conference in Queensland 14 More harm than good: Barney McCarthy gauges industry reaction to the Government’s banking reforms

DESIGN MANAGER Jacqui Alexander DESIGNERS Paul Mansfield, Lucila Lamas, Ivee Caburian SALES & MARKETING NATIONAL SALES MANAGER Rajan Khatak BUSINESS DEVELOPMENT MANAGER Lisa Tyras ACCOUNT MANAGER Simon Kerslake MARKETING EXECUTIVE Kerry Buckley MARKETING COORDINATOR Anna Keane

FEATURES 18 Be happy: MPA looks at why mortgage brokers should feel optimistic in 2011 22 A tale of two brokers: Urban and rural mortgage broking are almost different occupations, as Andrea Cornish finds out

TRAFFIC MANAGER Stacey Rudd CORPORATE DIRECTORS Claire Preen, Mike Shipley CHIEF OPERATING OFFICER George Walmsley PUBLISHING DIRECTOR Justin Kennedy ASSOCIATE PUBLISHER Rajan Khatak CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil

COLUMNS 56 Relationship advice: establishing a flow of leads is essential to brokers’ survival, as Doug Mathlin explains

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PROFILES 34 Life lessons: Wealth Today’s Tony Pennells has come a long way to launch his pioneering planning proposition 60 The go-to-man: ING Direct’s Peter Hayward is hot property when it comes to broker distribution

LIFESTYLE

Editorial enquiries Barney McCarthy tel: +61 2 8437 4790 barney.mccarthy@keymedia.com.au Advertising enquiries Sales Manager Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Account Manager Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media www.keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Hong Kong, Toronto www.brokernews.com.au 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

10 A day in the life of: David Holmes, Pepper 64 My favourite things: Lisa Bevan, AFG

This magazine is printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

NEWS

Downsizing demand jumps

MARKETS

Rising interest rates are leading to more

Fixed rate popularity peaks Research by Mortgage Choice has revealed a 29-month high in the popularity of fixed-rate mortgages. According to the data, the popularity of fixed-rate loans rose to 10.9% of all approvals nationally during November.

Mortgage Choice spokesperson Kristy Sheppard said the sharp increase, up from 7.7% in October, was indicative of rising borrower caution and conservatism in the face of higher interest rates and living costs.

“The elevated pricing of most fixed rates compared to variable rates has not deterred one in nine new Australian borrowers from fixing the rate on all or part of their home loan,” she said.

Australian First Mortgage director David White noticed the increase in the months leading up to the last rate rise, but said the RBA’s comment that it will leave rates on hold for some time has drawn most clients back to variable rates.

“We received a large increase in fixed-rate applications and enquiries in the two months leading up to the latest RBA rate change as we had a special fixed rate offer in the market.

“Since the rate change, we have noticed most applications are now for variable rates as the RBA has made positive comments that rates are now likely to remain stable until mid-next year,” he said.

Mortgage Choice’s data also showed that the proportion of basic variable rate home loans dropped to 36.1%, a 25-month low. It suggested this was due to the growing popularity of pro packs on offer with standard variable rate home loans. The standard variable rate remained the most popular, at 49.3% of all approvals.

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49.3% Percentage of home loans accounted for by borrowers on their lender’s standard variable rate Source: Mortgage Choice

borrowers seeking to downsize their mortgage, according to Loan Market.

The broker’s chief operating officer Dean Rushton said the company has seen a significant increase in enquiries about property downsizing since the latest round of rate hikes.

“Our call centre rarely receives downsizing enquiries in any given week of the year, so the influx of this type of enquiry indicates mortgage holders are really feeling the impact of the last Reserve Bank rate rise,” Rushton said.

“There have been predictions that the RBA could raise the cash rate from its present level of 4.75% to as much as 6% by the end of 2011, and that has unnerved many mortgage holders,” he said.

Rushton suggested downsizing may be a wise option for borrowers feeling the strain of increased repayments.

“By selling up and buying a smaller and less expensive property, people can reduce their mortgages and create a comfort zone,” he said.

CHOICE lauds broker impact Consumer group CHOICE believes mortgage brokers have a role to play in increasing competition in the banking sector.

Christopher Zinn, CHOICE director of campaigns and communications, said mortgage brokers will play an important role in helping consumers to switch lenders.

“Part of their role has been to cut through the complexity and confusion and to alert people to the best deal for them,” he said.

Increased competition in the sector is in the best interests of brokers, he said.

“Mortgage brokers have really been hit by the banks’ actions, because confidence has dried up as people don’t know what’s going to happen.

Mortgage brokers have a real and legitimate interest in seeing competition supported.”

NEWS

REVIEW

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NEWS MARKETS

RP Data predicts property price plateau Home values rose by just 0.3% in October 2010, and tougher times may be ahead.

Property research house RP Data’s latest index indicated that Australian capital city values rose by 0.3% in seasonally-adjusted terms, bringing growth for the first 10 months of the year to 4.3%. When taken over a 12-month period, investors will have seen a more robust 6.5% gain, due to the double-digit annualised growth that prices recorded in late 2009 and early 2010.

Research director Tim Lawless said since the market started to cool in June the cumulative decline in dwelling values to the end of October had been less than 1% across capitals, suggesting the market was slowing at a controlled pace.

RP Data is expecting the November rate rise, bank interest rate top-ups, declining clearance rates and a rising stock of unsold homes to result in tougher times for the residential market ahead.

Broking named top franchise Franchise marketing firm 10 Thousand Feet has identified mortgage broking as one of the strongest franchise sectors.

In its 2010 Franchisor Sentiment Survey it found franchisor optimism has returned to pre-GFC levels, with mortgage broking singled out as a strong sector for 2011. Ian Krawitz, head of intelligence, said franchisor optimism in broking has grown at a steady pace despite the downturn in the housing sector.

“Franchisor sentiment seems to keep on growing at the same pace it has in the past.”

Krawitz said that mortgage broking franchisors still believe the market will perform strongly, because broking as a whole has a good business model. He added that, despite fluctuations in the housing market, franchisors still see long-term demand.

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4.3% Property price growth in the first 10 months of 2010 in Australian capital cities Source: RP Data

Credit Ombudsman issues broker appeal Australians are becoming financially savvy at a younger age, according to Club Financial Services. A recent survey conducted by the mortgage broking franchise, primarily of current mortgage borrowers, found that 77% of over 300 respondents had purchased their first home before they were aged 30.

Club Financial Services general manager Andrew Clouston said while many younger people may struggle to save as they meet bond, rent and general living expenses, it was also common for people in their 20s to still be living at home.

“With few outgoing costs they often have quite a high disposable income, making it the ideal time to get a foot up on the property ladder, and our survey results show that many are doing just that,” he said.

Clouston said recent data from the Australian Bureau of Statistics and RP Data also showed employment opportunities were the biggest driver for areas where borrowers choose to purchase a home, rather than being guided by where houses were the most affordable.

As well as purchasing homes at a younger age, the Club survey found borrowers have gained early investment confidence, with 35% of respondents aged 18–29 and 44% of all respondents under 40 indicating they had already started an investment portfolio.

COLUMN

A DAY IN THE LIFE OF...

A day in the life of…

David Holmes, chief operating officer of Pepper, talks brand awareness, low-doc lending and a steady stream of emails

0630h

David Holmes

“ The market has picked up dramatically for Pepper during the last 12 months ”

I wake up and watch the news over breakfast. It’s another report on the seemingly never-ending troubles of Australian small businesses, this time highlighting the difficulties they are facing securing funding from the banks. More and more are finding it difficult to expand their business as access to finance remains tight.

I worry this could become a real problem as this important business sector makes up the backbone of the Australian economy.

0830h

The working day starts and I sit down over a coffee with my team to review the day ahead.

The market has picked up dramatically for Pepper during the last 12 months as the company is now only one of a handful of specialist lenders left in action following the GFC. This is great for business, but means there is a strong demand from brokers for our products and services.

1000h

The first meeting of the day is a presentation to the team from PLAN Australia. One of the main focuses for Pepper right now is shedding light on alternative income verification (AIV) loans – the new form of low documentation lending. Previously seen as an unsafe form of lending, the new NCCP legislation now regulates responsible lending practices in this area. Many brokers are still learning about the credit criteria of the lenders operating in this space and that’s what I’m here to help them with. There is huge untapped opportunity here for them in understanding the self-employed segment because at present it is both chronically under-serviced and under supported. After the presentation I’m hoping they’ll feel confident discussing AIV Loans with small business owners and the self-employed who need this type of lending.

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1300h

Quick lunch at my desk as I make my way through the morning’s emails.

1430h

Marketing manager Liz and I meet with the team from Pepper’s creative agency to approve the series of ads, online banners and other creative for our next campaign. After our return to the market following the GFC, Pepper has revitalised its brand. A new logo and website were launched at the same time as our first campaign under the new Pepper banner, offering reduced interest rates on home loan product, Self-Employed Advantage. The next campaign will be launched in the New Year and will continue to drive awareness for a suite of products now available to suit a wide assortment of borrowers.

1600h

The final meeting of the day is a catch-up coffee with a journalist from the Australian Financial Review, once again focusing on the worries in the market around low-doc lending. In response to a question on whether there is a future for low-doc loans under the NCCP legislation – I tell them in no uncertain terms the answer is yes; just not in their previous form.

1730h

Back to the office and a final check of my emails before heading off for the day. I look forward to an evening chilling out with my family and relaxing, recharging for the next busy day tomorrow.

NEWS ANALYSIS

Making a connection Connective recently held its fourth annual conference in Queensland. Barney McCarthy was there to report exclusively for MPA

N

oosa was the location for this year’s Connective conference, with the aggregator welcoming more than 200 delegates to the Sunshine Coast for three days of presentations aimed at helping members build their businesses. Connective is no stranger to rapid expansion itself, announcing shortly before the convention began that it had again made BRW’s Fast 100 list, in 25th place.

Principals Mark Haron and Murray Lees opened the event, with the former stressing that Connective was not resting on its laurels and had to earn the right to be their members’ aggregator each and every month. Giving an idea of Connective’s current structure, he said the aggregator had grown to include 27 staff and more than 1,200 broker members in the seven years since its inception. Haron also unveiled Connective’s impressive settlement figures, with a 20% year-on-year loan book increase. It also recently surpassed $4bn in loan settlements with Westpac, an achievement that was marked by a Westpac representative presenting the Connective senior management team with a plaque. Haron also made light of speculation the aggregator was up for sale, but did admit that Connective would make a valuable acquisition.

Westpac senior economist Matthew Hassan gave delegates an overview of the domestic and global economies and dismissed claims that Australia was experiencing a housing bubble.

“The bubble blowers have not done their homework, as affordability is stretched, not bubble-like,” he said. “If there was a bubble, it would have burst.” Hassan also discussed the potential ‘problems of prosperity’, such as meeting strong demand for resources with a

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stretched capacity in order to prevent inflation.

Gazing into his crystal ball, Hassan predicted that the RBA cash rate would sit at 5% at the end of December 2011, with the next rise likely around June.

Day one’s program was concluded by motivational speaker Craig Harper. Although primarily an exercise physiologist, Harper had the audience fully engaged with his presentation discussing how to transform oneself (and one’s business) from mediocre to amazing. Using physical fitness as a metaphor for improving business performance, Harper spoke of the need to get uncomfortable in order to make changes.

The second day of the conference began with Connective director Glenn Lees giving delegates the lowdown on the aggregator’s latest technology developments. With licensing a chief concern among intermediaries, Lees demonstrated how improvements to its Mercury mortgage-broking software now meant that brokers could print off a range of fully-compliant template documents to give to their clients at various stages of the home loan application process. For brokers without a huge budget to develop their own websites, Lees alerted attendees to a white-label service provided by Connective that allows them to create their own domain at limited expense.

Brokers were then treated to back-to-back presentations by self-proclaimed ‘master communicator’ Chris Helder. His high-energy, amiable style had delegates enthralled as he gave insights into the ‘power of influence’ and the ‘five keys to momentum’. The second day’s schedule was then wrapped up by self-made millionaire Troy Hazard, former global president

NEWS

ANALYSIS

of the Entrepreneurs’ Organisation, who recounted his business successes and failings using the motto of ‘change or die’ – particularly pertinent for mortgage brokers who find themselves at something of a crossroads as the industry comes to terms with licensing. Hazard was at pains to stress that perceived ‘value’ in the eyes of clients wasn’t solely a monetary consideration, but included other factors such as

service, quality and simplicity. The conference finished with an industry panel discussion, and there were opportunities for delegates to network at various social events. There was also a healthy lender presence at the event, with all four majors in attendance alongside 19 other providers. With Connective continuing to grow at an impressive rate, next year’s event is sure to be another key date for the diary. MPA

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NEWS ANALYSIS

More harm than good?

The banking reform package unveiled by Federal Treasurer Wayne Swan in December may have had consumers’ best interests at heart, but, as Barney McCarthy reports, mortgage industry reaction has been far from welcoming

W

hen Treasurer Wayne Swan revealed the Gillard government’s plans for reforming the banking sector with an eye on stimulating competition, he gamely admitted there was no silver bullet and acknowledged that the challenges stemming from the GFC could not be solved overnight. What developed in just a matter of hours was a wave of apathy from huge swathes of the mortgage market, who felt that they had been overlooked by the initiatives – including the very institutions that some of the measures were intended to benefit.

While Mr Swan explicitly referenced the intention to assist smaller lenders, the MFAA

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was quick to condemn the abolition of exit fees, saying non-banks would be “distinctly disadvantaged” by their removal. CEO Phil Naylor said “non-bank lenders have been able to offer consumers competitive interest rates by deferring some of their set-up costs into deferred establishment fees, which are paid only if there is an early termination of the loan. It is futile to establish mechanisms to enable switching if there is no viable and competitive alternative to switch to. The reality is that exit fees may be replaced by establishment fees, making it harder for consumers to get a home loan.”

Mortgage House managing director Ken Sayer claimed the exit fee ban in isolation would not adversely affect non-bank competitiveness, but he was disappointed the reform initiatives stopped short on a number of issues. “Consumers need to understand the degree of non-bank safety and standing,” he said. “For example, that disciplines associated with valuations protect financial institutions from inadvertent internal mistakes, that lenders mortgage insurance is independent, that non-bank funding programs are special purpose vehicles and cannot become bankrupt and that losers in prime Australian RMBS losses are nil.”

Sayer called for the promotion of non-bank funding transparency. He published his own list of potential reforms, including disallowing majors and their acquired financial institutions from utilising brokers. Other non-banks and regional lenders were critical of the reforms too, with Bank of Queensland managing director and

NEWS

ANALYSIS

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NEWS ANALYSIS

Swan’s banking reform package at a glance

“ The reality is that exit fees may be replaced by establishment fees, making it harder for consumers to get a home loan ” chief executive officer David Liddy saying the announcement put the cause for a ‘fifth banking pillar’ back 15 years.

Brokers out in the cold While non-bank reactions to the banking reforms were less than enthusiastic, perhaps the most vociferous complaints came from the broking community. Broker News message boards were overwhelmed with angry intermediaries, claiming the moves played into the hands of the majors and would further hamper the non-banks from competing on a level playing field. One anonymous contributor posted the following: “Just how many times can a broker be screwed? Probably until there are none of us left in this industry, which is clearly the banks’ objective. I suppose this is what happens when we have no voice and no industry bodies to go in to bat for us.” Another broker went even further, suggesting the “terrible decision” to abolish exit fees would force him to close the doors on his business.

National press reaction to the reform package was also critical, with the Herald Sun reporting that the big banks would be celebrating rather than lamenting the measures, which will do little to undermine their dominance, and The Sydney Morning Herald describing the list of objectives as “long on rhetoric and short on solutions”.

With licensing requirements to deal with on one hand and the feeling of swimming against a tide of political indifference on the other, brokers are entitled to feel hard done by after the reform announcements. If many non-banks share this discontent, maybe there is mileage in some sort of alliance to be formed for stronger representation, as Sayer suggests. Viva la revolution! MPA

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Under the heading of ‘A competitive and sustainable banking system’, Treasurer Wayne Swan unveiled the following three broad streams of reform: “To empower consumers to get a better deal, help smaller lenders put more competitive pressure on the big banks and secure our financial system so it can continue to provide a sustainable flow of credit to households and businesses.”

Consumer reforms: • Ban on exit fees outright on new home loans from 1 July 2011 • Boost consumer flexibility to transfer deposits and mortgages • Introduction of mandatory key fact sheet for new home loan customers • Empower the ACCC to prosecute anti-competitive price signalling • Fast-track legislation to get a better deal for Australians with credit cards • Launch of a national community awareness campaign to empower consumers in banking • Set up a taskforce with the RBA to enhance ATM competition reforms Smaller lender assistance: • Construction of a new ‘pillar’ in the banking system based on the combined competitive power of mutual credit unions and building societies • Confirmation of the Financial Claims Scheme as a permanent feature of the financial system, to secure critical deposit funding for smaller lenders • Further $4bn investment to support the residential mortgage backed securities (RMBS) market • Accelerated development of a ‘bullet bond’ structure for RMBS issuance to strengthen and diversify RMBS funding for smaller lenders Sustainability measures: • Allow all banks, credit unions and building societies to issue covered bonds to broaden access to cheaper, more stable and longer-term funding, and harness national superannuation savings to domestically fund more productive investment in the economy • Development of a deep and liquid corporate bond market by launching the trading of Commonwealth Government Securities on a securities exchange, to reduce reliance on offshore wholesale funding markets

NEWS

ANALYSIS

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FEATURE

PROFESSIONAL ATTITUDE

a Be h ppy Happy days are here again.

MPA looks at why mortgage brokers should feel pretty good in 2011

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R

ecession depression is a thing of the past – it’s time to get happy. And as a broker, there are plenty of reasons to feel good. A recent report by IBISWorld indicates brokers will see annualised wage growth of 4.9% between 2011 and 2016.

According to IBISWorld general manager Robert Bryant, the Australian mortgage industry is still relatively young and will grow rapidly on the back of increased housing demand. Despite commission cuts, the industry research group predicts brokers’ incomes will inevitably rise as demand continues to outstrip supply and house prices escalate.

“The mortgage broking industry is generating strong revenue and profits as house prices rise,” Bryant says.

Smaller lenders’ dependence on the third party channel will also increase the value of brokers in the eyes of the banks, he adds.

Not only are lenders looking to brokers, but so are borrowers. The latest research from the MFAA/Bankwest Finance Index indicates that awareness of brokers is at 97% and that 40% of consumers currently use the services of a broker. As rate uncertainty continues in 2011, MFAA CEO Phil Naylor predicts more borrowers will be looking to brokers to set them up with suitable products.

National regulation may be trimming the total membership of the industry by about 20%,

but Naylor argues this will mean more business for those brokers left standing.

And those around in 2011 to reap the rewards will have an easier time finding finance for their clients, as lenders continue to loosen credit restrictions and introduce higher LVR products for cash-strapped borrowers.

Indeed, the industry has changed drastically since the dark days of the GFC, says Ann Folbigg, chief people person at The Happiness Institute and Smartline broker for Northbridge, NSW. “The mood in the broker industry during the GFC mirrored the rest of the world,” she says, adding that the industry has undergone a fair amount of change in the last couple of years.

Brokers have faced consolidation, commission cuts, blowouts in lender approval times and reduced lending, but overall Folbigg says mortgage professionals kept their chins up.

“I don’t think I’ve met too many miserable mortgage brokers,” she says. “If you’re a good broker then you have the client in mind and you’re always thinking of helping them.”

She adds that it’s a profession that inherently generates a feeling of happiness.

“It’s incredibly satisfying helping people obtain their first home. You become a part of people’s lives – you keep in contact with them, you get invited to housewarming parties – it’s very fulfilling work.”

FEATURE

PROFESSIONAL ATTITUDE

And the timing of the regulatory makeover for the industry couldn’t be better, she adds.

“It’s raised the bar and gotten rid of people who probably shouldn’t have been in the industry in the first place.”

Folbigg is not a psychologist, but she runs the operational side of The Happiness Institute – Australia’s first and only organisation “focused solely on promoting happiness in individuals, couples, families and organisations”.

She co-runs the institute with founder and ‘chief happiness officer’ Dr Timothy Sharp, a clinical psychologist, adjunct professor, speaker and author. Folbigg and Sharp were introduced at university, but their business relationship didn’t develop until after they met each other again at a networking event in 2004. Folbigg had worked with Macquarie Bank in Corporate Banking and Securitisation for seven years, before establishing Mortgage Force in 1996 (which merged with Smartline in 2009). When she met Sharp, Folbigg was mentoring other mortgage brokers within Mortgage Force and was looking for some coaching advice, while he was looking to grow his business in a similar way to Mortgage Force.

“It was just one of those chance, serendipitous meetings,” Folbigg says.

Together they promote happiness through coaching, courses and consulting activities using strategies developed in the field of positive psychology.

“ It’s incredibly satisfying helping people obtain their first home.

You become part of people’s lives … it’s very fulfilling work ”

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FEATURE

PROFESSIONAL ATTITUDE

One of their core areas of work is promoting happiness at work – which has been proven to increase staff satisfaction, promote productivity and teamwork, improve retention rates and lower staff turnover.

Folbigg adds that happiness breeds success.

“Research has proven that you’re more likely to be successful if you’re happy.”

Part of happiness is building positive relationships, which in turn can actually help you earn more money – this is especially the case for mortgage brokers, who depend on referrals from clients.

So how do you get happy?

“To a certain extent you can fake it till you make it, but not for too long,” Folbigg says.

Anyone can spot a fake, but reminding yourself to smile once in a while can actually lift your whole attitude. Believe it or not, being happy takes practice – and it’s a worthwhile exercise both for your emotional wellbeing and your business.

“When you’re feeling negative, your mind closes down,” Folbigg says, “but when you’re positive your mind opens and you’ll start to see more opportunities.”

While it’s easy to get bogged down in the stress and tedium of a job, Folbigg says it’s important to make sure you have fun.

“Every job has its good days and bad days, but

‘‘ Research has proven that you’re more likely to be successful if you’re happy ” if you think your job is just a means to an end then perhaps you need a new career.”

If you love what you do, but hate certain aspects – such as processing – then consider outsourcing those tasks.

“Stick to what you’re good at,” Folbigg advises.

And for brokers working day and night to make their business a success, Folbigg recommends you prioritise your goals, strengths and values and try to find a balance. MPA

The Happy Guide Feeling blue or even just blah? The Happiness Institute recommends the following 20 tips to help kick-start your happiness, which are described in more detail in Dr Timothy Sharp’s The Happiness Handbook.

Top of the list Make happiness a priority.

Plan The pursuit of happiness requires planning.

Shoot and score Make happy goals that are SMART (specific,

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measurable, achievable, relevant and timed).

responsibilities in a playful manner.

life’s bounty and goodness.

thoughts with optimistic thinking.

Do a happy dance or whatever it is that makes you happy. Just remember to keep doing things that give you pleasure and repeat them often.

Focus on strengths Identify what you’re good at and take some focus off the things that need improvement.

Love yourself and so will others.

Get healthy Eat well, exercise.

Work on your relationships Invest time and energy into the key people in your life.

Sleep Happy people are well rested.

Get some satisfaction It’s not just about having fun. Plan some tasks that will give you a sense of achievement when completed.

Play Why the serious face? Approach your

Use your strengths Capitalise on the things you’re good at to succeed.

Curiosity won’t kill you (just cats) Approach life with a sense of curiosity and search for new ways to have fun.

Gratitude Be grateful for

Socialise as much as possible.

Time management Take more control of your life by managing your time.

Lose the negativity Getting rid of negative thoughts helps strengthen the positive ones.

Control issues It’s the old maxim: Control what you can control, accept the things you can’t and learn to know the difference.

Plant happy thoughts Replace negative

Live in the moment Be happy now.

FEATURE

PROFESSIONAL ATTITUDE

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FEATURE

BUSINESS LOCATION

Ever wondered how different your professional life would be if you worked in the hustle and bustle of one of Australia’s big cities? Or perhaps you’re dreaming of a simpler life? MPA compares operating in the bright lights with broking off the beaten track

Two sides of A

ustralia’s state capitals have plenty to offer brokers: worldclass restaurants, great nightlife and the opportunity to service high-net-worth individuals. But with all good things there must also be some bad. Traffic, increased competition and complicated loan structures are just a few negatives that generally come with the package.

There’s a lot to be said for broking in regional areas – a quieter pace, it’s easier to advertise and formal business wear is generally not required. But then again, you’re isolated professionally, home visits can involve travelling long distances and there’s a limited market. So just how green is the grass on the other side? MPA catches up with two brokers at opposite ends of the scale to compare their experiences.

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The simple life

Regarded as one of the world’s greatest river systems, the iconic Murray River winds through 2,756km of contrasting landscape in south-eastern Australia. The river supports some of Australia’s most important agricultural regions and is a popular tourist attraction, being the thirdlongest navigable river in the world after the Amazon and the Nile.

The town of Berri (which takes its name from the Aboriginal word ‘bery bery’, meaning ‘bend in the river’) is situated on the lush banks of the Murray, about 525km by water from the lake entrance below Wellington in South Australia, or 240km from Adelaide by road. Having a population around 7,500, Berri is surrounded by 3,000 hectares of irrigated

FEATURE

BUSINESS LOCATION

the story orchards and is well known as a fruitprocessing town.

Robin Foley, principle of Robin Foley Mortgage Brokers, runs a boutique financebroking business that services clients in the Riverland region of South Australia. This includes Berri, Renmark, Paringa, Loxton, Barmera, Waikerie, Blanchetown, Broken Hill, Mildura, Pinnaroo, Lameroo, Roxby Downs and Coober Pedy.

Foley was born and bred in Berri and has lived there all her life, with the exception of one year after she was married.

“It’s where I’ve always lived – my home and my family are here. When I’m having a rough day someone will always give me a wave and a G’day. Of course the river is here and part of my life as well. There are some beautiful places and wetlands here

and local fresh produce and wine. Living here is like being on holiday every day.”

Foley joined Wizard eight years ago.

Prior to becoming a broker she worked in retail, tourism marketing, administration and job placements for people with a disability. She was looking for a business that was less demanding physically and, as she’s always had a head for figures, she decided broking would be a good fit. When Aussie took over Wizard in 2009 Foley chose to strike out on her own. “I decided I would be better off having control over my business and future, so I chose to become independent.”

She selected Connective as her aggregator and says she has been happy with their training, support and management. Foley says the webinars

“ When I’m having a rough day someone will always give me a wave and a G’day ”

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BUSINESS LOCATION

offered by Connective, as well as by the MFAA and ASIC, make it much easier to be a broker in a regional area. “I love the webinars. A trip to Adelaide for a seminar will cost at least $100 in fuel and parking as well as three hours’ driving each way,” she says by way of comparison. Foley relies on the internet quite a bit, as her contact with BDMs is very limited. “I have only ever had about three BDMs call on me, so I think city brokers have an advantage with being able to discuss policy and product.”

She admits the professional isolation can be difficult at times. The bulk of Foley’s clients live in the Riverland area, which is comprised of five main towns with roughly equal populations of around 7,000. Her furthest clients live in Darwin, Tasmania and Canberra. Despite the distances, Foley’s clients usually visit her home office as she can photocopy IDs and documents on the spot and has ready access to information on the internet.

That said, she often drives to Adelaide for clients.

“I’m happy to do that as my business is small enough with low overheads to be able to commit time to travel if needed,” she says.

According to Foley, her area presents unique challenges for a broker. “An Adelaide loan is a dream compared to one here. As we are a farming and horticultural region, many of the workers are seasonally or casually employed. Few have savings. Although rent may be cheaper, it would be difficult for anyone to live and work here if they didn’t have a reliable car. Many of the horticultural employers are outside of the towns so most of the younger people have car loans, which may prevent them from borrowing for a home loan,” she says.

“In addition, I have to be aware of the postcode restrictions, zoning and land size, as mortgage insurers have different LVRs for some of the smaller towns. Some lenders will fund a property if it is for residential purposes regardless of the zoning, others will not. Some require a rural living property to have a sealed road access.

Some will not fund larger properties if they don’t already have a home on it, and services.”

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“ I love the webinars. A trip to Adelaide for a seminar will cost at least $100 in fuel and parking ”

Foley’s clients are an even mix of first homebuyers, upgraders and investors, and she is also accredited to offer commercial loans. PreGFC, a high number of first homebuyers were in the 100% category, but those numbers have since dropped off. “The 100%s were my main borrowers when I was with Wizard because of the difficulty of saving, and with the price of homes here they could get in with little, if any, deposit,” she says.

“Most of them managed okay but it is difficult for them to now refinance for a better deal, as they don’t have enough equity to refinance at 90% including LMI.” Foley’s clientele now includes referrals from parents whose adult children are having difficulty getting finance. Living and working in a small community means you are well-known, no matter what your profession, and Foley admits it’s a good incentive to always do your best for the client.

“They are certainly aware of me and I can’t afford bad publicity. Due to my community involvement I’m definitely not anonymous anyway!”

Foley is an active member of Rotary, the Berri Town Beautification Committee, Berri Traders Group and, previously, the Relay for Life. The community involvement pays off professionally for her, as she receives quite a bit of publicity in the local media. She also markets her business through regional television and radio: at present Foley has an advert in the local phone book and a monthly ad in the local paper. But Foley’s business isn’t the only one in town – banks and credit unions are readily accessible and local real estate agents have their own in-house finance.

There are also two other established brokerages servicing the Riverland area.

She is reluctant to put a figure on last year’s settlement figures, citing “unspectacular” results due to the local economy that has been severely affected by the recent drought and water restrictions. “For the loans I do submit, I have a high settlement volume as I have the time to contribute to the application and research not only the best loan for the customers, but also the loan most likely to be approved.”

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BUSINESS LOCATION

Big city, bright lights Newtown is one of Sydney’s most vibrant inner-city communities, located just 4km south-west of the city’s CBD. King Street, also known as ‘eat street’, dominates the suburb.

When combined with Enmore Road it comprises 9.1km (round-trip) of shopfronts, and is the longest and most complete commercial precinct of the late Victorian and Federation period seen in Australia.

The area is rich with history and has been reincarnated several times since its birth as a residential and farming area in the early 19th century. While it is now known for being very lively, it was ironically the final resting place for many early Australians. Almost 18,000 people were buried in Newtown’s historic Camperdown Cemetery, which for 20 years (1849-1868) was the main general cemetery for Sydney. Almost half of that number were the city’s poor, buried in unmarked and communal graves. During the latter part of the 19th century cheap terraces were hastily constructed to house a growing working class population.

Increased prosperity during the early 20th century led to the construction of Victorian mansions on larger estates and bigger, higherend terrace houses – many of which are still standing.

Newtown never strayed too far from its blue-collar roots during the first half of the 20th century, but in the 1970s low rents and the nearby Sydney University started to attract a large student population. The subsequent development of pubs, bookshops, eclectic eateries and cafes has given Newtown the bohemian atmosphere it’s now known for.

Sean Beavis, a broker of 10 years, is the principal of Aussie Newtown. Beavis previously worked in film and television for 15 years, but became interested in how to leverage equity and purchase investment properties as he witnessed Sydney go through more than one property boom.

“Before I knew it I found myself explaining

“ We are fortunate that our average loan size is higher than it would likely be if we were located in a regional area ”

what I learned to friends and this lead me to investigate opportunities with non-bank lenders, and finally I ended up getting a job as a mobile lender,” he says. He started his career at Wizard in nearby Surry Hills, but took over the Newtown branch when it came up for sale. The Aussie Newtown branch settled $142m last financial year and approximately $75m was from Beavis’ efforts alone.

He says there are several advantages to plying his trade in such a central location. “I believe that property in inner-city suburbs tends to change hands more frequently than outer suburbs or regional areas, as our customers tend to be working professionals who are upwardly mobile. We are also fortunate that our average loan size is higher than it would likely be if we were located in a regional area,” he says.

The target market in Newtown is 29 to 40-year olds and the majority are single. “We tend to find when we meet them they are career-based or professionals who are upwardly mobile. There is also a large gay community in Newtown with higher incomes and no kids.” About 30% of Beavis’ clients are first homebuyers, while owner-occupiers make up around 50%. Investors make up the remaining 20%.

According to Beavis, around 30% of his business is by referral. Over the years, he’s tried many different ways of marketing his business – some expensive, some not. “These days we seem to get more bang for our buck out of smaller things. For example, we are currently running a promotion to reward customers who refer their friends and family. The referrer and the new customer both go in the draw to win an iPad.” There is plenty of competition: all the major banks are easily accessible and there are many other brokers servicing the area. But Beavis contends there really aren’t any downsides – quite the contrary. In a 2010 blog for Aussie, Beavis noted that Sydney’s inner-west is quickly becoming the city’s best performing residential property market, with land values outperforming those of eastern and lower northern suburbs. MPA

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FEATURE REFINANCING

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mericain had barely crossed the finished line in the 2010 Melbourne Cup when a race of a different kind starting taking place across the country – the rush to refinance. The RBA’s decision to raise rates on 2 November after a five-month hiatus caused a stir among borrowers that was only compounded by the CBA’s decision to hike its standard variable loan by 0.45% – almost double the RBA’s increase.

As one of the largest writers of CBA loans in the country, Australia Property Finance’s Greg Sterland says he noticed almost an immediate impact. “We’ve been fielding about 10–15 enquiries a week,” he said in late November. Vow Financial CEO Tim Brown confirmed similar increases in enquiries from his camp. “There’s no doubt borrowers have been showing strong interest in refinancing their loans following the latest spike in interest rates,” he says.

“From what our brokers are telling us, inquiries have jumped 30% since the Big Four increased their rates by substantially more than the Reserve Bank’s 25-basis-point rise. While any interest rate increase will have people shopping around, I think the size of the recent increases has definitely prompted consumer interest.”

Sterland agrees that homeowners are now more aware of rates: “We had the same kind of heightened awareness in 2008 when rates started to go up.”

Part of that awareness can be traced to politicians who have been very critical of bank rate movements during the GFC. Federal Treasurer Wayne Swan has consistently urged borrowers to shop around. “The big banks behave in an arrogant way because they feel confident that their customers won’t walk down the street to get a better deal,” he said publicly after all four major banks raised rates beyond the RBA increase in November. “I think it’s really important that Australians are aware, and have the capacity to walk down the road and get a better deal.”

Intelligent Finance’s Justin Doobov says the refinancing bonanza really got started as a result of these types of prompts from politicians in the media. “The enquiries increased after the RBA lifted rates, but mostly coincided with government calls encouraging borrowers to get a

Conditions are ripe for refinancers. Andrea Cornish looks at the perks and pitfalls for brokers and their customers

The

refinancing 26

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better deal,” he says. Aussie founder John Symond also did his best to raise borrower awareness by publicly highlighting research that demonstrated borrowers could potentially save thousands. “Aussie’s research shows that borrowers who refinance through us generally save up to 0.75% on the rate, which can amount to tens of thousands of dollars over the life of the mortgage,” he says. “Further, 50% of customers who walk through our doors do not have the best mortgage deal available in the market,” he adds.

Mortgage Choice survey findings also indicate that borrowers could stand to make big savings by shopping around. “Around 68% saw their interest rate drop upon doing so. Of these, almost one quarter were saving over $300 a month while 88% were saving more than $50 a month,” says Mortgage Choice spokesperson Kristy Sheppard.

“ Fifty per cent of customers who walk through our doors do not have the best mortgage deal available in the market ”

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According to the MFAA, customers started calling their mortgage brokers in droves in the weeks leading up to Christmas. “There is no doubt consumer sentiment is building as borrowers look for ways to offset rising interest rates and shop around for a better home loan in this environment of interest rate uncertainty,” MFAA CEO Phil Naylor says. He adds that this uncertainty would elevate the importance of mortgage brokers as more people seek independent advice.

This is a sentiment echoed by FBAA president Peter White. “People have to be a bit smarter than the average bear in this environment,” White remarks. “It’s a refinance market now, and a golden opportunity for brokers to get back on the wagon if they’ve been doing it tough.”

Boom for brokers?

PFS mortgage broker Daniel O’Brien says the current climate represents a fantastic opportunity for brokers. O’Brien’s office started fielding calls from both new and existing clients looking to refinance even before rates were raised in November, but the enquiry level went through the roof in the weeks that followed. Of those callers, he’s had about 20 people follow through and refinance their home loans.

One of the most popular options for O’Brien’s clients has been Newcastle Permanent, which (at the time of writing) was offering a standard variable base rate of 6.74%. The savings for clients have been palpable. O’Brien says after one client refinanced from a rate of 7.2% to Newcastle Permanent’s 6.74% they shaved off about $450 a year for every $100,000 of their loan.

Another popular option was ANZ, O’Brien says. The lender sweetened its rate increase by offering up to $1,600 in fee discounts and subsidies to customers that switched to ANZ’s three-year fixed rate offer until the end of 2010. It appears ANZ’s offering was on the mark with borrowers. O’Brien says there was a significant increase in the number of people taking a closer look at the fixed-rate products on offer. “I think people are a bit concerned with the future; they want to safeguard themselves,” he says.

According to O’Brien, continued uncertainty over rates will continue to drive refinancing enquiry levels in the first half of 2011. “More people will look to refinance as rates change,” O’Brien says. “We’re spending a lot of time communicating with clients about the recent changes through e-mail, letters and phone calls.”

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The downsides

Daniel O’Brien

“ I think people are a bit concerned with the future; they want to safeguard themselves ”

Doobov says that with existing clients, refinancing for a better rate isn’t necessarily the best way to go. “The problem is that there may be a reason borrowers were put in a loan structure in the first place. Yes, the interest rate is a big factor, but it’s only one factor. In some cases we’ve advised clients not to refinance because overall it doesn’t fit in with their strategy,” he says.

“If the borrower decides to switch in the first 18 months the broker loses 50–100% of the commission. We might have done everything right by the client but still lose out because the lender is suddenly less competitive. So effectively brokers get penalised when banks are seen as being less competitive. As a broker, you now have to forecast banks’ rate movements over the next two years – well, we don’t know what a bank is going to do tomorrow, let alone two years from now,” says Doobov.

O’Brien agrees the clawbacks are a definite downside to the refinancing rush, and it’s something that could get worse now that lenders appear to be scrapping exit fees. “I personally think that the client should have to pay exit fees, or clawbacks should be abolished. I shouldn’t be penalised because a customer split up with his wife and is now selling the home – I still did the work. If you look at any other profession, that wouldn’t happen. Could you imagine phoning up a plumber a year after he fixes your toilet and telling him you don’t want the toilet anymore so he has to give back the fee he charged?”

Exit fees Exit fees, or rather moves to dismantle them, have also played a part in the recent refinancing rush. Amid the furore that followed the November rate rises, the Gillard government announced penalties for banks that charged unfair exit fees.

And in the same month, ANZ announced it would abolish deferred establishment fees altogether.

Commenting on exit fees, ANZ CEO Australia Philip Chronican says: “Our mortgage exit fee was already among the lowest in the market, and by abolishing it we are telling our customers we are prepared to win and retain their business…”

NAB followed ANZ’s lead shortly after, but brokers are sceptical that the moves will represent any real savings to borrowers.

“The government’s changes will have little impact,” says Brown. “This industry has typically had low entry and high exit fees, and there have been benefits to that formula. Borrowers often got

FEATURE REFINANCING

a one-year honeymoon period on their interest payments, a handy break at a time when they face the costs of moving home. In addition, exit fees are minimal after three years, so when you consider an average loan lasts 3.7 years then most people won’t be affected by the change.”

Doobov concurs. “There’s an inherent cost to write business and while I think it’s good to abolish the large fees, when it comes to a $700 fee I don’t think it makes that much difference. In the long run, the bank is always going to find a way to charge that fee and maybe it won’t be so transparent. They’ll build it into the rate, or find another way,” Doobov says.

What about LMI? While exit fees remain a political football, many brokers see non-transferable LMIs as being an even bigger barrier to refinancing. “It’s always been a problem and has definitely cost me deals,” O’Brien says. Refund Home Loans founder Wayne Ormond says “the mortgage insurance situation is a rort”, adding that while other policies are refundable, banks generally will not

refund a mortgage insurance policy. “At best there might be a partial premium refund – but that goes to the bank, not the borrower. Borrowers should not be forced to take out a second policy because they’ve switched lenders.”

While making LMIs transferable would be good – overall it is not going to impact the industry greatly, says Brown. “It’s only really going to make a difference in the early life of the loan as that’s when most of the premium is paid.

Historically, people defaulting do so early in the life of the loan and mortgage insurance is structured to account for this. So using the 3.7-year yardstick as the average loan period, for most people, having transferable mortgage insurance isn’t going to make a difference.”

Meanwhile the Insurance Council of Australia (ICA) defended the policies, arguing that LMI is not a bar to refinancers. An ICA spokesperson says LMI may or may not be required by an incoming lender. “If the lender does require it, then an additional premium is payable and the LMI provider is required by regulation to set aside new capital for that loan.” MPA

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COLUMN SMSFS

Opportunity knocks Adam Watts explains why limited recourse borrowing is opening up new doors of business opportunity

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n a financial environment where doing business seems to be increasingly more competitive, it is important to find ways of differentiating your service to clients. We need to find new sources of revenue and ways of adding value.

Some brokers have recognised that working in the limited recourse borrowing space – providing finance for super funds looking to purchase property – is providing a potential new revenue stream. Many brokers haven’t yet taken up this opportunity for numerous reasons. Some feel they haven’t grasped the superannuation legislative changes, some have attempted settling loans but have come across lending hurdles too high to jump.

Others simply wish to stick with their core business. It is also fair to say that many haven’t got the right business advice network to guide them through the highly regulated process that involves other service providers, including accountants, financial planners and lawyers.

Mark Attard, principal at Finance Path, agrees that while they understand the opportunity presented to their business, many brokers haven’t had the volume of client requests to gather enough experience in the area of superannuation to justify their focus on this market. Attard recognises it is a complex field but is taking the time to learn more about the opportunity.

While these reasons have prevented brokers from operating in this market in the past, there are clear financial benefits for increasing their

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understanding of existing superannuation and lending rules. These benefits include: • there is currently over $330bn invested in Australian self-managed super funds (SMSFs) • SMSFs are suitable for the more sophisticated investors, with the average fund investment balance over $900,000 • superannuation is a tax-free investment in retirement; a property held and funded by super can increase in value with potentially no CGT or rental income tax payable • business owners can use their superannuation entitlements to invest in and own the office or warehouse they operate from • only a small percentage of SMSFs currently own residential or business real property, however a large percentage of population prefer property investing over sharemarket investing • all working individuals have some form of superannuation, some will be in a position to establish a SMSF to purchase property today, others will want to start planning for their first property investment in super

“ There are clear financial benefits for brokers increasing their understanding of existing superannuation and lending rules ”

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Why would your clients want to borrow to invest in property with super? There are clear tax benefits to be gained by choosing to invest in property with self-managed superannuation capital. It must be said that these benefits can also apply to other superannuation investments and are not specific to property, thereby highlighting the tax benefits associated with superannuation. These can be summarised as capital gains tax, rental income tax, salary sacrifice tax and superannuation pension tax.

Undoubtedly the greatest tax benefit associated with investing in property within a SMSF is the potential capital gains tax concession on capital growth. If the property is sold while in accumulation phase after being held for more than 12 months, a 10% tax rate applies. However, if that same property is sold after the super fund has converted to pension phase (that is, in retirement), 0% tax applies. Therefore, the longer you hold the property, the greater the likely capital gain and the larger the tax benefit.

Rental income is also concessionally taxed for properties owned by your super fund. As with capital gains tax, in the pension phase no tax will apply to rental investment income, and a flat 15% will apply in accumulation phase. This is also extremely favourable when comparing neutrally or positively geared property with rental income taxed up to 46.5% for property held in an individual’s name.

The Australian Taxation Office allows individuals to make pre-tax salary-sacrifice contributions into super, paying 15% contributions tax in super and saving marginal tax in their own name, which again could be up to 46.5%. More after-tax dollars to invest allows greater wealth to be accumulated and/or more debt to be repaid.

It is commonly known that at 55, workers (employees or the self-employed) can establish a ‘transition-to-retirement account-based pension’.

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This financial strategy was legislated with the intention of allowing workers to phase into retirement by supplementing part-time hours and remuneration with an additional income stream.

The reality is that it is being taken advantage of by many full-time income earners.

Superannuation pension payments can be received while working full-time or part-time. The benefits are two-fold. First, in pension phase, as stated above, investments will be capital gains and rental income tax free. Secondly, pension payments made from super to an individual are also concessionally taxed and will actually be tax-free from age 60. Therefore, the typical transition-toretirement financial strategy involves swapping higher taxed salary income with lower taxed pension income, thereby allowing additional salary-sacrificed super contributions to be made.

The only opportunity cost associated with personal investment property ownership is the personal tax benefits associated with negative gearing on marginal tax rates of up to 46.5%. While this may be the case, there wouldn’t be too many property ownership scenarios where these negative-gearing tax benefits outweigh the tax benefits associated with gearing and owning property within superannuation.

In addition to taxation benefits, there are two core reasons why you would consider gearing in superannuation. First, the strategy can bring forward property ownership in super. For example, instead of acquiring a $500,000 property at, say, age 60, the same property could be acquired with $250,000 superannuation capital and $250,000 debt at age 50.

Secondly, for the same reasons that we borrow to invest in property in our own name, when we are confident the return (income and growth) will exceed the cost of borrowing, you come out ahead financially by ‘gearing or leveraging’ into property.

To simplify the maths, in the current interest rate

About limited recourse While the rules and regulations of borrowing to acquire property in super have been revised, they are still complex and the costs of incorrect structuring and management can be harsh. Here are some facts associated with taking advantage of the super borrowing rules: The super fund needs to establish a new trust.

The name of this trust typically is known as a bare trust, custodian trust or security trust.

The trust must have a new corporate trustee, rather than individual trustees.

The new trust is established to act as the legal title holder of the property, and the super fund has a beneficial interest in the asset.

The loan can be used to acquire a “single acquirable asset”. If multiple properties are acquired, multiple trusts and corporate trustees are required.

While a separate trust owns the property, the super fund owns it for tax purposes.

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environment, borrowing at rates of 7% and renting at a yield of 3%, capital appreciation of more than 4% a year will result in a positive financial result.

In order to avoid potential financial consequences of double stamp duties and noncompliance of the super fund, it is advised that superannuation structural planning is conducted and that specialist financial guidance is sought.

Despite the additional work and planning requirements involved in taking advantage of limited recourse borrowing arrangements within

SMSFs, the tax benefits associated with the strategy of potentially ending up with an income tax and CGT-free property in retirement can make it all worthwhile.

So, for brokers wanting to provide a comprehensive service to their clients or wishing to explore new avenues of business growth, it would be worthwhile looking at assisting clients with superannuation property financing needs. MPA Adam Watts is a financial planner for the LifeTime Financial Group

“ There are clear tax benefits to be gained by choosing to invest in property using SMSF capital ”

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BUSINESS PROFILE WEALTH TODAY

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BUSINESS PROFILE

WEALTH TODAY

Tony Pennells has taken an unorthodox path to his current role, but reallife experiences have taught him some valuable business lessons along the way. Barney McCarthy learns more about the man behind Wealth Today

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deas for business ventures can come from a variety of places – a sudden flash of genius, an opportunistic exploitation of a niche – but not many sources can rival the true inspiration that comes from living through scenarios that could have been improved by the advent of a new company or a different way of doing things. On a personal level, living through tough times can be a great motivator to better one’s situation and strike an effective work-life balance. Wealth Today managing director Tony Pennells has been through all of this and more to arrive at this point.

Pennells and his family fled war-torn Rhodesia (now Zimbabwe) and arrived in Australia via South Africa when he was 13. After finishing school, he enrolled at The University of Western Australia to study medicine and was forced to become financially independent at a young age as his family adapted to life in a new country. It was at this stage that Pennells realised the importance of one’s career fitting in with one’s lifestyle, and the need to separate the

everyday from the pay cheque. Pennells utilised his degree to help establish a nutritional health company, but soon realised he had a greater calling and that the lessons learned from his humble beginnings could help homeowners and those wishing to buy their first properties.

Early days In 2004, with three partners including his brother Greg who had launched Choice Aggregation Services, Pennells set the wheels in motion to found Wealth Today, the first in the Today Group of companies. He called on his experience of building back-office systems and training websites for the nutritional health company with the new venture. The idea to start Alliances Today came about not only as a result of wanting to give Australians greater control over their finances, but also after identifying how brokers could improve their offerings. “Many brokers are self-employed and are confident in their technical ability to sell mortgages, but they don’t know how

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to get the phone to ring,” says Pennells. “Their business models weren’t delivering, so Alliances Today was born out of trying to help intermediaries establish referral partnerships.”

In 2008 Pennells and the team made the decisive move into financial planning, establishing Wealth Today. The particular point of difference was in building a system that catered for brokers looking to cross the bridge into financial planning.

The business was launched with the intention of doing more than just adding diversification into insurances, and its enhanced value proposition was based on helping clients terminate their mortgage, while building wealth, with protection.

“This is what clients truly want from their broker and where the path to a professional industry and responsible lending ultimately lies,” says Pennells.

The genesis of Wealth Today in WA came against a backdrop of homeowners borrowing to the hilt in an environment of relaxed credit criteria, and Pennells quickly established a simple philosophy. “People don’t want a mortgage, they want a house,” he reasons.

“Mortgages were being sold without consideration to how and when borrowers would eventually get out of them. Broker focus must be on the client, and responsible lending is about long-term relationships, not just selling a product.”

Wealth Today currently has around 65 brokers now qualified as financial planners up and running under its brand, with dozens more in the process of completing due diligence procedures. With more than 90 people requesting information every month, Pennells hopes to grow this number to around the 1,000 mark over the next three to four years, eventually reaching a client base of up to 100,000. As well as receiving an increasing number of enquiries, Pennells says Wealth Today is seeking out brokers that fit its model. “The ideal broker has a mid- to long-term view of the market and is settling in excess of $1m a month,” he says. “They would usually have a few years of experience and a client base of around 200.”

Holistic advice An acronym that Wealth Today encourages its advisors to use to explain its advice process is LIFT, which stands for Lifestyle today with Independent Financial freedom Tomorrow. In other words, Pennells acknowledges that while people may be keen to make changes to their

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“ Many brokers are selfemployed and are confident in their technical ability to sell mortgages, but they don’t know how to get the phone to ring ”

budget, they don’t want to live on dry bread to achieve a noticeable decrease in their outgoings.

“We take care of the client’s financial future and don’t just look at the cheapest mortgage out there,” he says. “We examine cash-flow management and any surplus in a customer’s budget. We look at utilising offset accounts, cancel any unnecessary bank accounts and look at existing debts, especially non-deductible ones where people are being stung twice – once by the taxman and again by the interest.”

Pennells says that by establishing themselves as the first port of call for their client’s financial needs brokers increase their chances of an ongoing relationship. “Our head of training, Ian Tait, likes to use the analogy of a personal trainer in terms of the client having accountability and being kept on track,” he explains. “Plenty of people have a gym membership and never use it, so having an ongoing review process can help create a ‘stickier’ client who returns to you for advice.” Pennells says a by-product of creating a network of customers who return again and again is a reduced need to seek out new clients, and the subsequent opportunity for brokers to ‘buy their life back’.

Many pundits have claimed that the introduction of licensing and shrinking bottom lines is forcing brokers to diversify and consider charging for advice to reduce dependence on commissions. Pennells argues that the picture has been lost in the clamour to prepare for the NCCP regime. “The whole regulatory issue has distracted brokers from the basics of their core job,” he says. “The majority of brokers are professional and don’t need licensing to ensure they are doing the best for their clients.”

Away from the office, Pennells is keen to achieve the work-life balance he espouses to potential Wealth Today brokers. He regards his family and two children as the most important part of his life and enjoys learning kung fu with his teenage son (with one recent tour taking them to China). Travel is also a large part of the Pennells’ family life, with south-east Asia a particularly well-visited region. Pennells also considers himself something of a bookworm, with the motivational tome Drive by Daniel Pink his current read. Given the path Pennells has taken to arrive where he is today, you get the impression that drive is not something he or Wealth Today are lacking. MPA

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COVER

2011 PREDICTIONS

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f crystal-ball gazing was foolproof, then the chances are we would be looking up next week’s Lotto numbers or this year’s AFL Grand Final winners, rather than matters closer to home. But alas, none of us know what tomorrow holds. When it comes to the mortgage industry, we are able to make fairly accurate predictions based on economic fundamentals and trends, with a smidgen of guesswork thrown in for good measure.

Rather than make our own forecast, we asked 15 of the mortgage market’s leading lights about their expectations for the year ahead, so read on to see what 2011 could have in store.

Barney McCarthy rounds up some of the industry’s most influential figures to ask them what 2011 holds for the mortgage industry

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2011 PREDICTIONS

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2011 PREDICTIONS

Huw Bough General manager, broker sales and third party distribution Westpac

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. I think the most significant will be

managing the changes brought on by regulatory reforms to the market, such as responsible lending. We’re committed to actively helping brokers comply with reforms, with minimal disruption to their businesses. This means we will need to work closely with our business partners on the implementation of any changes to help ensure customers receive a seamless experience during this period.

Banks will also need to continue to improve the support tools and information we provide to brokers, so that they can build quality mortgage applications that reflect the needs of their customers. Also, operational processes will continue to be an important factor in lender-broker relationships and lenders must build on their service proposition to brokers.

Westpac is currently working with brokers on ways to improve these processes, including reducing application errors, simplifying systems and speeding up the actioning of requests.

Q. What are your company’s own targets and objectives for 2011?

A. Over the coming 12 months we are

focusing on further strengthening our broker and aggregator partnerships and extending this support throughout all of our branch teams and the processing unit.

Our intent with regard to advocacy and support for brokers will be providing them with the very best BDMs in the market; those highly engaged and empowered to help resolve issues.

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“ We’re committed to actively helping brokers comply with reforms, with minimal disruption to their businesses ” We are also planning more local activities for brokers that allow them to meet face-to-face with our local bank managers, so that we can work together as a team in the best interests of our customers.

Westpac has the strength and momentum to deal with the challenges of the year ahead.

We have the right partners, people and the right strategy. We’ll be successful by staying focused on our goal and vision: to be the lender of choice for our priority segments in the broker market, and to be one of the world’s great companies, helping our customers and our communities to prosper.

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which will be highly valuable because of the broader uncertainty and change that we are seeing in global and domestic economic conditions.

Q. Where will the RBA cash rate be in December 2011?

A. There are too many significant

John Flavell General manager, broker distribution NAB Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. The biggest issues for 2011 are the state of the global economy, the implications for our market, and navigating through the National Consumer Credit Protection changes. There is opportunity for brokers to deepen their relationship with customers through broader solutions and improving the overall economics of their business.

Q. Name one thing you’d like to see happen in the market in 2011.

A. The benefits that flow from global economic stability and growth.

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. I would like to see the broker share of the market expand.

Brokers are well positioned to provide customers with advice

influences to make an accurate prediction. There is the global growth issue, concerns about the outlook for the Eurozone (highlighted recently by Ireland’s troubles), questions over sovereign debt, the sustainability of growth in China and demand for resources, the ongoing strength in the Aussie dollar, local and offshore access/cost of funds, taxation rates: all of these are key variables. What we would like to see is minimal movement either up or down in the cash rate; this will reflect a period of stability and certainty over the year.

Q. How do you expect the first year of licensing to go?

A. There is still some uncertainty around obligations for lenders and brokers. We are all focused on the complexity around the administration and there will be changes in business models. Most importantly is that we will get to the end of 2011 and the consumer will be better served by the changes; the mortgage broking industry will have benefited accordingly.

Q. What are your company’s targets and objectives for 2011?

A. We will seek to continue growing and consolidating our position in the market. This will be through delivering an even stronger proposition to our broker’s customers from a product and service perspective. We will also focus on improving the overall service we deliver to brokers.

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Kathy Cummings Executive general manager, third party banking Commonwealth Bank

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. The biggest challenge will be

the pending threat of politicians forcing changes which may have unintended consequences.

Brokers will need to meet their obligations under responsible lending: their role is now much more than just putting applications together. They have a duty of care and under the new legislation they have to ensure they do not recommend an unsuitable product.

They will need to maintain a thorough knowledge of their lender partner’s home loan products and credit policies.

Brokers will need to ensure both their staff and themselves are able to lodge quality applications. They will need to educate customers on debt and, if the deal is not affordable, they will have to say no to them.

The affordability of housing will also continue to be an issue.

In my view interest rates are not the problem – it is the cost of housing. In the past, borrowers

paid well over 10% interest and by the late 1980s it was well over 15% – but loan amounts were much smaller, in most cases under $250,000.

Q. Will competition return?

A. Attempts by the government

to increase competition are welcome but in the end it will be only those companies with a robust business model that will survive. We have competition between the major banks, second-tier banks and nonbanks. However, non-bank lenders will continue to find it difficult to access funds in a tightening credit environment with increasing interest rates.

Q. Where will the RBA cash rate be in December 2011?

A. It looks as though interest

rates will continue to rise in the coming 12 months, with predictions of the cash rate lifting from today’s level of 4.75% to 5.50% by the end of 2011. It also seems likely that demand for housing, particularly in NSW, will

“ Brokers have a duty of care and under the new legislation they have to ensure they do not recommend an unsuitable product ”

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increase due to a supply shortage. This means there will be plenty of work around for brokers who deliver excellent customer service.

Q. How do you expect the first year of licensing to go?

A. Lenders who deliver efficient

processes and who provide reporting on the business received to brokers and head groups will win their business.

Communications around regulation and compliance issues will be important to ensure brokers and head groups are fully informed and meeting the requirements in a timely manner. Commonwealth Bank will continue to partner with the industry to ensure its growth and sustainability.

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Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. Increased competition, funding costs/

Q. How do you expect the first year of licensing to go?

A. I think it will be a year of all stakeholders

interest margins and regulation.

including brokers, consumers, lenders and the regulator finding their way through licensing and how it works in practice.

Q. Name one thing you would like to see happen in the market in 2011.

A. The government delivering on its promise to support lenders outside the top tier. This is vital to stimulate competition.

Mark Hewitt General manager, sales and operations AFG

Q. Can you identify a company or individual ‘to watch’ in 2011?

A. Ruan Burger and his team at Home Loans

return to the market and prices adjust.

Etc in Gladstone, Queensland. Gladstone is in the midst of a resources-based investment boom and Burger and his team are ideally placed to grow their already strong business even further.

Q. Where will the RBA cash rate be in December 2011?

A. My crystal ball says 5%. Two 25-basis-point

Q. What are your company’s targets and objectives for 2011?

A. Assist our members through the rollout

increases in the first half of the year followed by a late reprieve, as there is a realisation we have gone too far.

of NCCP, continue to grow our business organically and do our bit for competition through AFG Home Loans.

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. We should start to see first-home owners

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Tim Brown CEO Vow Financial Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. The new licensing arrangements will certainly continue to be a topical issue. I expect ongoing consolidation of aggregators and, most importantly for our brokers, more competition returning to the mortgage industry as funding becomes more accessible.

Q. Name one thing you would like to see happen in the market in 2011.

A. I would like to see the government become more innovative in how it tackles inflation. Right now the only weapon in its arsenal is interest rates. But other options could be using tax and increasing the GST to spread the burden more equitably across the population – although it would be politically hard to sell. As it is now, home buyers and small businesses bear the brunt of higher interest rates.

Mining will continue to do well as the Asian economies, particularly China and India, continue to grow. This will flow, in turn, through to our industry with stronger growth in the residential markets in those states that are beneficiaries of this boom – Queensland, Western Australia and South Australia.

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Q. Where will the RBA cash rate be in December 2011?

A. I expect rates to rise by another 50–75 basis points so my prediction is 5.5%. That said, I am expecting tougher competition between the banks and non-banks to keep lenders’ rates more on par with the cash rate. Hopefully, the period where lenders enjoyed bigger margins post-GFC are coming to an end, as they are forced to be more competitive to win market share.

Q. How do you expect the first year of licensing to go?

A. For the brokers who choose to stay in the industry there will be more business as they will have less competition and will be operating in a growing market.

Q. What are your company’s own targets and objectives for 2011?

A. To grow our broker businesses significantly and look for acquisitions in geographical areas where we are not well represented. We are also looking to ‘bolt on’ businesses that make sense, such as conveyance, origination, leasing and insurance.

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Michael Russell CEO Mortgage Choice

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. Firstly, NCCP: will its implementation be

Q. Where will the RBA cash rate be in December 2011?

A. The general consensus amongst the

seamless for lenders and brokers to ensure home loan borrowers are not inconvenienced?

Secondly, lender competition: will the federal government finally look to provide some much-needed stimulus to promote a return to a healthy and competitive mortgage market?

Finally, funding: will the cost and availability of funding begin to improve or will the government be forced to innovate to turn the tap back on, particularly for non-bank lenders?

forecasting community is somewhere in the vicinity of 5.25–5.75%, which would mean an additional $100–200 per month in mortgage repayments on a $300,000 mortgage.

Q. Name one thing you would like to see happen in the market in 2011.

A. Index the First Home Owner Grant (FHOG) and back date it to 1 July 2000 to give first homebuyers a better and fairer opportunity to get into the property market. Based on median house price movements, the FHOG should today be in the vicinity of $14,300.

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. Comparison websites – for all kinds of products and services – provide a convenient service for time-poor consumers seeking affordable deals for everything from a home loan to utility suppliers to health insurance.

With more people venturing online to research their purchase options, well-run and real-time updated websites should be successful.

Q. How do you expect the first year of licensing to go?

A. To be honest I’m a little tense. While the industry worked at a frenetic pace to have its systems and people ready by 1 January 2011, much of the legislation remains subject to interpretation. Additionally, the tight time frames did not afford the desired collaboration with our lenders we would have liked, in order to ensure absolute consistency in the interpretation and application of the responsible lending obligations.

This inconsistency may well cause strong headwinds for intermediaries and may cause a negative impact for consumers. All we can do is our best with the information provided to us.

Q. What are your company’s own targets and objectives for 2011?

A. We aim to increase our home loan market share, grow our national footprint of franchisees and record even higher levels of customer satisfaction. We have a three-year ‘growth through transformation’ strategy that is tracking well.

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requirements. There will be areas regulators may have to revisit as some aspects of compliance will undoubtedly create even more complexity and possibly more costs to the consumer.

John Symond Executive chairman Aussie Home Loans

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. The availability of wholesale

Q. Where will the RBA cash rate be in December 2011?

A. 5– 5.25%

funding will be a major issue. If credit remains tight, then the banks’ lending criteria will tighten, impacting adversely on the housing sector. Competition will suffer further with smaller lenders remaining on the sidelines.

Complying with NCCP will be a cumbersome and costly process, particularly for many of the smaller non-banks. The persistent threat and fear of rising interest rates will also loom large.

Q. How do you expect the first year of licensing to go?

A. This will cause disruption to the industry and many smaller organisations may well have difficulty in meeting the regulatory

Q. Name one thing you would like to see happen in the market in 2011.

A. The return of affordable wholesale funding, which will reignite competition.

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. Brokers who meet the new regulatory requirements should do well, as refinancing will increase while interest rates remain the focus of worried consumers. Mortgage managers will continue to be impacted while wholesale funding remains stifled.

“ Complying with NCCP will be a cumbersome and costly process, particularly for many of the smaller non-banks ”

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Q. What are your company’s own targets and objectives for 2011?

A. To continue to grow our sales distribution following the successful purchase of Wizard. 2011 will also see Aussie rolling out technology which will enable delivery of more efficient services and new products which hopefully will increase our market share.

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Lisa Montgomery CEO Resi Mortgage Corporation

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. If 2010 was characterised by a significant shift in consumer sentiment in relation to banks, then 2011 is set to become the year in which the non-bank sector achieves the legitimacy it deserves. As a result of policy makers and the community realising the value of not only preserving but enhancing competition in the mortgage industry, I see the next year being centred on the following three developments: Firstly, significant changes to wholesale funding markets will hopefully have the desired and compounding effect of improving the competitive landscape. Next, changes to how fees and credit are structured will broaden opportunities for the non-bank sector, in relation to the innovation of new loan products and their speed to market, both of which will benefit a more savvy-minded borrower. This will hopefully then lead to borrowers becoming increasingly aware of the service proposition of their lender and not just the rate they can get.

established within a community and will be based on trust, brand and the individuals who are providing the service.

The appetite for loans offering greater flexibility and portability will increase, in line with demand by experienced borrowers looking to recoup the financial ground they may have lost after the GFC, as well as first homebuyers now more attuned to shopping around to get the best deal.

Q. Where will the RBA cash rate be in December 2011?

A. Borrowers can expect interest rates to increase further into 2011. Current predictions see a likely 25pt rise at the beginning of the second quarter; however, we cannot rule out any influence from other global economies bringing that decision forward. Domestically, the flow-on effect of recent out-of-cycle rate increases has still yet to be realised. The effect on consumer spending will be of particular interest to the RBA, and it won’t be until they meet in February that we get a firm understanding of their position for 2011.

Q. Name one thing you would like to see happen in the market in 2011.

A. As a result of these developments, Resi would like 2011 to mark the year in which the non-bank sector claws back its pre-GFC share of the mortgage market, and ends the year with an even greater percentage than before the GFC.

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. We see activity over the next year involving a substantial shift in the lending and service preferences of consumers, based around a relative changing of the guard onto the next generation preparing to enter the property market. The way in which mortgages are marketed and sold will start to become more skewed towards social media, and more customer referrals will come through word of mouth. These referrals will be

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John Mohnacheff Group sales manager Liberty Financial

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. Licensing: and how it will

affect all participants, especially those that have chosen to be licensees in their own right.

Diversification: the increasing importance of brokers actively embracing asset classes other than just mortgages. Education: and the need for all brokers to embrace further training, especially in light of the new licensing requirements.

Q. Name one thing you would like to see happen in 2011.

A. I would like all brokers to

understand that the finance world has changed forever and, as such, new and more exciting opportunities exist for those who are willing to embrace them. Although brokers talk a lot about how dissatisfied they are with the domination of the banks, it’s up to them to be the drivers of change. They can have a profound impact on the shape of the market: if all brokers actively support the non-bank sector, the stronger the competition to the banks will become.

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. Brokers who actively seek to

diversify their asset classes will improve their business and

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become more relevant to the consumer, in a similar way to insurance brokers and financial planners. I also believe that the formation of strategic alliances will be an important aspect of business success.

Q. Where will the RBA cash rate be in December 2011?

A. At 12 months out, it is very

difficult to say, however, I suggest that it may be 50 points higher than now.

Q. How do you expect the first year of licensing to go?

A. I think that once brokers

have had time to experience being either a representative or a licensee, there will be considerable rationalisation, with brokers making more informed decisions.

Q. Can you identify a company or individual ‘to watch’ in 2011?

A. We will see more independent finance companies emerging.

Q. What are your company’s own targets and objectives for 2011?

A. 2011 will be about growth in

every asset class for Liberty.

Liberty is unique in that it is an independent lender delivering a broad range of asset classes to the broker market. If more brokers support us, we can continue to build in strength and bring more products to the market for our brokers.

“ If more brokers support us, we can continue to build in strength and bring more products to the market ”

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John McGrath CEO McGrath Estate Agents

I believe 2011 is set to be a turnaround year. In my opinion, the property market will gather more strength in the first half of the year, particularly in metropolitan markets with a spill-over effect into regional markets in the second half of the calendar year. Sydney property values are now stabilising as interest rates continue to rise and we have seen some softening of prices over the winter months.

We experienced an upsurge in listing volumes in October and November 2010 due to the late

spring season (courtesy of the extended federal election) with auction clearance rates hovering between 50–60%. While this is down from the 70–80% clearance rates we saw earlier in the year, it’s still reasonably average for the market over the long term.

Sydney, Melbourne and Canberra continue to lead the way in what I anticipate will be a strong recovery period in 2011. These markets, being the key national markets economically and politically, reflect Australia’s strong financial position.

Sydney is like BHP, the big blue-chip within Australian real estate that generally outperforms as markets improve.

Rising rents, a national housing shortage and an improving economy are the key drivers of the market. In Sydney, demand is strongest from upgraders and investors. I’m expecting prices to continue to rise over the next three years – possibly by 8–10% in 2011, especially close to the CBD and the beaches.

“ Sydney, Melbourne and Canberra continue to lead the way in what I anticipate will be a strong recovery period in 2011 ”

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Mark Haron Principal Connective

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. Licensing will be the main focus. While there will be a significant amount of work required by brokers to become – and remain – compliant under NCCP, regulation will be a huge step forward towards the industry being viewed in a more professional light. Brokers and the industry at large need to market themselves accordingly.

Interest rates will be another big issue and more specifically, the extent to which official rates (and unofficial rates above or below the RBA) could significantly impact the industry. If rates increase substantially then behaviour in the housing market will obviously be more subdued than otherwise. There will, however, be refinance opportunities for brokers as mortgage holders assess their options in search of a better deal.

Any action by the major lenders to impose further performance hurdles or adjust commissions will obviously have a major impact too. We don’t, however, expect that there will be any significant adjustments to commissions.

Q. Name one thing you would like to see happen in the market in 2011.

A. It would be terrific if the investment markets recognise the strength and value of the Australian residential lending market and begin to significantly invest in it, enabling banks and non-banks greater access to funding. This would ensure improved competition.

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. Insurance sales have increase by 35% over the past year. We expect this trend to continue as more people become aware of the importance of protecting themselves and their families.

Q. Where will the RBA cash rate be in December 2011?

A. We expect two RBA rate increases of 0.25% (0.5% overall). This is dependent, however, on

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whether the major banks increase (or decrease) rates again independently.

Q. How do you expect the first year of licensing to go?

A. We expect the licensing process to run relatively smoothly. While there will naturally be a few bumps along the road, brokers overall welcome the regulation so the desire to become compliant and to remain part of this vibrant profession will see them overcome any obstacles.

There will, however, be a decline in broker numbers by the end of 2011 as many credit representatives see the additional cost of being under their aggregator’s licence and decide it’s not worth continuing in the industry.

Q. Can you identify a company or individual ‘to watch’ in 2011?

A. The regional banks and how quickly and strongly they can come back into the market and create some real competitive pressure.

Q. What are your company’s own targets and objectives for 2011?

A. Coming from consecutive years of exceptional growth, we’re confident we can maintain momentum. We are very confident about our prospects in 2011; we expect our loan book to top $26bn and our broker numbers to increase by 17%.

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small and large lenders have had to rely more on retail deposits to meet their funding requirements. Government guarantees and support through AOFM has enabled these institutions to continue lending. Uncertainties continue with a number of countries weighed down with debt and economies under severe stress. In Australia, the major concern is the impact on mortgage lenders’ funding following the withdrawal of the government guarantee on retail deposits.

Finally, the Senate inquiry into competition in the banking sector will be an interesting one to follow. The terms of reference of the inquiry focus on what can be done to provide consumers with more choice and competitive offerings, compared to what they have following the changes in the market since the GFC. While it is too early to speculate on what might emerge, the desire for change levelling the playing field is strong.

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. After a relatively quiet year in 2010, first homebuyers will be back in the market, a pre-condition for more activity from upgraders.

Ian Graham CEO QBE LMI

Q. Where will the RBA cash rate be in December 2011?

A. Any increase will be more modest than in the recent past. What is less clear is what increases the banks will pass on above the RBA.

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. Home loan affordability will continue to be a

Q. How do you expect the first year of licensing to go?

A. There is no doubt the introduction of NCCP is

big issue. Reduced government incentives for first homebuyers and the impact of higher interest rates and property price growth have seen a significant decline in demand for home loans in 2010. While the outlook for interest rates is still uncertain, the good news for 2011 is that future rate rises are expected to be less than in recent years, which together with the slowdown on house prices and continued growth in incomes will improve overall affordability. Thus, the volume of home loans will increase throughout the year.

Cost and availability of funding will also be headline news in 2011. This has been the major issue for most mortgage lenders. In response to the GFC and offshore funding constraints, both

another change in the way we deal with borrowers, lenders and insurers. While this has required significant changes to be made to documentation, policies, processes and training of our people, the industry has been preparing for some time.

Q. What are your company’s own targets and objectives for 2011?

A. QBE LMI’s goals are to understand how the changing environment is shaping lenders’ strategies to compete and succeed in the year ahead. We will continue to develop and build long-term partnerships and deliver a high level of service and value to the market.

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Iain Forbes Director Australian First Mortgage

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. Rising interest rates, major banks subsequently increasing rates outside of RBA movements, and licensing.

Q. Name one thing you would like to see happen in the market in 2011.

A. A decline in interest rates is always welcome!

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. We would like to see all sectors of the market thrive in 2011, including new home buyers, construction loans for new residential properties, investors and upgraders.

Q. Where will the RBA cash rate be in December 2011?

A. We expect the RBA to increase rates in the second half of 2011. It may be as high as 5.50%– 5.75% by the end of next year.

Q. How do you expect the first year of licensing to go?

A. We expect that it will be a challenging time for all introducers of new business as well as lenders, to ensure that they adopt the changes after January 2011. Many small groups may decide to exit the broker business, considering it to be too difficult or labour intensive.

Q. Can you identify a company or individual ‘to watch’ in 2011?

A. Advantedge appears to be moving quite rapidly in signing up new sources of business.

I think it is in growth mood and will continue to expand.

Q. What are your company’s own targets and objectives for 2011?

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A. At AFM we work on organic growth for the business. While we have acquired small loan books, natural growth is the way we intend to go.

We will continue to develop the portfolio which has grown every month this calendar and financial year. 2011 will also see the introduction of the AFM online lodgment portal, which will enable brokers to lodge their deals any time over the internet. We always look to make changes where necessary, to provide the market with quality products at competitive interest rates and with excellence in customer service.

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Q. How do you expect the first year of licensing to go?

A. While regulation should get rid of the

Justin Doobov Managing director Intelligent Finance

Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. The cost of funding increasing and pushing up the interest rate further will be an issue. The government will also get its wish to create competition in the market, which will cause lenders to have to drop rates to compete on price, which in turn will cause lenders to write unprofitable loans. This could mean lenders will decrease brokers’ commissions further and then the viability of the mortgage broking industry as a profession will be in doubt.

The good brokers are already earning less than they are worth, so to decrease their income further will make our industry non-viable – especially with the extra work that will be needed with the new regulations. There will also be some tightening of credit policy due to lenders decreasing their risk appetite because of the new regulation. There are still a lot of borrowers that want to borrow money but are not able to do so.

Q. Name one thing you would like to see happen in the market in 2011.

A. I would like to see second- and third-tier lenders coming back into the market with low exit fees and a guarantee that their interest rate will not exceed a certain margin above the RBA cash rate for the life of the loan.

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. The refinance market will thrive.

Q. Where will the RBA cash rate be in December 2011?

A. I would expect it to be at least 5.25%.

cowboys, I think that brokers will now have to spend too much time preparing disclosure documents that most clients won’t read. It happens in the financial planning industry where a client is given an inch-thick disclosure document and most clients just read the summary page. Regardless of whether a broker is fully compliant with ASIC, this still does not guarantee the client that the advice is sound.

The time taken to produce the extra regulatory paperwork is not being compensated for, so our dollar-cost and time-cost per loan application has just increased.

I think the first year of licensing will be a bit chaotic as it seems like the regulations have been rushed through.

Some of the regulations were put in place to prevent one thing, but as a result of their implementation, something else is now affected.

Q. What are your company’s own targets and objectives for 2011?

A. We aim to double the volume of loans written per year and improve our systems to reduce the processing time per application.

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Q. What are the three biggest issues likely to affect the mortgage industry in 2011?

A. Firstly, continuing confusion between what is best in the interest of competition and building political populism. Whilst there are clear opportunities for government and policy makers to encourage greater competition in the mortgage market, there is a real threat that consumers, brokers and lenders face the challenge of policy and legislative decisions chasing the wrong objectives.

Secondly, in the year ahead, margins will be under pressure from increasing costs and greater competition. This is likely to be driven by a combination of factors such as increased compliance costs.

Changing consumer trends will also lead to lower productivity for many brokers and lenders alike. Our own research shows that 43% of applicants see more than one broker before making a decision, but with the rise of more savvy consumers, the value proposition of brokers will

Tony Carn General manager, third party distribution Homeloans Ltd

need to evolve to ensure their ongoing viability.

Finally, we will see growing channel conflict. Many brokers see channel conflict existing generally between the broker and bank retail channels, but I believe there are new channels which will grow in popularity over the next year.

Q. Name one thing you would like to see happen in 2011.

A. Growing recognition of the great opportunities available to borrowers outside of the banks. At Homeloans we are investing heavily in our brand, and I look forward to significant growth in our brand recognition in 2011.

Outside of financial services, I would also like to see the West Tigers win the NRL!

Q. Are there any particular sectors you expect to thrive or decline in 2011?

A. I think the property market remains strong and is wellsupported by underlying

What they said 12 months ago...

Kathy Cummings

Kim Cannon

Huw Bough

CBA

FIRSTMAC

WESTPAC

“It looks certain that interest rates will continue to go up in the next 12 months.

It also looks certain that demand for housing, particularly in NSW, will increase, due to the shortage of supply. This means there will be plenty of work around for brokers who know how to deliver excellent customer service.”

“APRA’s new liquidity regulations will be the biggest change over the next 12 months. If the APRA standards go through, it will be hard for the small institutions to justify being in business without a huge margin shift upwards.”

“I have considerable optimism about the coming year and believe that it will be a defining time for the industry as a whole.

The overwhelming focus on quality that we have seen across the industry coupled with licensing will have a major positive impact on the mortgage broking industry. The standards across the industry have been steadily rising. Better quality business ultimately benefits the client but it also ensures that there is a greater opportunity for better efficiencies throughout the supply chain.”

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fundamentals. That said, I think there will be many opportunities in the property market, but buyers will need to look more carefully for them.

Q. Where will the RBA cash rate be in December 2011?

A. I would be surprised if the RBA cash rate was to exceed 5.25% by the end of 2011, particularly given the continuing complexities of debt funding and pressure on lender margins which has been flowing through to consumer rates.

Q. How do you expect the first year of licensing to go?

A. I think the big challenges will be how credit assessment translates certain aspects of the responsible lending provisions. I would expect the low-doc market will see some more robust framework develop around it from a process perspective.

We should also see closer scrutiny evolve around the assessment of living expenses from responsible brokers and lenders alike. I believe that licensing will bring a new era of

professionalism to the Australian broking market. Being seen by consumers as licensed and regulated professionals will allow the value proposition of the broking community to shift considerably, bringing with it many opportunities.

Q. What are your company’s own targets and objectives for 2011?

A. Our own objectives are focused on continuing to build new lending volumes. It is fair to say that in recent years this has been challenging, but we remain very optimistic about our value proposition as a competitive alternative to banks.

With continuing concern over the market oligopoly that consumers find themselves in, we plan on capitalising on the opportunities this creates in the market for 2011. Our approach centres on building our brand and awareness in the market, delivering exceptional service to our customers and delivering exceptional service to our broker partners.

Tanya White,

Steve Kane

AUSTRALIAN FIRST MORTGAGE

FAST

“2010 will be the year of the non-bank lender, it is time for us to re-create consumer confidence in non-banks and build brand awareness for this sector. Non-banks in the last two years or so have been severely impacted, tarnished and left questioning their value proposition, but the new year will bring about opportunities to overcome these issues and regain our market share.”

“The overall economic positioning of Australia appears to be much better than any other country. We think that there are a number of factors that will stimulate growth – that is, a shortage of dwellings and rising population – also low rental vacancies that will drive investor interest. Rental returns are now almost getting to a positive gearing. That will drive change and opportunity in the marketplace where there is a level of confidence.”

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COACH’S COLUMN

Relationship LEAD GENERATION

agreeing on the execution. Finally, you need to review and measure the productivity of the relationship on a regular basis.

Targeting the right referrers

M

ost brokers that I’ve worked with over the years have one or two very profitable business relationships with a referring business.

These referrers are often in closely related fields, such as accounting, real estate, legal or financial planning. The importance of these relationships is clear: they commonly provide the initial source of business for a broker to get started in business, and they provide a steady flow of business leads once that business is established.

I am regularly told that prospecting for referral relationships is frustrating, difficult, time consuming and often leads to no result. I couldn’t agree more. Too many people expect relationships to happen naturally, without substantial effort, and for both businesses to flourish almost magically. On rare occasions successful referral relationships seem to be built effortlessly, but the chances of that happening are remote.

If you want to build an effective relationship with a referrer, you will need to go through some reasonably simple steps to get there. Firstly, you need to target the right referrers and then you must engage them. Next, you need to plan for a successful relationship before building trust and

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Establishing a steady flow of leads is essential to a broker’s survival.

Doug Mathlin reveals how to establish and maintain a strong referrer relationship

It’s great to have people agree to refer business to you, but if they don’t do much business you can’t expect many leads from them. Ideally, your target referrers will be at the top of their game in your geographical area or will be on their way to that level. The referrer needs to have the same business values as you: putting the client first, focusing on quality and ensuring that much of their work is repeat business from existing clients. Your referrer needs to embrace the concept of business relationships as enthusiastically as you do. The saying goes that losers will always say yes to an appointment because they have nothing else to do.

Target successful people and work hard to build a strong referral relationship with them.

Rules of engagement At the end of the engagement process, your referrer will be able to recite who you are, what you do, your background and importantly, your value proposition – what you provide and why people should do business with you.

The engagement process involves meeting with the referrer at their office and yours to determine whether you have a basis for a relationship. This is your opportunity to ask questions of each other to fully understand their motivations and values.

Your referrer needs to like and trust you and be

COACH’S COLUMN

advice willing to endorse the services that you provide.

They need to be able to speak positively about you and pre-sell your services effectively.

At the end of the engagement stage you should draw up an agreement to formalise the relationship. This shouldn’t be a contract or need legal sign-off, but rather a simple document that confirms what has been agreed (one page will do).

Plan for a successful relationship You probably already have a business plan with strategies for success. At the engagement of a new relationship it would be a good idea for you and your referrer to put a plan in place for your relationship. This should be a brief document that outlines each person’s responsibilities, a measure for success and how frequently you will review the progress you are making.

The most important thing about any plan is implementation. Implementation keeps the plan alive, so holding each other accountable for key actions is paramount to success.

Building trust You will know that you have a good relationship when your referrer chooses you to do their loan. It’s a much more credible endorsement when someone says: “He/she is my broker, I was very happy with the service – that’s why I recommend them.” To achieve this, you will need to build enough trust and be in the right place at the right time. If the referrer is not a borrower of yours, that’s still okay – as long as they would choose you if they were to borrow.

LEAD GENERATION

If the referrer can tell their clients that many of their other clients have used you, and the feedback they give is overwhelmingly positive, it helps to create better credibility for your business.

However, this is not the end of the process. You will need to work with your referrer on a regular basis to ensure that you both sell each other well.

You will naturally develop a script to promote each other’s businesses. You will need to check this script from time to time to ensure that the information is accurate, compliant and beneficial.

“ Your referrer needs to embrace the concept of business relationships as enthusiastically as you do

Review and measure

”

You will need to agree to review the success of your relationship on a regular basis. My advice is to do this monthly. That way you have enough time to focus on your own business and regular meetings to keep the referrer at the top of your mind.

Designing a business scorecard for the relationship is a good idea as you can manage your relationship by efficiency measures rather than comparing the total number of converted leads. A good measure for this type of arrangement would be the leads to total appointments ratio. There is no benchmark number to chase here because some referrer businesses are irrelevant to some client needs. However, a good practice would be to identify the current ratio and set an improvement goal.

Finally, when your referrer depends on you to enhance their business, you know that the relationship is really established. But don’t let a financial arrangement between you and the referrer be the basis for the relationship. MPA

Top referral tips • Be visible – get in front of your referrer as often as possible, especially in the early stages of the relationship. Out of sight is out of mind at this time • Reward the referrer for the first deal or lead –

give them something of value to show your sincere thanks • Seek feedback from the referrer on each client transaction referred by them

• Provide feedback from your clients about your referrer’s business (good or bad) – this will show you how serious they are about growing their business and caring for the relationship with you

• Celebrate the success of your business relationship from time to time. When you both achieve a significant milestone go to lunch or do something that you both enjoy to mark the occasion

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MPA LENDER NEWS

CONTENTS 58 A REVIEW OF NEWS ON THE WORLD

OF LENDING 60 IN PROFILE: ING DIRECT

MFAA calls for non-bank funding

Banks not alone in out-of-cycle blame game An interest rate update from Canstar Cannex shows out-of-cycle rate moves have not been the sole territory of the major banks.

Out of 99 lenders surveyed by the research firm, 89 have moved on interest rates. The survey has indicated that, in addition to the oft-maligned major banks, building societies, credit unions and mortgage originators have all increased rates in excess of the official cash rate. The lenders who moved on rates did so by an average of 0.32%, meaning borrowers will now pay 1.34% more than at this time last year.

Mitchell Watson, financial analyst for Canstar Cannex, said: “The high profile hikes of 0.45% we saw last year from Westpac and this year from the Commonwealth Bank certainly signalled a cutting of the umbilical cord from the Reserve Bank and bumped up the average overall figures from the banking sector.”

The research firm said that the results imply borrowers are at risk of rate variances regardless of the lender they choose.

“In the last 12 months, only five lenders out of 99 increased their rates in accordance with the Reserve Bank,” Watson added.

The MFAA has pushed for Australia to develop an RMBS market similar to that in Canada.

In its submission to the Senate inquiry on banking, it argued that lending competition can only be increased by enabling non-bank lenders to access funding.

“The government can best act by facilitating the development of a mortgage bond and mortgage backed securities market based on the model which has successfully operated for many years in Canada,” MFAA CEO Phil Naylor said.

In its submission, the MFAA indicated that exit fee regulation alone would not lead to increased competition in the sector. “We don’t believe exit fee regulations in themselves free up competition unless there is a wider range of lenders from which to choose. Exit fee regulation is not the solution to lack of competition,” Naylor said.

The MFAA pointed out that credit unions and building societies currently have only a 6–7% market share, which would need to double to around 15% in order for the non-bank lenders to provide serious competition.

“As our submission argues, the Australian [market] best operates when there is healthy competition between a range of lenders,” Naylor said.

Building societies lead lending growth Research from the Australian Prudential Regulation Authority shows that building societies have led the way in lending growth, with rises of around 15%, annualised, in home loans over the September 2010 quarter.

The increase was around double the rate of growth for the rest of the credit system.

Heritage Building Society CEO John Minz said the mutual had seen significant increases in lending activity.

“Lending for September, October and November in 2010 was up 30% compared with the same period in 2009,” he said. “Once we get into December and January people go on holiday so it would be difficult to expect the trends from the last three months to continue, but we suspect year-on-year we will continue to do very well and even be up on that result.”

Minz said the broker channel had made a significant impact on lending growth in the sector. “Our broker-based lending was up 33% from the period of July to the end of November compared with that period last year,” he added.

5 99 out of

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Lenders who increased their rates in accordance with the Reserve Bank over the past 12 months Source: Canstar Cannex

COLUMN

LEADERSHIP IN LENDING

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LENDER PROFILE ING DIRECT

T

here are a lot of similarities between ING Direct and Peter Hayward’s former employer, Citibank. Both are foreign-owned, both are mid-tier players in the Australian home loan market and both are heavily reliant on the broker channel. But in 2011, the two international banks plan to embark on completely different strategies.

While Citibank is choosing to strike greater balance between its third party and direct channel, ING Direct is looking at “aggressive expansion” through the intermediary channel that will include service improvements to enhance the broker and customer experience.

Last October, executive director of mortgages Lisa Claes signalled the lender’s new strategy at the group’s Sydney road show, where she said brokers and mortgage managers would remain a key focus for the lender, arguing that its commitment to remaining branchless was a testament to that pledge. The announcement coincided with Hayward’s appointment as the bank’s new head of broker distribution.

Hayward, who had been instrumental in growing the broker channel at Citibank, was selected by ING Direct to recreate some of that success for them.

Citibank’s director of mortgages Steven Ramage credited Hayward as being an asset to the business, particularly in progressing relationship management with brokers.

“Peter was fantastic for Citibank,” Ramage says. “His strategies around the broker channel have been very good and have helped the bank in many ways in that area.”

Hayward says the opportunity to join ING Direct and assist in building its sales team was just too good to pass up. “Watching people realise their full potential is not only exciting and fulfilling, it’s what I enjoy the most,” he says.

Perhaps that enthusiasm stems from Hayward’s former professional life as a primary school teacher. While making the switch to banking has been his biggest turning point, Hayward says a number of skills learnt in the education sector were are transferable.

Hayward’s new responsibility will be to run the broker distribution team for ING Direct in Australia, a job that includes deepening the

The

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lender’s relationships with key accounts, strengthening state relationships and focusing on areas that the bank has natural affinities with.

Hayward says his goal is to “ensure our team offers a meaningful and worthwhile relationship with those brokers who are keen to grow their business”. “It is about how we can help brokers to achieve a better result in all aspects of their business by working closely together,” he adds.

Given the similarities between ING Direct and Citibank, the transition into his new post has been relatively smooth, Hayward says.

“Both players have a small physical footprint in Australia compared with our major competitors, and both rely heavily on the third party channel to promote their offerings. You need to be very focused on this channel if you are to realise your goals. This focus has ensured ING Direct is a major player in the Australian mortgage landscape.”

However, he notes that the focus and drive of each business is different.

“Coming out of the GFC, each lender needs to look at its strengths, weaknesses and natural affinities with borrowers,” he says. “This will drive goals and desires in a direction that makes sense to the lender. ING Direct is keen to grow its share and enjoys sound relationships with the

go-to ING Direct announced plans to boost mortgage production by 20% in 2011 and recruited Citibank’s former head of broker distribution Peter Hayward to lead the push. MPA catches up with the international banks’ man of mortgages

Personal profile

man

+ Age: 43 + Family: Married with three children + Home town: Tauranga, New Zealand + Education: Masters in Education, various business-related courses: strategic management, principles of marketing, finance + Hobbies: Sport: cricket, golf + Renovations: My dad was a builder, so he taught us all to be handy + Relaxation: Spending time with family and socialising with friends + Typical day: Starts with 5:15am to walk the dog, 7:15am in the office and leave by 5:30–6:00pm.

But I never really switch off from work

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LENDER PROFILE ING DIRECT

significant participants in the industry.” The biggest challenge Hayward faces is ensuring that ING Direct can adapt to change.

“This is a dynamic industry that will continue to change and develop. Regulation is just the start. It is a licence to operate. How brokers react, position themselves and spot opportunities will determine the future,” he says.

“There will be a lot of change. My team needs to be able to adapt to this paradigm and remain focused as our relationships evolve.”

Regulation In Hayward’s eyes, regulation is the most exciting development in the industry, as it will allow lenders and brokers to be more effectively engaged with each other’s businesses.

“The more professional the industry in its entirety becomes, the easier it will be for both parties to do business and share the successes.”

While regulation has driven some brokers from the industry, recent research from IBISWorld predicts the sector will see employment growth of 24%. According to the report, increasing income levels driven by housing shortages and lenders’ need of a third distribution channel will attract more people to the profession.

And Hayward says ING Direct will be just as keen to work with these rookie brokers as it is with more experienced brokers.

“We are focused on understanding brokers’ needs, dreams and aspirations, and working with brokers, whatever stage in their professional lifecycle they’re at. We’re not about a one-size-fitsall approach. If we can help a broker improve their business then we have done our job. BDMs are perfectly positioned to do this as they meet exceptionally good operators on a daily basis and are perfectly equipped to share best practice. It’s about adding serious value.”

Competition The major banks dominated lending during the GFC and continue to control about 80% of lending in Australia, but ING Direct is keen to bring back some competition to the market.

“The last few years have not been about competition,” Hayward says. “For most it was a case of battening down the hatches to deal with what was being described as the storm of the century. Now that the horizon looks a little clearer and banks understand their position in

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“ We are focused on understanding brokers’ needs, dreams and aspirations, and working with brokers, whatever stage in their professional lifecycle they’re at. We’re not about a onesize-fits-all approach ”

terms of capital and funding mix, we can plan for the future. Most of these plans are about growth.

We have already seen some second tier and non-bank lenders taking back some solid share in the recent months. I think this trend will continue. Brokers like having a wide selection of competitive offerings to present to their clients,” Hayward says.

As a significant player in the borrowing landscape, ING Direct is motivated to build on its position through brokers, Hayward adds.

“The broker channel is an integral part of this growth and we are keen to ensure that as many brokers as possible understand what we can do for them and their customers.”

ING Direct made its first foray into the securitisation market in October, upsizing its RMBS deal from $500m to $900m as a result of strong investor demand.

In a statement, chief financial officer Mark Mullington said the deal was part of an ongoing strategy to diversify the bank’s funding base.

“ING Direct is committed to growing its mortgage portfolio in coming years and a diversified funding base is a key to that strategy.”

He added: “ING Direct is also committed to providing Australians with an alternative to the Big Four in the mortgage market.”

While the federal government and the opposition bandy about various regulatory measures to force banks to keep interest rates low, Hayward suggests new banking rules are not the answer.

“The key to better banking is greater competition. We need to ensure that there are vibrant alternatives to the Big Four and that customers can easily switch banks to get the best deal. We believe easier switching in the banking sector will stimulate competition.”

ING Direct joined other banks in ditching its deferred establishment fees in November to encourage further competition in the market. The changes to its exit fees were made in addition to its $1,000 cash-back offer to customers making the switch to ING Direct.

“ING DIRECT is committed to a low-fee environment and we are committed to raising the profile of switching as a means whereby customers can get a better deal. Getting rid of deferred establishment costs aligns with our belief that switching behaviour should be encouraged,” Hayward says. MPA

BUSINESS PROFILE CITIBANK

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LIFESTYLE FAVOURITES

DRINK Bubbles (preferably French) and Singapore Slings

PLACE TO BE On holidays, drinking cocktails by the pool in the sun with my children behaving themselves – unlikely, I know

Lisa Bevan + company secretary + AFG

Tony Meredith

Favourite things CELEBRITY Ashton Kutcher, who obviously appreciates the finer things in life

HOBBY I have recently taken up cycling but after my last fall I am considering a new hobby

VACATION SPOT Bali or Rottnest Island

BOOK I love a murder-mystery.

I’m currently reading The Wolf of Wall Street by Jordan Belfort (a very interesting character)

MOVIE Thelma & Louise

MUSIC Mainly old Aussie bands: Weddings Parties Anything, Paul Kelly, The Waifs

FOOD Tapas

SPORT … is boring!

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