MPAMAGAZINE.COM.AU ISSUE 21.02
PURPOSE OVER PROFITS The customer-owned banks are putting brokers and borrowers first REFINANCING More borrowers are keeping an eye on their home loan rates
BROKER EDUCATION Brokers need to stay in the know as policies change
BIG INTERVIEW Specialist Finance Group’s Will Lockett reflects on the past 30 years
9/02/2021 6:47:36 AM
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UPFRONT 02 Editorial
Low interest rates are prompting borrowers to review their home loans
WILL LOCKETT The managing director of Specialist Finance Group reflects on three decades in the aggregation business
06 News analysis
Buyer activity boosts prices
Perfect storm for technology
FEATURES 46 Bank of Queensland
A look at what the bank is doing with refinances
50 Workplace culture
CUSTOMER-OWNED BANKS ROUNDTABLE
Six mutual banks meet virtually for MPA's annual panel discussion
Mixed views on the property market
Two key elements that are vital to a vibrant culture
56 Other life
54 Brokerage insight
Boss Money's Tom Uhlich has a passion for numbers and helping people Broker Ben Robinson learns mental focus sailing the seas
With lender policies changing all the time, brokers must keep up
Research shows older Australians want to stay in their homes
MPAMAGAZINE.COM.AU NOW ONLINE: Our daily newsletter. Keep on top of property market trends, business strategy, and what industry leaders have to say.
5/02/2021 11:08:04 AM
EDITOR’S LETTER www.mpamagazine.com.au
Ready to move forward
his month’s issue sees MPA speak to a wide range of industry figures for their insights on some of the biggest topics affecting broking, including a discussion with six customer-owned banks at our annual roundtable. This was originally planned as an in-person event – the first since our non-major banks livestream back in March last year. Unfortunately, with the rise in COVID-19 cases in NSW, many of the participants were not able to travel into the state to take part. This meant we were back at our screens for a virtual event. As disappointing as it was that we couldn’t meet in person, the customer-owned banks are always a joy to talk to. And despite the typical challenges of leading a virtual roundtable when you’re working from home (like someone ringing the doorbell three times), it was really good to catch up on how the sector had fared over the past 12 months.
As disappointing as it was that we couldn’t meet in person, the customerowned banks are always a joy to talk to In our feature on refinancing, MPA also spoke to a number of non-bank lenders, mortgage groups and banks. Refinances were a huge part of the market last year, as you will all be aware, so it’s a really good time to reflect on that and look forward to what we can expect to see in 2021. It doesn’t stop there. In this issue we also put the focus on broker education – another really important topic, particularly after all the ups and downs of 2020, with changing regulations and policies. Other features look at the work being done at the Bank of Queensland and Heartland Seniors Finance, and in our Big Interview we talk to the managing director of Specialist Finance Group, Will Lockett. Before the coronavirus re-emerged in December, I did manage to meet with some of the team at Specialist Finance Group and their brokers. It was so valuable to hear from this aggregator’s BDMs and brokers about how the past year had been for them. While we still don’t know what will happen over the next few months, particularly as we’ve seen how suddenly things can change and how quickly they can escalate, we remain hopeful that in the not-too-distant future we can do more face-to-face events.
FEBRUARY 2021 EDITORIAL
SALES & MARKETING
Editor Rebecca Pike
National Sales Manager Claire Tan
Journalist Tom Goodwin
Global Head of Media Marketing Lisa Narroway
Contributors Tony Carn, Colin Ellis Production Editor Roslyn Meredith
ART & PRODUCTION Designer Cess Rodriguez Traffic Coordinator Kristine Jamir
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
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Rebecca Pike, editor, MPA 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 the magazine can accept no responsibility for loss.
9/02/2021 6:50:26 AM
SFG’s unmatched technology and superior support has been the perfect complement to our business. Fabio De Castro SIMPLIFY FINANCE
1300 303 382 specialistfinancegroup.com.au Australian Credit Licence No. 387025
5/02/2021 10:10:13 AM
STATISTICS COVID-IMPACTED AUSSIES RELYING ON CREDIT
of Australians with reduced working hours are relying on credit cards
MIXED VIEWS ON URGENCY TO BUY OR SELL HOMES
of Australians with reduced working hours have taken out a personal loan
55% 45% 39%
ME Bank asked those planning to buy or sell in the next 12 months how quickly they would like to action their plans. More (57%) said they were ‘not in a rush and are delaying their move until COVID-19 situation improves’, while 43% wanted to buy or sell ‘as soon as possible’.
30 20 10
HOW SOON DO YOU PLAN TO BUY OR SELL YOUR PROPERTY?
As soon as possible, pending COVID-19 restrictions
Not in a rush – I’m delaying until COVID-19 situation improves
BETTER OUTLOOK FOR HOUSE PRICES
2 in 5
workers have used early access to super to pay off credit cards and personal loans
A survey of Australian property professionals in Q3 2020 found the outlook for property prices had improved, potentially buoyed by the prospect of low interest rates. Nationally, prices are expected to fall by just 0.6% in the year to Q3 2021, compared to the 2% decline predicted in Q2 2020.
GROWTH FORECAST FOR AUSTRALIAN HOUSE PRICES, Q3 2020
of Aussies have abandoned pre-COVID goals to pay off personal loans and credit cards Source: AMP Financial Wellness report, 2020
1.5 1.0 0.5 0.0 -0.5 -1.0
GROWTH NEXT 2 YEARS
Vic NSW Qld SA/NT WA Australia
GROWTH NEXT 1 YEAR
2.3% 1.9% 0.8%
-1.5 -2.0 -2.5 -3.0
-3.0 Source: NAB Residential Property Survey, Q3 2020
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THIRD OF FHBS IN BETTER POSITION TO BUY
New research reveals that around half of Australians are planning to buy a home within the next year, but what they are looking for in a new home is shifting as a result of COVID-19: more than half are looking for one that accommodates office space.
THOSE WHO BELIEVE THEY ARE IN A BETTER POSITION THAN BEFORE TO BUY/INVEST IN A PROPERTY 35 33%
Owner- Investor First occupied property home property owner buyer owner Property status
Intend to buy
Intend to sell
18- to 24year-olds
25- to 34year-olds
35- to 44year-olds
First home buyers
Source: CUA Home Sentiment Survey
Source: ME Bank Property Sentiment Survey, November 2020
VALUE OF HOME LENDING SHOOTS UP
SWAPPING HOUSEMATES FOR HOMES
The value of new home loans settled in October 2020 reached an all-time high, thanks to a boom in construction lending and a resurgence of first home buyers.
According to Westpac, 69% of prospective first home buyers are currently living with housemates, parents or in-laws. The research suggests that time spent with others during the restrictions is a motivating factor for purchasing.
HOME LOANS BY SECTOR, OCTOBER 2020
10 $5.3bn Owner-occupiers
REASONS FHBS WANT TO BUY
No longer want to pay rent
Year-on-year growth (%)
Value at October 2020 ($bn)
45- to 54year-olds
Source: ABS Lending Indicators October 2020, released December 2020
54% Are seeking more stability
39% Are looking for financial security
37% Are seeking sense of independence
Source: Westpac, November 2020
9/02/2021 6:56:33 AM
Surge in buyer activity set to continue With property settlements reaching a two-year high in December and prices breaking records, it’s incumbent on banks to keep up with buyer demand THERE WAS a huge surge in property sales settlements as 2020 drew to a close, and experts predict this will be an ongoing trend. While the last month of the year is often an active one for property settlements across Australia, with the Friday before Christmas historically the busiest day on the property calendar, December 2020 recorded a twoyear high of 79,187 settlements, including 1,711 on Christmas Eve. PEXA, the online property exchange network, saw a 22% year-on-year increase in settlements nationally in December. And as restrictions eased in Victoria, there was a huge 43% month-on-month increase in this state. “We saw property settlement numbers begin to recover following the easing of restrictions nationally in the second half of the year; however, the rebound in Victoria was delayed due to the second lockdown,” said Mike Gill, PEXA senior research manager. Over the last six months of 2020, NSW had the highest number of property settlements, at more than 24,500, followed by Victoria at nearly 21,000 and Queensland at just under 20,000. Settlements in WA and SA remained consistent throughout the year, with moderate increases during the second half of 2020. Prices shoot up with buyer activity It was not just settlement numbers that saw huge rises in December. Domain’s House Price
Report for the last quarter showed house prices across all capitals – with the exception of Darwin and Perth – hit a new record high. Unit prices rose marginally in most capitals over the quarter, with only Melbourne and Canberra recording significant growth. Over the year, unit prices in Melbourne and Adelaide hit a record high. Outer-city regions across the country saw record price growth due to rising demand as COVID-19 resulted in more people working from home and having the option to move out of the cities. The Blue Mountains and Central
“The 4.1% gain over the December quarter to $852,940 marks the steepest quarterly jump in four years,” said Domain senior research analyst Nicola Powell. “House prices across all capital cities are now at new peaks, apart from Darwin and Perth. National unit prices increased a more
“What’s the most important thing? Is it allowing property prices to increase but actually stimulating the economy and getting more people employed?” Susan Mitchell, Mortgage Choice Coast regions in NSW, Mornington Peninsula in Victoria, and Queensland’s Gold Coast and Sunshine Coast all recorded strong house price growth in the year to December 2020. Hobart has been pushed off the top spot as one of the most affordable capital cities in which to purchase a house; it is now more expensive than Darwin and Perth.
modest 1.3% over the December quarter to $574,245 and now are only 1.4% below the mid-2017 peak and could surpass this high over the next quarter.” Property prices are not expected to stop there. A previously confidential report from November 2020, which was recently released by the RBA, pointed to a possible 30%
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PROPERTY SETTLEMENTS ON THE RISE 30,000 25,000 20,000 15,000 10,000 5,000 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20
SA Source: PEXA
increase in property prices over the next three years should borrowers see the low interest rate as permanent. However, it may only be a 10% increase if the rate is thought to be temporary. While this would help drive the economy due to increased wealth and household spending, it could also induce
erty prices will probably increase,” she said. “I guess the question is, what’s the most important thing? Is it allowing some of those property prices to increase but actually stimulating the economy and getting more people employed? I think [the RBA has] decided that employment’s more important.”
“With January looking strong … there will be continued pressure on lenders to avoid the blowouts we saw in application and settlement processing last year” David Hyman, Lendi borrowers to bite off more than they could comfortably chew in credit. Mortgage Choice CEO Susan Mitchell agreed that property prices would likely rise as a result of sustained low interest rates, but she pointed to a recent increase in loan commitments in the first home buyer segment. “Lower rates are going to mean that prop-
What does the future hold? Data from home loan platform Lendi indicates that 2021 will continue to see high volumes of borrower activity and continued pressure on banks to keep up with demand. In December, a 33% year-on-year increase in the value of unconditional loan approvals was recorded and, as at 27 January, the number of
loan submissions jumped by 41% compared to the same period in 2020. “With January also looking strong in terms of loan submissions, there will be continued pressure on lenders to avoid the blowouts we saw in application and settlement processing last year,” said David Hyman, co-founder and CEO of Lendi. “The seasonal flows the industry is accustomed to may well be a thing of the past, at least in 2021. 2020 forced many lenders to update and digitise more of their processes, and this should deliver more streamlined loan processing times this year across applications, settlements and hopefully discharges.” Analysing a sample of more than 7,250 loans settled in 2020, the latest Lendi Home Loan Report shows loan processing reflected the volatility and turmoil of 2020, and the big banks were more susceptible to processing blowouts and delays. “Volatility in customer and lender behaviour largely normalised by the December quarter; however, our data shows the non-major lenders delivered a more consistent processing experience over the course of 2020,” said Hyman.
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9/02/2021 6:58:39 AM
GOT AN OPINION THAT COUNTS? Email firstname.lastname@example.org
2020: The perfect storm The double-whammy impact of COVID-19 and the launch of the Consumer Data Right have fast-tracked new digital-first lending solutions that will revolutionise the industry, writes NextGen.Net’s Tony Carn
ALTHOUGH NOBODY could have foreseen that 2020 would have been the year a pandemic changed the way we live, work and do business, NextGen.Net saw the digitisation of the mortgage industry coming. Like the rest of the financial sector, we just didn’t anticipate that it would come so fast. The reality is that the perfect storm of COVID-19 lockdowns, social distancing and work-from-home measures, combined with the introduction of the Consumer Data Right and open banking, has brought 10 years’ worth of product digitisation plans forward to six short, intense months for the lending sector. What COVID-19 taught us in the mortgage industry is that being an early adopter of new technology pays off when it comes to futureproofing your business. Although many of the digitisation tools available on NextGen.Net's ApplyOnline platform – such as the Document Verification Service and ‘eSign’ – have been around for some time now, it wasn’t until the pandemic hit that higher adoption took off out of necessity. CDR will revolutionise the industry The CDR launched in Australia on 1 July 2020, with the financial sector (open banking) the first to go live. Giving consumers more control over their banking data, the CDR enables consumers to safely share their data with trusted third parties. Open banking also introduces significant opportunities to reduce reliance on supporting documents and lessen the burden on resources required to assess customer data, and radically accelerate the loan approval process. That’s a win-win for customers and lenders from a time and cost point of view.
Adapt or die Recognising how open banking would change the future of Australia’s mortgage industry, in July 2020 NextGen.Net acquired Frollo – a purpose-driven fintech and accredited data recipient under the new CDR regime. Using Frollo’s technology, NextGen.Net will use CDR data to improve the loan application process and lead the way to making lending easy.
lenders invest in the evolution of open banking in terms of their own approval processes. We predict several lenders will emerge as real leaders in the space over the next 12 to 24 months, particularly as more ADRs come online, consumer awareness starts to grow, and lenders begin to see the benefits of faster turnaround times, more compliant and reliable data, and a lower head count.
Now is the time to do a robust assessment of your readiness to leverage the innovations that will come with the evolution of open banking In November 2020, NextGen.Net and Frollo published the first industry report on The State of Open Banking in Australia since the CDR launched. The report highlighted that 71% of respondents intend to use CDR data and almost 58% plan to do so within the next 12 months. Streamlining the lending process through income and expense verification was identified as the most popular immediate use case for open banking. The impact of the CDR is going to be Darwinian – so it’s a matter of adapt or die. Today, 99.9% of all mortgages are completed and lodged digitally, but 15 years ago all those applications were faxed. We look back now and wonder how we ever did it that way. Open banking will be exactly the same, so it’s a matter of evolving through change management or being left behind. Although we don’t expect the CDR to become embedded in the lending industry overnight, we are starting to see a number of
Build or buy? With many lenders working on legacy systems that are not fit for purpose in the new open banking ecosystem, now is the time to do a robust assessment of your readiness to leverage the innovations that will come with the evolution of open banking. And one of the big questions is whether to buy instead of build. With an established and mature Software as a Service (SaaS) model, NextGen.Net embraces the concept of ‘configure, not customise’. Modular delivery provides economies of scale in terms of delivery and training, meaning businesses that use ApplyOnline benefit from the continual investment NextGen.Net makes in ongoing research and development to deliver fit-for-purpose lending solutions.
Tony Carn is the chief customer officer at NextGen.Net.
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5/02/2021 10:13:22 AM
WILL LOCKETT: AGGREGATION THREE DECADES ON As Specialist Finance Group celebrates its 30th anniversary this year, managing director Will Lockett looks back at how the broking industry has evolved
REFLECTING ON 30 years in the aggre gation business, Specialist Finance Group managing director William Lockett says he is proud of the journey the company has taken. Growing from a local business based out of Perth to one that now has a presence across Australia and Singapore, the aggregator has succeeded in maintaining its close relation ships and community feel. SFG was one of the only aggregators in Australia when it began operations in 1991. Back then, brokers worked for a flat fee of about $300, and there were just a few lenders to choose from when submitting their loan applications. Lockett says WA was really the birthplace of the broking industry, and this saw all mort gage broking businesses in the state become fully licensed. As the industry grew and matured, other states and territories followed suit with their own requirements, such as for registration and the use of contracts.
While this created its own challenges, particularly for those businesses working across more than one state, it eventually
Lockett says has been challenging for everyone on both a business and personal level. As a managing director who takes a hands-
“I remember many a time when there would be a line of mortgage brokers at the fax machine waiting to submit their loan applications to lenders” shifted to the national approach we see today, with licensing through ASIC and the support of industry bodies like the FBAA and MFAA. Before he joined SFG, Lockett was involved in the construction and finance industry, looking after private investors and their construction developments, so he has seen the industry changes first-hand. Of course, 30 years ago no one could have expected to experience a year like 2020, which
on approach, he says it was important to not only make sure the business models of SFG’s brokers were OK, but that they and their families were also safe and well. The group’s management teams and BDMs regularly communicated with brokers to make sure they were fully aware of their different business and personal circum stances, enabling SFG to provide the support and assistance required.
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PROFILE Name: William Lockett Title: Managing director Company: Specialist Finance Group Years in the industry: 30+ Career highlight: “Given that we have now been operating for 30 years in the aggregation space, there have been many highlights along the way. First and foremost is commencing in our great industry in 1991 and then becoming one of the first aggregators to have an office overseas, with our office in Singapore.” Career lowlight: “Without a doubt, my career lowlight was in the findings of the recent royal commission and where this report and recommendation gave no credit or value to the service proposition that mortgage brokers provide both their clients and their local communities.”
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Lockett has worked with several brokers over the last year who have taken the time to reassess their business models and plan how they can improve their businesses moving forward. While brokers navigate changes to their own businesses, they are also busy dealing with the financial requirements of their existing clients, which has put them under additional pressure. “One of the most important aspects of communicating with our members, particularly in these challenging times, is to make them fully aware that they are not alone, and we as their business partner are here to help on any matter,” Lockett says.
A big year for tech and digital tools While today’s brokers can rely on technology, in the earlier days of SFG there was a lot of manual work to be done using the photocopier and fax machine. “I remember many a time when there would be a line of mortgage brokers at the fax
ABOUT SFGCONNECT Specialist Finance Group created its digital platform, SFGConnect, to provide its members with a clear competitive advantage. It offers a feature-packed solution designed to reduce broker workload, improve compliance and enable effective collaborative involvement of brokers, their staff, clients and referral and business partners during and after the loan application process. Key features include: • • • • • • •
borrowing capacity calculations product search and comparison stamp duty and LMI calculations compliance tools third party integrations mobile phone app client portal
“One of the most important aspects of communicating with our members, particularly in challenging times, is to make them fully aware that they are not alone” machine waiting to submit their loan applications to lenders and both hoping and praying that the brokers before them did not jam the fax machine,” Lockett says. The value of using emerging technology in the broking industry was never greater than it was last year, with digital tools and systems playing a huge role in the way brokers worked, not to mention giving them the ability to communicate effectively with customers throughout the restrictions. It also provided a way for aggregators and lenders to keep brokers up to date and educated as the situation and policies continued to change.
SFG prides itself on the industry-leading technology it offers brokers, which has enabled them to continue to operate with their business models unaffected. The group’s software platform has always allowed easy engagement between finance brokers and their clients; it also gives them the ability to record video conferences, which has been particularly useful during COVID-19. “I have received numerous communications from our finance brokers thanking us for the technology and software platform we provide them, which has allowed them to continue their business models,” Lockett says.
“We also acknowledge the contributions and concessions made by lenders during the past year, which have provided common-sense amendments for finance brokers to engage with their clients and continue to submit loan applications. Good technology is good business.”
Reconnecting with brokers SFG’s offerings to brokers, from the technology it provides to its strong emphasis on communication and building relationships, have meant the aggregator has seen a number of well-known finance brokers join the group, mostly due to referrals from already-satisfied brokers. Lockett says brokers who make the move to SFG gain a variety of benefits, such as having direct access to him and the rest of the senior management team, the choice of four different aggregation commission models, and the group’s industry-leading software. In 2021, Lockett says SFG will continue to work on evolving its technology through SFGConnect and ensuring its members fully comply with and are aware of their responsibilities with regard to the best interests duty. Its hope is also to be able to hold face-toface events again, given that many of the events of last year were virtual. SFG had to postpone its 2020 national conference, but Lockett is looking forward to celebrating the group’s 30-year milestone at the conference this year. “This is not just about learning and education; it is also about reconnecting with that personal touch,” he says. Lockett adds that SFG is looking at all the services it provides to members and considering not only how it can improve them but also what services it can add for their benefit. “When we start any business planning, we always start with the view of how we can be a better aggregator today than we were yesterday. Therefore, we look forward to improving our aggregating business model in 2021,” he says.
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9/02/2021 8:49:17 AM
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PURPOSE OVER PROFITS As borrowers look for extra support thanks to COVID-19, the appeal of customer-owned banks is growing. With more than just products drawing brokers and new clients in, their market share is on the rise
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IN A year when customers have required more support than ever before, there was one banking sector that was able to leap into action faster than the rest. Customer-owned banks have always been about the customer, not about shareholders or profits. Six customer-owned banks joined this year’s Customer-owned Banks Roundtable to talk about what the last 12 months had been like for them and exactly how they had been working with brokers and borrowers through a crisis that no one was prepared for. MPA had originally expected to kick off 2021 with an in-person roundtable, but the COVID-19 cases in NSW over Christmas meant that many of our panellists could not enter the state. So, we were forced back online for a virtual panel. Taking part this year were Darren McLeod from Beyond Bank, John White from CUA, Mark Middleton from Teachers Mutual Bank, Richard Irving from Bank Australia, Simon Burt from Newcastle Permanent, and Stewart Saunders from Heritage Bank. We also have comments from Kimberley Ash, a mortgage consultant at QuickSelect. Having last met as a group in January 2020, it was almost amusing to ask how they had all been since then; no one could have predicted how the year would have turned out. But despite the challenges COVID created for the banking sector, it also brought opportunities. The panellists discussed how they were able to respond quickly by automating and simplifying processes; how they worked in particular with first home buyers and really demonstrated their customer-focused approach to brokers. They talked about phoning brokers to see how they were doing, producing wellness videos, and ramping up their customer support call centres. The success of their hard work and focus was demonstrated in numerous surveys, like Roy Morgan’s October Customer Satisfaction Report. Satisfaction with the major banks as a group was 76.9%, but Beyond Bank came top of the list with 92.3% – an increase of 2.4% from the year before. Newcastle Permanent achieved 90.3%, up by 3.6% from October 2019. As these banks look to the year ahead, their customer focus never changes. They know that the best interests duty, responsible lending and the continued impacts of COVID-19 will be top of mind for brokers this year, and they plan on being there through all of that. Read more about how they are supporting borrowers and brokers over the following pages. I’d like to thank the customer-owned banks for joining this year’s roundtable, albeit under different circumstances than we had hoped for. MPA MPA’s ’s next panel discussion will be the Fintech Roundtable, which will be featured in next month’s issue.
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Simon Burt Newcastle Permanent
Richard Irving Bank Australia
How has the last year been for the customer-owned banking sector? While it seems there is nothing new to say on what 2020 was like, we could not begin the roundtable without talking about the obvious: COVID-19. Kicking off the conversation, Newcastle Permanent’s head of transformation, Simon Burt, said that while the last year had been an interesting one, being a customer-owned bank meant the lender could be nimble in terms of responding to the pandemic. The bank “quickly adapted” to provide personalised support to its customers. “We were among the first in the industry to announce broader community support and hardship relief packages for our customers. And in the first few weeks of the pandemic we saw an increase in call volume to our Customer Contact Centre of up to 50%,” Burt said. “Our people willingly adapted to this change, which enabled us to redeploy people from across our organisation to increase the capacity of the call centre so we could continue to help our customers one-to-one. “In the face of the pandemic, we stayed true to delivering our business strategy and three-year plan. During the height of the pandemic we introduced digital interviews and digital verification of identity for new customers applying for a home loan, which enabled us to keep lending,” he added.
Darren McLeod Beyond Bank
Mark Middleton Teachers Mutual Bank Limited
“Being a customer-owned bank, we’re highly focused on meeting our customers’ evolving needs, in the last year specifically we adapted to support them, whatever their needs were.” CUA’s head of brokers and insurance partnerships, John White, agreed that while there were challenges in 2020 there were also opportunities for customer-owned banks. He pointed to the record-low interest rates
Stewart Saunders Heritage Bank
John White CUA
COVID-19 hit, he said he was pleasantly surprised at how 2020 turned out from a mortgage and broker perspective. “The market was a lot more resilient than we expected,” he said. “For Heritage, 2020 was our highest-ever year of broker originations. Even with the lockdown periods and the impacts that continued throughout the year in Victoria, we were still able to achieve some great
“We’re highly focused on meeting our customers’ evolving needs; in the last year specifically, we adapted to support them, whatever their needs were” Simon Burt, Newcastle Permanent and competitive offers available to customers. “The challenge was to ensure our customers were as well placed as they could be during the pandemic and that we maintained our competitiveness in an environment where those low interest rates were present,” White said. Looking back 12 months, Heritage Bank’s head of broker experience, Stewart Saunders, said the year had started out for the lender with high hopes and momentum. And while expectations were somewhat subdued once
outcomes. We saw a very resilient property market, a lot of activity. We’ve seen some great support from the government in terms of new dwellings and construction, and that’s been really positive for the industry.” The overall sentiment of the customerowned banks has remained positive. Richard Irving, head of distribution at Bank Australia, said the sector was in a strong position and had managed the difficulties of COVID-19 and the economy well. “Customers required more support over
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SHARE OF BROKER-ORIGINATED LOANS SETTLED — BY LENDER SEGMENT 1.8% 2.4% 5.1% 5.9% 4.8% 10.2% 12.7%
5.6% 4.0% 7.4% 4.9% 5.7%
5.7% 5.5% 7.1% 6.1% 6.7%
8.0% 5.7% 7.2% 6.1% 7.5%
6.7% 9.2% 6.3% 11.8%
6.2% 7.9% 7.5% 13.4%
Credit unions, building societies and mutuals Non-bank lenders Any other type of lender
White label lenders International banks (eg ING Direct, Citi, etc.) Independent regional banks (Suncorp, Bendigo)
Regional banks owned by or aligned to major banks (ie Bankwest, St. George) Major banks (ANZ, CBA, NAB, Westpac)
Source: MFAA Industry Intelligence Service, 10th Edition
the past 12 months, and being a customerowned bank meant the priority of customer needs was at the forefront of decisions being made,” he said. “Customer-owned banks have the ability to manage the longer-term benefits of customers, and this was very clear in the approach taken by customer-owned banks in assisting home loan customers through difficult times.” Like most mutual banks, Beyond Bank also had a strong year in lending, said head of third party Darren McLeod. Both the first party channel and the third party channel experienced a record year in mortgage lending. In October, Beyond Bank was named as the highest-ranking banking institution for customer satisfaction in the country by Roy Morgan.
“With this unpredicted increase in lending we were still able to achieve high customer satisfaction with both our brokers and customers,” McLeod said. “The continued awareness of the sector and the desire to look at alternatives to the majors has increased the market share of the mutual sector.” Pointing out that 2020 was not just difficult because of the virus, Teachers Mutual Bank Limited head of third party distribution Mark Middleton reflected that the year had started out with bushfires, which led to crises in many regional towns and even major cities. “People are still rebuilding their lives, and some of these people are members of credit unions or mutual banks in those regions,” Middleton said.
“The sector has done their bit to support members in the affected areas in different ways – both financially and physically – through donations and volunteer programs.” Turning again to COVID-19, he said it had completely changed the way the sector operated, and while there had been a huge lift in business, which they had not originally expected, there have certainly been challenges. “The economic turbulence caused by the pandemic has created a difficult environment for some of the smaller credit unions and mutual banks to operate in,” Middleton said. “Coupled with increased innovation in commercial and technological offerings, this may lead to further consolidation of the industry to help promote longevity for members and continue the mutual ethos.”
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BROKER PERSPECTIVE How has the last year been for the customer-owned banking sector? For mortgage brokers in 2020, life was incredibly busy. As customers needed help with loan repayment deferrals and refinancing, as well as new lending, brokers had to navigate changing lender policies and processes. QuickSelect mortgage consultant Kimberley Ash said customer-owned banks were a great solution to turn to as the major banks in particular added layers of bureaucracy, which created significant backlogs. “We found the customer-owned banks to be extremely supportive, offering an exceptionally high level of empathy,” she said. After the “worst month ever” in April, Ash said the last year became the busiest she’d ever experienced. She said it was all about helping customers understand what was available to them; initially there was a lot of confusion. “There was a lot of miscommunication around repayment deferrals where customers thought interest wasn’t being charged rather than accrued,” Ash said. “Many customers put their loans on hold as a precautionary measure but never really needed to. “Customers got caught up in accessing super, believing it was a good contingency and not realising it would later be interpreted as overtly being in hardship.”
“Customers can now see that there are alternatives out there; there are banks that do put customers first” John White, CUA What was your relationship with brokers like in 2020? Understanding that it was not just borrowers who needed support over the past year, the customer-owned banks made sure the third party channel had adequate support as well. Unable to communicate in person as the industry was so used to doing, CUA took a digital approach and really focused on brokers as human beings: the bank released wellness videos covering topics such as how to create a meal using what’s left over in the pantry, or home-based yoga and meditation. Of course, this was on top of the practical business tools it offered that brokers could benefit from. “CUA was also extremely focused on how to make it easier for brokers to do their business and serve customers during this unprecedented time, by allowing the use of a new digital ID verification and the launch of
our online broker portal,” White said. “They were changes to our business that we needed to make, but it was on the basis of understanding how small business needs to adapt to COVID. We were looking at COVID from outside of the home lending prism and thinking, ‘how do small businesses operate in this environment?’ That’s the thinking that we applied during that period.” Praising the idea of wellness videos, Burt said Newcastle Permanent drew strongly on its ethos of delivering banking with a human touch with its broker partners. Just as it did after the banking royal commission, the mutual bank called its brokers to ask if they were OK. “We aim to have a real relationship with our brokers, and from this base flows onto the relationship we have with our customers,” he said. When the decision was made by the banks to defer mortgage repayments, the biggest
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question on brokers’ lips was whether trail commissions would also be deferred. “Bank Australia worked very closely with brokers over this period, and we stayed in touch and communicated regularly with the brokers, providing them with updates when relevant to ensure brokers understood how we were supporting customers,” Irving said. “Importantly, we also made a decision that, if any of their clients were impacted by COVID, this would not affect any of their trail payments.” Teachers Mutual also understood the importance of continuing trail payments to brokers whose clients had been granted financial hardship assistance, and made the decision to do that right at the start.
It introduced a deferred commission payment for brokers, which was calculated by reviewing the loan account balance at the end of the month after the 12-month anniversary of the loan. The top-up commission is based on the difference between the current loan account balance (net of any offset) and the loan account balance used in the initial upfront calculation of the loan – provided the movement is greater than or equal to $20,000. “During this time, we worked to keep our engagement with brokers high, and to offer extra support where we could,” Middleton said. “We are really excited to continue working with and growing with brokers. The third party channel has been a great
reason for our growth across all four divisions and has particularly exceeded expectations for our Health Professionals Bank division.” With the restrictions on social gatherings and face-to-face meetings, Heritage Bank’s BDMs had to shift from seeing brokers every day and talking through a transaction in person, to doing so over the phone. Saunders said he had seen BDMs become much more responsive and able to help brokers in a more holistic way. On top of that relationship focus, Heritage has introduced digital processes like digital verification of identity to support brokers. “For an industry that can take a long time to agree on a form, it’s been really refreshing
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CUSTOMER-OWNED BANKS “[Our banks are] more member-focused, providing real value to members and the communities they’re in, as opposed to driving the highest profit we can”
tion numbers for first home buyers. We have developed a real niche in the first-home construction space due to our process and swift payments to builders for construction loans.” The scheme has helped Bank Australia grow its already-strong presence in the first home buyer market even further. The bank is involved in all federal and state government initiatives to support first home buyers, and Irving said this would continue. “Bank Australia believes strongly in supporting first home buyers to get into the market,” he said. “The market is definitely strong, and this segment has increased its market share, especially in the environment of low rates and with varying levels of government initiatives making it more affordable. “We will continue to support first home buyers by way of having products that meet their needs, like 95% LVR loans, attractive
Stewart Saunders, Heritage Bank to see how some of these changes that have been discussed for a long time have been rolled out and supported across all of our organisations,” Saunders said. “It’s been fantastic, and I think it’s given us an opportunity to get closer with brokers and better support them.” Also looking at how its BDMs interacted with brokers, Beyond Bank ensured continued communication with brokers last year so they could stay informed. “Despite the face-to-face restrictions, we ensured brokers were kept informed via our BDMs and EDMs, with product, policy, pricing and service-level updates and changes,” McLeod said. “We survey each broker after settlement of the loan, and for the year we had a 94% satisfaction rate from these surveys.”
Customer-owned banks make up the majority of institutions involved in the First Home Loan Deposit Scheme. How important has that scheme been to your sector? What have you been seeing in that segment of the market? Twenty out of the 27 lenders on the First Home Loan Deposit Scheme (FHLDS) panel are customer-owned banks. The scheme supports eligible first home buyers by providing a guarantee that allows them to purchase a home with a deposit of as little as 5%. Four out of six of the customer-owned banks at the roundtable were participants in the scheme, and their feedback was all positive. McLeod said being part of the scheme had given Beyond Bank “a real footprint” in the first home buyer space and had assisted the
bank in raising its brand awareness nationally. “Brokers who previously didn’t use us or know about our proposition started by giving us a FHLDS application and now are giving us all types of applications,” he said, adding that the bank was also participating in the latest round of the scheme for new home purchases. “First home buyers now account for a large percentage of new business each month. Even when the FHLDS spots were exhausted, we still continued to receive strong applica-
CUSTOMER PERCEPTION OF MAIN FINANCIAL INSTITUTIONS - BY ATTRIBUTES Trustworthy 87%
48% 50% 35%
Customer-owned banking institutions
Other banking institutions
Base: Customer-owned banking institution members, n=157; CBA members, n=603; ANZ members, n=299; Westpac members, n=221 and NAB members, n=241 Source: COBA, Spotlight on Customer Vulnerability report, December 2020
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CUSTOMER-OWNED BANKS BROKER PERSPECTIVE How important has the First Home Loan Deposit Scheme been to customers? What have you been seeing in that segment of the market? The First Home Loan Deposit Scheme has been “a brilliant leg-up” for those customers who fit the criteria, said QuickSelect mortgage consultant Kimberley Ash. Despite that, she said there were still some challenges, such as finding properties that were eligible for the various government schemes – but the customer-owned banking sector had been particularly supportive. “Our biggest concern is the number of customers locking into fixed rates with the majors and then moving onto a rate 1.5 to 2% higher on the revert but unable to refinance,” she said. “We have really felt like the customerowned banks have worked in partnership with us, putting in place strong strategies to pay the loans down and have lower revert rates combined with historically low fixed rates.”
How will you continue to work in the first home buyer market? Ash said the first home buyer segment was the most rewarding one to work in. “Customers are so appreciative of the guidance and invariably love discovering better deals that they could never find just by going to a major, where many of them have historically held their everyday banking,” she said.
fixed rates with an offset account, and continued focus on providing education and support for first home buyers.” Providing more insight into the FHLDS experience, Middleton said Teachers Mutual Bank Limited had seen a lot of customers applying for a certificate but not yet settling on a property. With the latest round of 10,000 allocations rolled out in October, he said the scheme had become more of an economic stimulus through the New Homes Grant, which means applicants will be further down the process
For those of you who are not part of the FHLDS scheme, what was your experience of the first home buyer market in 2020? Even without the FHLDS, the first home buyer market was incredibly strong last year. While two of the panellists had not taken part in the scheme, first home buyers remained an important part of their customer base. Saunders said Heritage Bank had chosen not to opt into the scheme. It already offers family guarantee loans, allowing parents or family members of first home buyers to
“[At a] customer-owned bank, there is not a distinction between shareholders and customers – they are one and the same” Richard Irving, Bank Australia and more Australians will receive support in getting into the property market. “We have a long-standing history of helping our members enter the property market,” Middleton said. “I’ve been at Teachers Mutual Bank Limited for nearly 10 years, and it has been one of our leading values. Our mission is to help key workers secure their financial futures, including helping them to buy their first home.” With around 900 successful applications coming through over the past 12 months, White said CUA had also benefited from being part of the scheme. Brokers are presenting customer-owned banks to customers who may not have considered them in the past. “Through the scheme, many customers are experiencing customer-owned bank service for the first time, and I think that’s really exciting,” he said. “Those customers can now see that there are alternatives out there; there are banks that do put customers first. “Many brokers are also starting to experience what it’s like to work with CUA, and they’re seeing we can provide a great service to customers.”
provide equity to support them in getting into the market. “We’re very strong in the family guarantee market, and that’s a different segment of customers to those in the First Home Loan Deposit Scheme,” he said. The bank also offers a strong proposition to borrowers in need of construction lending, a large proportion of whom are first home buyers. “We’ve seen that supported this year through the grants provided by the federal and state governments and the significant increase in construction lending, where we’re seeing a high proportion of first home buyers looking to construct their first house,” he said. Newcastle Permanent also elected not to be part of the scheme. Burt said the lender was also already strong in the first home buyer market, particularly around the Newcastle and Hunter areas of NSW. “We’ve been supporting first home buyers for 118 years – it’s how we started and is certainly still our business today,” he said. Newcastle Permanent also offers family guarantee loans and are very strong in construction loans for the market.
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3 3 3
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CUSTOMER-OWNED BANKS TOP 10 CUSTOMER-OWNED BANKS BY TOTAL ASSETS - 2020 CUA
12% 2% 6%
Teachers Mutual Bank
7% 1% 5%
Source: KPMG Mutuals Industry Review 2020
“First home buyers are different – they need a little more support. It is very rewarding helping a first home buyer into their first home,” Burt added.
What is it that resonates with customers about customerowned banks, and how do you plan to keep your growing market share? Middleton said it was the sense of community and the values these banks represent that really resonated with customers. He added that after the banking royal commission and the subsequent changes to legislation, consumers were looking for financial institutions they felt they could trust. “I think this is something special that you find in the mutual sector,” he said. “For us, however, I think our growth this year can be largely attributed to brokers.
“We are really excited to continue working with and growing with brokers. The third party channel has been a great reason for our growth across all four divisions” Mark Middleton, Teachers Mutual Bank Limited Brokers act like an extended sales force for us where we don’t always have bricks-andmortar representation. Working in the third party channel has significantly contributed to the growth of our organisation.” Irving said the royal commission had highlighted that customer-owned banks offer transparency and a focus on being responsible by putting customers’ interests ahead of profit.
“Customer-owned banks deliver a personalised service that treats customers as shareholders,” he said. “By joining a customerowned bank, there is not a distinction between shareholders and customers – they are one and the same.” McLeod said that in the current environment it was all about “meaningful alternatives”, and as the sector continued to grow it was important to educate brokers and
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customers on what customer-owned banks had to offer. “We will continue to promote this offering to our brokers, who can in turn pass this on to their customers,” he said. “Being an owner of an organisation which they transact with and seeing what is given back to communities resonates as a true alternative to a growing segment of the market. “This year we merged with Nexus Mutual, which gave us a local footprint in Victoria. We lifted our unverified B Corp score to 140, making us one of the highest-scoring B Corp banks in the world today. We also delivered over $650,000 in funding via our community reward program.” White said that, particularly in the last
year, customer-owned banks had been able to provide a great experience for customers who use brokers, and CUA intended to make sure that continued by offering fast assessment times and digital processes. The bank has just implemented a new integrated lending platform supporting the broker’s application from submission through to approval and settlement. “We’re starting to see now the fruits of that through direct feedback from brokers saying that our assessment times are fast,” White said. “If your rates are competitive in market, you offer fast assessment and you have no ongoing fees, then those factors all matter under the new best interest duty obligations.”
Burt agreed that being integrated with end-to-end digital systems was really important; Newcastle Permanent has focused on making things simpler and faster for brokers, with tools like ApplyOnline and automated forms. “We’re really focused on making sure we understand the broker’s approach, their own value proposition,” he said. “Part of their job is actually giving customers alternatives they wouldn’t have found otherwise, and we really go looking for those brokers that have that as part of their value proposition. “The other thing we’re focused on in terms of growing that share is expanding the number of aggregators that we deal with. We’re looking carefully at opportunities
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CUSTOMER-OWNED BANKS “Continued awareness of the sector and the desire to look at alternatives to the majors has increased the market share of mutual banks” Darren McLeod, Beyond Bank
and doing that in a way that gives us goodquality business.” Explaining why mutual banks resonate with customers, Saunders said it was about being part of something that was more than just a bank. Even before the royal commission and the challenges of 2020, he said people and customers had been looking for something more than just bank products. People are becoming a lot more socially conscious when choosing the products they buy and the organisations they deal with. “It’s these sorts of areas that mutual banks have exemplified for a long time which are really starting to get attention,” Saunders said. “Our products are all fairly similar, but we’re more member-focused, providing real value to our members and the communities they’re in as opposed to driving the highest profit we can for the organisation. “I think that will start to be a strongerplaying factor and hope that consumers can see the greater value of being part of an organisation that really stands for something.”
What other trends – apart from the COVID response – do you see affecting the broker industry right now and into 2021? The customer-owned banks agreed that regulation would play a big role in 2021. Irving said that while the broker industry was in a strong position to capitalise post-COVID, there was still more work to be done around changes associated with BID. “We believe there will be a need for brokers to continue to diversify their businesses and to think about how they position themselves as a point of difference,” he said. “Bank Australia is well placed to support
brokers who are looking for a differentiated market positioning for customers who are socially aware and believe strongly in an ethical and trusted brand.” Middleton agreed that BID would be “on the minds of many brokers”, adding that he believed it would bring positive change as it had the potential to uncover further opportunities for clients. He also called out the changes to responsible lending and the aftermath of COVID-19 support. “While we wait for legislation to pass on the changes to responsible lending, I think this will also be top of mind for brokers,” Middleton said. “Potentially, this could see a speed-up of the application process that will hopefully benefit the consumer in the end. “The winding down of government support in response to COVID-19 presents a big unknown to us all. COVID-19 has had a massive impact on the economy, and I think we are all waiting to see what will happen as we recover.” Burt said it was going to be interesting to see how BID evolved over the coming year and impacted institutions, and questioned how much price would come into play. “I think it’s interesting to see how that will evolve for all of us,” he said. Beyond BID, White said transitioning to digital services that better support brokers and their customers would be important this year. On top of that, it was vital that banks had an experienced and responsive team of BDMs. With all the changes to lending policies, White said it had been hard for brokers to keep up, and communication was vital.
BROKER PERSPECTIVE Not for the first time, customer-owned banks have been praised by consumers in various surveys. Why do you think that is? After a year like 2020, when customers needed support but also empathy, customer-owned banks have topped the customer satisfaction surveys. Kimberley Ash, mortgage consultant at QuickSelect, said, “It is in times of adversity that people do need to lean on experts, and that has never been truer than now. When people reflect on what was an unprecedented year, customerowned banks will again reflect the value they bring.”
Customer-owned banks’ market share is also continuing to grow. What is it that resonates with customers? Ash said customers were definitely leaning more towards customer-owned banks because they saw them as offering more personalised customer service, more competitive interest rates, lower fees and a commitment to ethical lending practices. “I speak with all my clients on a sixto 12-monthly basis and review their lending. I think I could count on one hand the number of discharge forms I’ve completed for a customer-owned bank in the last five years – that’s got to be saying something,” she said.
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MUTUAL BANKS LEAD PORTFOLIO GROWTH IN 2020
12% 10% 8% 6% 2.9%
Source: KPMG Mutuals Industry Review 2020
“I could count on one hand the number of discharge forms I’ve completed for a customer-owned bank in the last five years – that’s got to be saying something” Kimberley Ash, QuickSelect “Having a team of business development managers that are experienced – a stable team that knows the policy back to front and they can talk to it and provide confidence to the broker that they know whether the deal is going to be approved or not, and can answer those questions and respond to those enquiries immediately – is going to be really important,” he said.
Another thing to look out for this year would be consolidation in the aggregation and lending spaces, McLeod said. This would result in even more changes in the third party market. “There are a lot of unknowns to be played out this year,” McLeod said, such as “the impact of the removal of the repayment holidays and government incentives and
how the property market will stack up”. He added, “COVID brought things forward, so it will be interesting to see if application flows are as strong in ’21 as they were in the second half of ’20.” Saunders said he thought BID and the responsible lending changes would present a good opportunity for lenders. “The responsible lending obligations present a great opportunity for lenders to improve processes and take out some of the pedantic nature that has been implemented in our assessment processes, to deliver a better experience for brokers and their customers,” he said. “It’s going to be another big year of change, but much of that will be positive for brokers, so we’re really excited to see what opportunities that presents.”
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SECTOR FOCUS: REFINANCING
Providing choice and savings for borrowers Refinancing has kept the lending industry buoyed in the last 12 months, and it’s not too late to help your customers save big on their home loans – with advice from these industry leaders IT’S NO secret that refinancing made up a huge portion of lending activity in 2020. Back in May, overall refinancing by owner-occupiers was worth around $15.2bn, with just under $10bn of that total value coming from borrowers who refinanced to a new lender. By comparison, in May 2019, external refinancing by owner-occupiers was worth just $5.7bn. And that’s just the owner-occupier sector. Refinancing by investors peaked in June 2020, with over $8bn worth of loans refinanced.
So, why was refinancing so strong in 2020? Suncorp Bank head of broker partnerships Troy Fedder says that with the high economic uncertainty came an opportunity for borrowers to evaluate their finances and take advantage of historically low interest rates and refinance incentives. “For some, 2020 was an opportunity to look for a better home loan deal with their broker or bank, while others took the opportunity to refinance their home and utilise equity for renovations,” Fedder says.
While customers usually choose to refinance as part of their strategy to meet their financial goals, Fedder explains, they may also be doing it to switch from a fixed to a variable rate, or vice versa, or for reasons beyond the financial. “There are also other factors that come into play, with some borrowers looking for a lender who demonstrates social and corporate responsibility aligned to their values, or digital solutions which meet their banking needs,” he says.
5/02/2021 10:56:04 AM
Borrowers have also been refinancing to consolidate debts, such as credit cards, business loans and ATO debts, says James Angus, chief customer officer at Bluestone. The non-bank in fact saw a drop in refinancing applications over 2020, due to its redirection towards prime lending, which has attracted much more purchase business. Still, refinancing made up 52% of all applications received by Bluestone. “Refinancing can be an incredibly smart thing to do. When we think of the potential financial impacts of COVID-19, many households attempted to improve their cash flow via refinancing their home loan to a lower rate and consolidating high-interest unsecured debt,” Angus says. Refinancing was not just important for customers who needed to save money or for keeping brokers busy – it kept the mortgage
“Refinancing can be an incredibly smart thing to do. [With] the potential financial impacts of COVID-19, many households attempted to improve their cash flow via refinancing” James Angus, Bluestone market active at a time when it could have really struggled. Resimac’s general manager, distribution, Daniel Carde said this surge of activity in the space introduced competitive pressure on interest rates, in turn benefiting borrowers with an unprecedented amount of choice of competitive home loan deals. “Borrowers often refinance their home loans to take advantage of lower rates in
the market – indeed, it’s one of the major benefits of choosing a variable interest rate over a fixed rate,” he says. “But it’s not the only reason. Once borrowers have built up equity in their property, they can refinance their home loan and use that equity to finance things like home improvements, or to consolidate existing commitments.”
VALUE OF EXTERNAL REFINANCES — 2020 Owner-occupiers
Nov 2019 Dec 2019 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May 2020 Jun 2020 Jul 2020 Aug 2020 Sep 2020 Oct 2020 Nov 2020 Source: ABS Lending Indicators, November 2020
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SECTOR FOCUS: REFINANCING
A budget reset for homeowners Refinancing is not a new thing, however; borrowers were choosing to do so long before 2020. But Mortgage Choice CEO Susan Mitchell says COVID-19 “reset the budgets of many households”. The broker group saw a 50% increase in refinancing submissions in the three months to May 2020, when compared to the same period one year prior. Mitchell points out that the pandemic, the recession, RBA rate cuts and new government schemes would also have brought home loans to the forefront of consumers’ minds. “Lockdowns and restrictions presented an opportunity to better realise the value of a home and, because it’s people’s biggest financial asset, refinancing their home loan made sense,” she says. “Refinancing has always been an effective lead generator for brokers, but in 2020 our conversations with borrowers shifted from just getting a better interest rate to providing financial certainty and security in otherwise uncertain times.” With a huge number of Australians working from home, this gave them time to not only look at their finances but also work on them, according to Pepper Money’s head of south east retail sales, Siobhan Williams. “Many customers working from home found they had time to reassess their cash flow position and review their short- and long-term goals with their trusted advisers,” she says. “Brokers have reported that their customers also found it easier to provide the necessary documentation, which supported a smoother application process.” Working from home has also caused many more people to think about the properties they live in in a different way. “We see borrowers who look to use their equity position for a whole range of purposes, including renovations,” Williams says. “Renovations were a big driver in 2020 – borrowers were staying at home and buying
HOMEOWNERS SCEPTICAL ABOUT BANK ADVICE According to research by Mortgage Choice:
2 out of 5
homeowners are either in the process of refinancing or are switching to a new loan
1 in 2
homeowners are reluctant to speak to a bank for refinancing advice out of concern that they won’t be advised if there is a better deal elsewhere
of homeowners trust a mortgage broker’s home loan recommendations Of those, 55% value the support brokers provide in comparing loans, rates and fees
1 in 2
homeowners feel banks don’t have their best interests at heart
of refinancers say a mortgage broker streamlines the process
RFi Group survey indicated that 72% of respondents had not refinanced their most recent home loan. This shows there was a huge opportunity for brokers to reach out to those customers who are missing out on savings. ING’s acting head of retail, Glenn Gibson, says people’s circumstances change over time, and the home loan market is also constantly evolving. “It can be helpful for brokers to conduct regular health checks to ensure their customers have the most suitable loans for their needs,” he says. “Customers’ circumstances may change over time. They could have moved into a different life stage compared to the initial time they first got their home loan, and their needs would have also changed.” Gibson warns that brokers who are helping their customers refinance should ensure they are matching the refinance to the right home loan. “When it comes to comparing home loans, brokers should always try to compare apples with apples, and don’t forget to ask about the fees associated with moving loans, and the ongoing fees. “It’s really important for brokers to
“It can be helpful for brokers to conduct regular health checks to ensure their customers have the most suitable loans” Glenn Gibson, ING more than just a sausage sandwich from Bunnings! “We have also seen borrowers leverage equity to invest in their business and/or further property acquisition – both residential investment and commercial premises.”
Still a huge opportunity for brokers Despite the rise in refinances, a recent
understand the reasons why a customer wants to refinance, and sometimes a few thousand dollars cash back is not the right answer.” Agreeing that customers could be refinancing for a range of financial or personal reasons, beyond interest rates and cash-back offers, Virgin Money’s head of distribution, Christian York, says brokers “play a crucial role” in continuing to understand customers’
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SECTOR FOCUS: REFINANCING
circumstances and presenting them with options so they can decide which lender or product is most suitable for them. “In addition, oftentimes customers may be turned off by poor experiences with the incumbent lender and want to look elsewhere,” York explains. “Most brokers will develop long-lasting relationships with their customers and continue to touch base with them throughout the life of their loan to understand how their financial situation and goals change over time. Having these key conversations with customers is how the broker may discover a customer is interested in refinancing.”
Customers’ best interests in mind To support the refinancing market, Suncorp has introduced its Easy Refinance initiative, which uses technology to access richer
SIGNS OF INTEREST RATE APATHY Proportion of Australian homeowners who know the interest rate on their mortgage
80 70 60 50 40 30 20 10 0
2020 Source: Mortgage Choice and CoreData
“When chasing lower interest rates, it can be easy for borrowers to overlook all of the costs involved in refinancing a home loan” Daniel Carde, Resimac consumer credit information. This means the bank can identify applicants with a proven borrowing history, and those applicants who qualify will speed through the application process without having to provide as much documentation as customers who are applying for new home loans. Fedder reminds brokers who are helping customers to refinance that while lower interest rates over the long term may help save borrowers money, it is also important to disclose other factors that may apply to a refinance, such as fees or charges. “With best interests duty top of mind for brokers, the break-even-point calculation when refinancing is likely key when deciding on a lending product, as well as consideration
of loan features, the lender’s credit policy and current SLA,” he explains. In light of this, brokers should also ensure they are considering the capabilities of nonbank lenders. Angus explains that non-banks like Bluestone do not have the restrictions on debt consolidation that the banks do. For instance, Bluestone can consolidate up to $100,000 of unsecured debt under its prime home loan offering, whereas several banks are restricted to a small number of unsecured debts or have LVR and other restrictions, and some will not allow debt consolidation for self-employed borrowers. Angus says brokers should stay in close contact with their existing customers and keep them abreast of refinancing opportunities.
“Take a deeper look at who your customers are and what they want; follow up frequently by providing something of value (for example, business insights and news through storytelling); keep customers abreast of new offers and, most importantly of all, create a service-focused culture in your business,” he says. “I don’t believe there are any material risks in refinancing. Be aware of the interest rates available at the time of refinancing, take the time to understand each lender’s service proposition and turnaround times, and understand that you will ultimately pay for any cash-back offers. As the saying goes, there ain’t no such thing as a free lunch.” Carde also warns brokers to watch out for cash-back offers and honeymoon rates, saying that for Resimac it’s about providing ongoing savings for the life of the loan. The non-bank also allows customers to make extra repayments, access the redraw and offset portions of the home loan, and pay off the loan early, which some banks do not. Comparing a refinance application to a
5/02/2021 10:57:21 AM
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SECTOR FOCUS: REFINANCING
new home loan, Carde says there isn’t much difference, but there are key ways brokers can provide assistance, such as by making sure customers are aware of break fees that could negate any savings, and working out if they need lenders mortgage insurance. “When chasing lower interest rates, it can be easy for borrowers to overlook all of the costs involved in refinancing a home loan,” he says. “For a fixed rate home loan, break fees can be substantial. For those with less than 20% equity in their property, they will have to pay lenders mortgage insurance on the new loan as well. Both of these fees can vary dramatically, depending on each individual’s circumstances, and brokers are best positioned to help borrowers make an informed decision.”
different approval criteria for refinancers, and brokers are in a better position to navigate that landscape than borrowers. “A good broker will be aware of any changes to a customer’s financial circumstances, as well as any change to house prices that will affect the use of equity in the home,” she says. Mortgage Choice has kept its network of brokers across all the changes to policy, pricing
Customers trust brokers over banks
and processes with weekly video updates, and has updated its technology and provided access to its lending advice forum. “During the pandemic peak in April and May 2020, the Mortgage Choice customer communications team sent more than 1.5 million emails to existing broker customers and leads,” Mitchell explains.
According to research from Mortgage Choice, 94% of homeowners trust a mortgage broker’s recommendation, and 53% are wary that if they speak to a bank they won’t be advised of better deals elsewhere. Mitchell says refinancing isn’t always a black and white process, as lenders have
“This was a deliberate strategy so that our customers were up to date with timely and professional information in what was otherwise an uncertain time, and so brokers could focus on what they do best.” To ensure brokers and borrowers don’t have any surprises during the application process, Pepper Money recommends that brokers obtain a copy of the customer’s
“With best interests duty top of mind for brokers, the break-even-point calculation is likely key when deciding on a lending product” Troy Fedder, Suncorp Comprehensive Credit Report before starting an application. “Sometimes customers might forget they have had a late repayment or a dispute with their telco provider in the past,” Williams explains, adding that Pepper’s Product Selector Tool provides brokers with a free copy of their customer’s report.
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To find out more, chat to your ING representative or visit introducer.ing.com.au For the curious: Information is correct as at date of publication and subject to change. All applications for credit are subject to ING’s credit approval criteria. Any advice in this advertisement does not take into account your or your customers’ objectives, financial situation or needs and you should consider whether it is appropriate for you or your customers. Before making any decision in relation to any of our products you and your customers’ should read the relevant Terms and Conditions booklet, fees or limits schedule or relevant Product Disclosure Statement available at our website. Products are either issued or are promoted by ING Bank (Australia) Limited ABN 24 000 893 292, AFSL and Australian Credit Licence 229823. ING is Australia’s most recommended bank according to RFi XPRT Survey February 20 - July 20 ( n= 4,067) when compared to customers of 20 other banks operating in Australia. ING 3098 09/20
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SECTOR FOCUS: REFINANCING
HOMEOWNERS SPLIT OVER REFINANCING ‘I’m worried it is going to become more difficult to refinance my home loan in this economy’ Agree
Q3 2020 54%
Q4 2020 49%
Source: ME Bank Quarterly Property Sentiment Report, 7th Edition
Beyond that, Williams says brokers will need to spend time with their customers, identifying both their short-term and longterm needs. “The solution presented will complement both,” she says. “If a customer is opting for a solution that will improve their cash flow today, they would be wise to speak to their broker or adviser about how to best utilise the savings. Extra repayments to the loan may put a customer in a better position to achieve those longer-term goals much sooner, whatever they may be.”
The importance of interest rates RFi Group’s Australian mortgages research indicates that 69% of Australians would consider switching their mortgage to another institution that advertised a lower mortgage rate. However, 31% said they would not switch purely based on rate, emphasising the importance of other factors, such as fees and customer service. While it seems likely interest rates will remain low in 2021, it is not certain how much longer this will continue.
“Most brokers will develop long-lasting relationships with their customers and continue to touch base with them throughout the life of their loan” Christian York, Virgin Money “Interest rates are currently at an all-time low, so it’s highly possible we’ll continue to receive high volumes of people wanting to refinance,” ING’s Gibson says. “If borrowers haven’t reviewed their home loan interest rates, [and] in a few years there’s a change, they could be missing out on great savings.” Virgin Money is also expecting to see refinancing remain a key source of market activity in 2021. But rather than being arguably the most important area of lending as it was in 2020, York says the first home buyer and investor segments will grow as well. Brokers will therefore need to work
closely with borrowers over the year ahead. “Brokers need to ensure they have a clear understanding of their customers’ financial goals and objectives; this goes for all loans,” York says. “Brokers are supported by their aggregators to adhere to industry compliance and regulatory reforms. There has been a huge amount of change, and brokers are in a fantastic position to provide their customers with education and support. Brokers are the core driver of our product in market, and we’re committed to working with our trusted network to deliver high-quality customer outcomes.”
9/02/2021 8:45:40 AM
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Better broking through learning Broker education has always been an important consideration – but in 2021 and beyond, it’s going to become even more critical. Thinktank’s Peter Vala explains why
IN 2020, the home loan industry saw an emergent need to think outside the square in ways that couldn’t have been foreseen. Brokers faced a drastic shift in the type of assistance their clients required, and many found themselves needing to learn on their feet as the world changed around them. For Peter Vala, general manager – partnerships and distribution at Thinktank, 2020 proved to be a crucial demonstration of the importance of ongoing broker education. “At its heart, ongoing education helps a broker remain relevant, impactful and compliant at the very minimum,” says Vala. “Great education goes beyond this to increase revenues, avoid costly mistakes, convert more opportunities more efficiently, contribute to a stronger and more vibrant industry, and give back to the industry and community.” After all, Vala notes, fulfilling customer needs isn’t just about meeting expectations – it’s about exceeding them. “You’re also being constantly confronted with change,” says Vala. “Last year, for example, we saw a big shift towards arranging finance under different terms and structures, as well as handling and resolving hardship cases and enquiries.”
Well-designed and well-delivered education, he explains, helps brokers prepare for such instances at both a personal and professional level. Vala believes education equips brokers with the tools necessary for successful – and often negotiated – outcomes through the full range of business and market conditions. “The better educated a broker is across business and financial concepts, the better equipped they are for identifying key risks that
days previously plugged some of these gaps, there’s no question that the social distancing restrictions of 2020 have heavily restricted their frequency. “It’s been a challenge for the whole industry,” says Vala. “Obviously we’ve made steps to engage with brokers digitally, and that’s really been embraced. But we’ve really missed the opportunity to meet with brokers in person, and we look forward to resuming
“The better educated a broker is across business and financial concepts, the better equipped they are for identifying key risks that the client may not have considered” Peter Vala, Thinktank the client may not have considered or have had the time to identify for themselves,” he says. Vala is also quick to note that every commercial loan is different, so the specifics of where a broker may need to expand their skills palette or brush up on existing points are likely to be fairly individualised. While PD
a series of regular face-to-face events as the year unfolds.” During 2021, where safe and practicable, Thinktank will be facilitating a series of ‘Lunch and Learn’ and ‘Coffee and Credit’ sessions to further support and enhance its wider broker education program.
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in the driver’s seat for any possible future business or personal finance needs,” he says. “Think of it as creating a moat around the broker-client relationship.” Vala sees the industry as undergoing some of the biggest changes it’s experienced since the UCCC was introduced in late 1996. After many years of relative stability, the operating environment is now subject to continual change, whether as a result of the wider economic and property market cycle, technology, digital innovation and regulatory change, or simply the need to consider how new business is generated. Couple this with the introduction of the best interests duty, and Vala remains firmly convinced that ongoing education is a critical means for brokers to keep pace. Additionally, Thinktank offers a variety of formal and informal education options that are available throughout Australia – monthly SMSF and commercial lending workshops and accreditation sessions (held both in person and online as necessary), informal high-level updates via monthly newsletters, and webinars in collaboration with aggregator partners. Vala also notes that a two-minute mini podcast update will soon be launched, covering aspects of the business such as policy changes, new products and features, and technology advancements. “We’re a lender that’s looking to add value and not consume people’s attention unnecessarily,” says Vala. “We always want to be mindful of how limited a broker’s available time is to stay updated and acquire further education and skills, while still looking after their own business and their clients.” Looking to the year ahead, Vala sees continual education gained from the right sources and delivered by the right people as critical to helping broker businesses not only survive but thrive. Broker businesses don’t stay static. As they grow, develop and mature over their lifespan, their network of clients diversifies and the nature of the
“We’ve really missed the opportunity to meet with brokers in person, and we look forward to resuming a series of regular face-to-face events as the year unfolds” Peter Vala, Thinktank value that a broker brings to that network will inevitably shift. Accordingly, Vala sees staying educated and informed as integral to building goodwill, improving customer retention and increasing the potential for quality referrals. “Importantly, it also puts you as the broker
“Our industry is not still – and no successful broker business is, for that matter,” says Vala. “There’s always a need and a rationale for further education. If you can offer new information, insights and skills in an effective way to your clients, they’re always going to need your talents.”
ABOUT THINKTANK Thinktank was launched in 2006 by a group of highly experienced professionals with extensive backgrounds in property finance, business lending, consumer finance and third party distribution in response to the increasing demand for straightforward, set-and-forget mortgage funding solutions, exclusively available through the mortgage broking channel. The business’s ethos is to be relentlessly committed to fairness, transparency and professionalism, and to consistently prioritise relationships with borrowers, introducers, investors, institutions and industry alike. It believes that is what you should expect from a lender. And it’s why Thinktank has been able to fulfil existing and emerging market requirements. The company’s operations are backed by a team of experts with unparalleled industry experience and commitment to superior service levels.
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Finance solutions for retirement Sharon Yardley of Heartland Seniors Finance talks to MPA about the growing demand from consumers for reverse mortgages, as well as the shift towards debt consolidation in 2020
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AUSTRALIA’S POPULATION is ageing. As the average age of those purchasing (and paying off ) a home continues to rise, people are carrying more debt into retirement than ever before. For brokers, this can create a challenging situation: while they have a potential customer base looking for help in funding their retirement and the care they may need, many financial products with ongoing regular loan repayments may not be suitable for seniors and their lifestyles. However, in such situations, reverse mortgages can be a useful solution. Sharon Yardley, head of operations at Heartland Seniors Finance, believes that having reverse mortgages in a broker portfolio is a necessary solution to ensuring the brokerage grows and evolves with its client base and that the broker can assist their customers at every stage of their lives. To maintain their living standards in retirement, Yardley says, most older Australians require a combination of superannuation, voluntary savings and the Age Pension. “Compulsory superannuation is an important component,” she says. “But on its own it’s not usually sufficient to maintain the living standards of most seniors. It has to be supplemented by the Age Pension – and if the Age Pension isn’t covering the gap, then equity release from their home can be a useful option.” During 2020 – and particularly amid the challenges of COVID-19 – Yardley notes that Heartland saw continued demand for reverse mortgages. There was also a shift in loan purposes towards debt consolidation and home improvements, which Yardley says are “clear demonstrations” that people are thinking about their finances more, and how they can remain independent during retirement, without repayment stress. “Reverse mortgages allow seniors to release and access their own equity, with no regular loan repayments until the end of the loan term, all while living in and continuing
“Heartland’s thorough assessment process works to achieve the best customer outcome and provide specialised guidance and support to brokers every step of the way” Sharon Yardley, Heartland Seniors Finance
to own 100% of their property and enjoying the benefits of the community, social networks and family memories the home provides,” Yardley explains.
How do reverse mortgages work? Reverse mortgages allow the homeowner to release equity from their principal place of residence (or investment property or holiday home), and the debt is only repayable when the home is sold, using the sale proceeds from the estate, if the homeowner passes away. Furthermore, there are no regular repayments required – unless the borrower chooses to make them – and the interest compounds monthly until the loan is repaid. Using Heartland’s regular advance drawdown option, a reverse mortgage can create a steady and reliable stream of income to supplement the borrower’s pension, superannuation and savings. Payments can be aligned to a monthly, quarterly or annual frequency for up to 10 years, with a minimum draw applying. “A reverse mortgage can be used for almost anything to make retirement for your client more comfortable,” says Yardley. “This could include a new car, travel, consolidating debt, in-home support and residential aged care. Clients can even use a reverse mortgage for gifting purposes to assist their family.” In practical terms, many senior Australians may be faced with reduced mobility and
need housing with accessibility and safety features. These types of houses – unless homes are adapted and modified to meet the needs of older people – are not necessarily readily available, and therefore modifying the family home may be a better option than selling and looking for a ready-made house. Such home improvements include making a house age-friendly, for example by installing handrails and ramps and doing bathroom modifications, kitchen renovations and much more. These often require a lump sum of money that many retirees are unable to provide – and a reverse mortgage can help fund this. In fact, Yardley notes that around 47% of all Heartland reverse mortgages are used for this purpose. “Home renovations also have the potential to increase the value of the property, so when and if they choose to sell the house, they may benefit from this,” she says. Additionally, Yardley believes the desire of many seniors to remain in their own home has become even more pronounced since the onset of COVID-19. “With COVID restrictions varying around the country, staying at home has even greater significance,” she says. “Relocating to institutional settings, such as aged care facilities, has raised concerns over losing social relationships, changes in daily routines and loss of independence, and the pandemic has only heightened those worries.”
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ABOUT HEARTLAND SENIORS FINANCE Heartland Seniors Finance is Australia’s leading reverse mortgage provider. Established in 2004, we have helped over 21,000 people aged 60 and over release more than $1.3bn in equity from their homes, helping them live a more comfortable retirement with independence and dignity. Our award-winning, market-leading product is supported by expert, personalised service, making Heartland Seniors Finance the reverse mortgage lender of choice for many Australians. Heartland Seniors Finance is owned by Heartland Group Holdings Limited – a New Zealand-based financial services group with a history stretching back to 1875. Heartland Group Holdings is listed on the NZX and ASX and has operations in New Zealand and Australia. Heartland Seniors Finance is dedicated to doing what matters most to our customers, our communities and our shareholders. For our Heartland Seniors Finance customers, that means putting all our heart into helping them make informed decisions to meet their retirement needs. We’re hands-on and dedicated to doing the right thing when it comes to providing reverse mortgage options that work.
“It’s critical that brokers pay close attention to be able to identify the signs that someone is vulnerable or may be experiencing undue pressure or influence” Sharon Yardley, Heartland Seniors Finance
Better broking outcomes From a broker perspective, when working with a reverse mortgage there are a number of considerations, Yardley says. As arguably one of the most heavily regulated consumer financial products on the market, reverse mortgages are straightforward in concept but different to a standard mortgage in terms of the documentation required with an application. Additionally, older Australians may become more vulnerable as they age, with vulnerabilities including age-related diseases such as dementia. Elder abuse has also been on the rise, often involving family members or someone close to them. “It’s critical that brokers pay close attention to be able to identify the signs that someone is vulnerable or may be experiencing undue
pressure or influence,” says Yardley. “This includes assessing the suitability of the loan for the customer to ensure it is being used to actually benefit them – this is especially important when a loan is being used to help a family member or is being applied for under a power of attorney.” Heartland takes its duty of care seriously, Yardley says, and all loan purposes are subject to a suitability test to ensure they are in the best interest of the borrower, and that the loan they are taking meets their current and future needs. “Heartland’s thorough assessment process works to achieve the best customer outcome and provide specialised guidance and support to brokers every step of the way, from application to settlement,” says Yardley.
To this end, Heartland also invests heavily in supporting brokers who deal with reverse mortgages. “We provide support for our brokers in many ways, including access to a suitably qualified and focused broker support team, monthly newsletters with industry and company updates, and monthly training webinars,” says Yardley. “We also have a dedicated online Broker Portal that contains all the information required for application; marketing resources to help brokers grow their business; an online submission platform; and access to our lending system so they can track the status of their applications. We also regularly engage brokers for their feedback so we can grow and improve our services to them.” Looking to the year ahead, Yardley says Heartland will be covering a whole series of educational topics that will expand on transparency in the reverse mortgage space and highlight not only what is being requested by a client but why information may be needed. “We want to be able to help seniors finance their retirement for many years to come, and we see brokers as integral to helping us do that,” says Yardley. “We want to be able to provide support wherever we can.”
Every situation is different – this information has been prepared without taking into account your needs, objectives or financial situation. If you are considering a reverse mortgage, we encourage you to understand how it may affect your personal circumstances. Talk to friends and family, speak to professionals, and use the resources and tools Heartland has available. Subject to complying with the terms and conditions of the Heartland Reverse Mortgage, you will not owe more than the net sale proceeds of your home, and you can keep your home for as long as you choose. Loans are subject to loan approval criteria. Terms, conditions, fees and charges apply. Credit provided by ASF Custodians Pty Ltd (ACN 106 822 780/Australian Credit Licence No. 386781).
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ANZ Financial Wellbeing
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5/02/2021 10:24:35 AM
LENDER PERSPECTIVE: REFINANCING
Resetting refinancing expectations Refinancing saw a drastic upswing in 2020 – but what will this year have in store for brokers? Bank of Queensland’s Kathy Cummings gives MPA her insights
IN THE wake of 2020’s COVID-19 pandemic, brokers around the country found themselves confronted with all manner of refinancing requests as economic uncertainty prompted borrowers to reassess their existing home loan arrangements. It was a daunting period for many, but for brokers it also represented an opportunity to put their best foot forward
at Bank of Queensland, believes that while COVID-19 had a significant role to play in the shift towards refinancing, this borrower trend was also driven by a variety of other factors. “We saw a significant uplift in refinance activity in 2020, which resulted in a shift in our acquisition mix towards this segment,” says Cummings. “That’s certainly
“Other drivers for refinancing [illustrate] the significance of the broker-customer relationship and the need for lenders to prioritise providing exceptional support to customers and brokers alike” Kathy Cummings, Bank of Queensland when it came to customer service and clearly demonstrate the role they play in the current home loan environment. But what will 2021 be like? Should brokers expect more of the same, or will there be a cooling in this space as Australia gradually wrestles COVID-19 back under control? Kathy Cummings, general manager – broker
aligned with broader industry trends, and COVID-19 was a driving force, but I actually think it’s more nuanced than that.” Cummings points to recent research from RFi Group, which focuses on borrowers who refinanced in the last 12 months. “The research showed us the most common reason borrowers switched banks was to
access lower interest rates, often with a view to decreasing their monthly loan repayments,” Cummings explains. “Certainly that makes sense in the context of COVID-19; customers were responding to the associated economic uncertainty by seeking to free up additional funds in their budget.” But there were other findings as well, she points out. “The same research revealed that other drivers for refinancing were the advice provided by brokers, and borrower dissatisfaction with their original lender,” Cummings says. “I think it really illustrates the significance of the broker-customer relationship and the need for lenders to prioritise providing exceptional support to customers and brokers alike. It’s not just about onboarding the borrower; it’s about being part of the whole home lending journey.” Cummings expects to see a continuing emphasis on refinancing among existing borrowers in 2021. Brokers will need to be prepared, and to establish contacts within their lending network in order to prepare. “The biggest heights for refinancing were in the middle of 2020, and we’ve certainly seen it shrink a bit since then,” she says.
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“But COVID-19 still remains an uncertain factor, and at least some of the government stimulus measures are expected to taper off in the first half of this year. So I think we can be reasonably confident that borrowers will be keeping a close eye on ways to save on their repayments. We want to work with brokers to ensure they’re prepared to support those borrowers.” Accordingly, BOQ has put a variety of measures in place for borrowers who are looking to refinance, including cashback offers and fixed rate loans for eligible borrowers. Cummings notes that these have been designed with maintaining SLAs in mind. While it has an offer on the market, BOQ actively monitors and manages it application volumes to ensure these service levels are maintained.
BOQ REFINANCING OFFERS Bank of Queensland has a range of competitive solutions to support customers’ varied home lending needs. Borrowers who make the switch to BOQ can earn $3,000 cash back on new and eligible applications submitted by Friday, 26 February 2021 (inclusive), where the loan settles on or before Friday, 28 May 2021. A minimum loan amount of $250,000 and maximum loan-to-value ratio of 80% applies. BOQ is also offering attractive fixed rates starting from 1.99% per annum for customers refinancing or looking to purchase their first or next home.
While price will always be a significant consideration, maintaining consistent service levels and an efficient time to decision is critical to delivering quality home lending experiences for brokers and customers alike,” Cummings says. “So before launching a new home lending offer, BOQ critically assesses its end-to-end resourcing to determine
whether an uplift in application volume can be supported while also upholding the level of service brokers and customers expect and deserve.” Cummings sees this as another way that BOQ both fosters and maintains open and productive partnerships across its trusted network of brokers.
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LENDER PERSPECTIVE: REFINANCING
ABOUT BOQ BROKER Bank of Queensland (BOQ) is one of Australia’s leading regional banks. Over the past 12 months, the bank has invested in reinvigorating its third party proposition under the leadership of Kathy Cummings, who came on board as general manager, BOQ Broker, in January 2020. From simplifying their product offering, processes and procedures to launching a secure broker portal, the BOQ Broker team have already undergone a significant transformation, and they are far from finished, with plenty of exciting enhancements still in the pipeline. With an ambition to be the regional bank of choice for brokers and customers, BOQ is focused on making it as simple and convenient as possible for brokers to partner with the bank to provide exceptional home lending experiences, whether a customer is looking to buy their first home, their next home or to refinance.
“Another thing we do to facilitate this connection is have direct contact between brokers and credit managers,” says Cummings. “We feel it creates opportunities for both parties to discuss aspects of an application that might require clarification or amendment, which supports a more efficient decision process.” So on that front, what do brokers need to know about lodging refinancing – or new loan – applications with BOQ? Information is key, says Cummings. “In line with recent regulatory changes, before submitting an application to a lender, brokers need to ensure their recommendation is in the customer’s best interest. From there, if we want a really seamless and efficient application process, we need as much relevant information as possible from the outset,” she says. “Lenders are keen to help prospective borrowers, but to do this, we need to understand the full picture of their financial position.” In particular, Cummings says brokers should ensure they: • order an upfront valuation • provide the lender with all mandatory supporting documents
• accurately review and verify the customer’s bank statements • include comprehensive notes that explain the loan purpose, funding position and any other pertinent details not otherwise captured by the application Additionally, Cummings notes, where the outcome is not an approval, these conversa-
to be aware that we’re very much here throughout the process,” she says. “BOQ is committed to partnering with brokers to provide exceptional support to their customers throughout the lending journey.” Cummings points to an initiative introduced by the bank in December 2020 to provide brokers with loan maturity notifications. Designed to alert brokers to customer milestones, such as the expiry of a fixed rate term, these notifications also include the type of loan, the loan maturity date, and the new interest rate the customer is scheduled to roll over to, as well as providing a direct link to the Secure Broker Portal where the broker can submit and track a retention pricing request. “Brokers have responded really positively to the loan maturity notifications,” says Cummings. “It gives them the opportunity to proactively connect with customers ahead of key milestones. That gives them a better picture of the customer’s circumstances and what they’d like to do next.” Given the connection between highquality service and customer retention,
“BOQ is committed to partnering with brokers to provide exceptional support to their customers throughout the lending journey” Kathy Cummings, Bank of Queensland tions and details provide the broker with a clear picture of the bank’s rationale, which in turn enables more effective communication with their client, particularly when it comes to future applications. Cummings says BOQ customers also have access through their brokers to a dedicated broker support team who can assist with enquiries throughout the life of a customer’s loan. “I think it’s really important for brokers
Cummings is also quietly confident that this will lead to better customer retention for both brokers and BOQ in the long run. “We want to be the regional bank of choice for brokers and customers,” says Cummings. “We know that to earn that title, we need to make it as easy as possible for brokers to provide exceptional support to their customers at every stage of the lending process, and that is absolutely our focus.”
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Start off 2021 on the right foot with the lender who’s always looking for new ways to help you help more customers. In a constantly changing market, finding solutions that meet your customers’ evolving needs is key to building a successful and sustainable broker business. At Bluestone, we continuously review our products and policies to make sure that we can provide simple and competitive loans that offer solutions where others can’t. Here’s just some of the positive changes we’ve made recently.
Solutions for more borrowers
Investing in investors
With a flexible product suite from Prime to Specialist+, our loans meet the needs of borrowers from all walks of life. Our assessment is based on your customers’ stories, not their credit score.
Property investment remains one of the most popular avenues of wealth creation, and we’ve recently made a range of changes to help Aussies from all walks of life reach their goals sooner.
Rate promotion extended - Competitive rates starting from 2.44% at <70% LVR
Reduced investment loading - Investor rates now starting at 2.59%
LVR limits increased - Borrow up to 90% LVR in Sydney, Melbourne and Brisbane metro
Maximum loan amount increased - Borrow up to $2.5m
No cap on investment properties - Unlimited number of investment properties now accepted
Cash-out limits increased - Cash out up to $500k
More rent used for servicing - Now using 80% of residential rental income for servicing
Average time to credit assessment - 2 days
Contact your BDM or visit our website to find out how we can help you help more customers. bluestone.com.au/brokers/ Rates start from 2.44% p.a. to 8.09% p.a. The actual rate applied will depend on the borrower’s circumstances. Warning: this publication is not intended for consumers and is not to be distributed to consumers under any circumstance, Bluestone Servicing Pty Ltd ACN 122 698 328 Australian Credit Licence 390 183 on behalf of the Credit Provider, Permanent Custodians Limited ACN 001 426 384. Lending criteria, terms & conditions, fees and charges apply. The information in this publication is given in good faith, believed to be accurate at the time of publication and subject to change.
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Working together on culture Everyone within a team is responsible for getting to know each other, working together and achieving results, says Colin Ellis, but there are two essential elements that are also needed when building a vibrant workplace culture
ONE OF the things that always baffled me in my early working days in the 1980s and 1990s was the notion that how an organisation operated was the sole responsibility of managers. Of course, my youth and inexperience probably contributed to the confusion, but still I would often ask myself why “we’re doing the work, yet they’re telling us how we should be doing it”. It wasn’t until towards the end of the 1990s and my first real managerial role that I was able to implement my own approach, and as a team we reaped the benefits of it. We took the time to define how we would work together: the things we would or wouldn’t do and the steps we would take to retain our sense of belonging. We hit plenty of speed bumps on the way, yet we retained our sense of purpose, and our work flourished. It’s actually not that difficult to do, yet most teams and organisations struggle to get started. Culture, by definition, means the ideas, customs and social behaviour of a particular people or society. In a work context, a team represents ‘particular people’. Therefore,
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everyone within a team is responsible for getting to know each other, agreeing the accepted behaviours and ways of working together, generating new ideas and achieving results. This is still chronically misunderstood at many organisations which still see culture as ‘belonging’ to the senior management team or HR department. These are often the same people who refuse to spend time and money on defining and building a culture, yet talk about it being the ‘most important thing’ almost in the same breath.
personality and skill strengths, your opportunities for improvement, and what you feel right now. When you’re able to understand these feelings and moderate your actions accordingly – with no loss of motivation, commitment or passion – then you become a positive role model for others. When the entire team behaves this way, then you have the recipe for building and maintaining a great workplace culture. As a group of people, you are able to reject those who are looking to destroy the culture through their behaviour or performance.
As a group of people, you are able to reject those who are looking to destroy your culture through their behaviour or performance Two essential elements are required to build a vibrant workplace culture: emotionally intelligent people and a high level of engagement. On paper, these look like relatively straightforward things to achieve, yet the reality is quite different.
Emotional intelligence The importance of emotional intelligence has been downplayed for far too long. Daniel Goleman brought its importance to the fore in 1995, and the world has been playing catch-up ever since. There are still many organisations that promote people based on technical excellence or length of tenure rather than whether they have the human skills to inspire and motivate others to do great work. Of course, people still require the technical skills to be successful. However, emotionally intelligent individuals understand this and they work hard to stay relevant in an everchanging world. At its most basic level, emotional intelligence is about understanding yourself: your
Engagement But having a group of emotionally intelligent employees isn’t enough. Indeed, I worked with a team of 30 people a couple of months ago who were all lovely – full of empathy, understanding and compassion for each other. They just didn’t really understand what their collective vision was, let alone how their work connected to the success of the organisation. As a result, they had a pleasant culture that regularly missed its targets. Engagement is achieved when people and teams are committed to working together to achieve a set of goals. This means understanding the vision and the strategic intent the organisation has and how that relates to the work they are doing. When teams and departments understand this, they are able to define the cultural conditions required to get there and are twice as likely to be engaged in the work that they do. Priorities need to be regularly assessed for relevance, and time made for people to challenge and innovate.
Targets need to be stretched but still achievable and set at the team level, not individual. This encourages connection, collaboration and creativity and builds a sense of oneness and belonging that keeps people together even during stressful times. Highly emotionally intelligent staff who are highly engaged in their work are respectful towards each other and push each other to achieve their goals. They celebrate the small wins, interact socially and reject the behaviours of those who seek to hold them back. They see failure as a learning opportunity, continually challenge inefficient ways of working, and work hard to keep their skills and their culture fresh. Any organisation or team can have a vibrant culture if they are prepared to invest in its definition and then work hard with each other to maintain it. All too often, however, culture falls into the ‘too hard’ basket, or else quick-fix solutions are applied to try to change it. Of course, programs that address issues such as diversity and inclusion, technical skills gaps, and working environment and process refreshes are all important, but they pale by comparison with human behaviour and how connected people feel to their work. When these programs fail to provide the expected lift in productivity or engagement, managers revert to telling people how they should behave or feel, and all motivation is lost. Culture is the sum of everyone’s behaviours, skills, attitudes, ideas, beliefs, stories and traditions. Therefore, it’s only when everyone is involved in defining and upholding it that it can ever be vibrant, and when that happens the results are fantastic.
Colin D. Ellis is a culture change expert and an award-winning author and international speaker.
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Reflections of a broking boss Needing the right mix of mental exercise and working with people, Boss Money founder Tom Uhlich entered broking after several years as an accountant – and has not looked back
HOW RUNNING MARATHONS IS LIKE BUYING HOMES A few years ago, at the age of 45, Tom Uhlich set himself the goal of running a marathon in under three hours. In much the same way as he helps his clients develop a plan for buying a home, he created a list for himself to achieve his goal. He says whether you are running a marathon or buying a home, the plan is similar: 1. Get a coach (or your broker) 2. Set a plan 3. Execute 4. Sacrifice 5. Achieve On marathon day, he was running at a pace to finish at 2:53, but he says at 37km it got ugly. “I could see and hear the three-hour group coming behind me. I did dig deep, remembered all the sacrifices, all the tough sessions, and I finished in 2:58,” he says.
IT WASN’T a straight road towards mortgage broking for Brisbane-based Boss Money founder Tom Uhlich. But after working in a variety of different roles in his early career, he became a broker 17 years ago and has followed this path ever since. When he started out as a qualified accountant, Uhlich says he found the job boring, and after five years he moved to London, where he spent another eight years as a live accountant to stockbrokers at J.P. Morgan. He later came back to Sydney to work as an operations manager at Challenger, before moving to Aussie Home Loans as a strategy analyst. But then, knowing that he wanted to run his own business, Uhlich headed to Brisbane and a completely new career: designing and importing furniture. He ran two stores until he felt pulled back to his love of numbers. “After two years, I closed both retail shops and wanted to go back to my passion of numbers, but to something that also involved people,” he says. “I love both, but neither at 100%; I needed a mix.” The Queensland state manager at Aussie suggested broking to Uhlich. “With nothing to lose, I took the leap,”
Uhlich says. He then spent another 11 years at Aussie operating two franchises, which regularly placed in the top five of the group’s franchises nationally. In 2016 he decided to take his experience and set up his own brokerage, and that’s when Boss Money was founded. Uhlich says what he loves about broking is the challenge. “Whether it’s working out which bank will approve the client’s loan, which has so many variables, or pushing the banks to get approval; developing strategies to help clients pay off their loans faster; [dealing with] complex self-employed and company/trust structures with many different personalities thrown in – it just makes me buzz,” he says. With a background in accounting, Uhlich’s customer base is largely made up of selfemployed borrowers, and companies and trusts with complex loan structures. Taking a unique approach to staff, he employs around 30 regular Airtaskers who he uses for everything from graphic design to database management to photography; he also has one team member who provides administrative support. When it comes to bringing in new leads,
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BOSS MONEY IN BRIEF Founder: Tom Uhlich Location: South Brisbane Year founded: 2016 Services offered: Mortgages, self-employed loans Number of employees: 2
“I’m hoping that a vaccine is rolled out, confidence lifts, employment grows, and the property market becomes solid” Uhlich says 85% come to the brokerage through existing clients and social media. “I was an early adopter of social media via Facebook and Instagram back in 2010, and for the first three weeks I never got one lead,” he says. “Now I get five to six leads per month, and it’s free marketing.”
Aside from huge growth in social media use, the market has changed a lot since Uhlich started out 17 years ago. He says he used to do no-doc loans, but it’s great to see more regulation now because it pushes out bad brokers and the industry is becoming much more respected.
“If the client had a 30% deposit, they basically signed a form and got the loan. No income verification,” he says. There are still challenges in the industry, though, and while the mortgage market is very resilient, Uhlich says there may be stress when the final mortgage holidays come to an end in March and JobKeeper stops. With employment still a concern for a lot of Australians, as well as the recent Northern Beaches outbreak in Sydney, the next few months remain uncertain. “The fear is that there could be a second and third wave and more lockdowns, which could slow the property and mortgage market,” Uhlich says. “I’m hoping that a vaccine is rolled out, confidence lifts, employment grows, and the property market becomes solid.” Uhlich recently stepped back from the business after his mother passed away, but he returned at the start of 2020. As he looks forward into 2021, he plans to consolidate his business and take Boss Money across the line of $100m in settlements. “I’m hoping to continue helping until I leave this earth; there are still so many more to help,” he says.
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TELL US WHAT YOU GET UP TO Email firstname.lastname@example.org
“I started to love sailing as it gave me a mental release a nd focus, a physical challenge, [a nd a] mea ns to fuel my competitive nature”
Age at which Ben Robinson began training on his own boat
Number of Sydney to Hobart yacht races he has completed
65km/h The fastest he has sailed
OUT ON THE OPEN SEA Inovayt Finance broker Ben Robinson has been sailing since he was five HAVING BEEN first taken out on the open water when he was just two years old, it’s no great surprise that Ben Robinson is now an incredibly talented sailor. The Inovayt Finance broker “grew up on the water” – his dad taught him how to row the dinghy out to their yacht before he graduated to sailing at the age of five. When he was just six, Robinson began formally learning to sail, and he “absolutely hated it” at first. Now he loves it.
The Melbourne-based broker has taken part in hundreds of races across the world, including three Sydney to Hobart races. He was meant to compete in the 2020 Sydney to Hobart yacht race, but a sudden cluster of COVID-19 cases in Sydney resulted in the event being called off in December. “Sailing is a sweet combination of mental focus, calculation and concentration, coupled with great physical exertion,
accuracy and precision,” Robinson says. When it comes to preparing for races, he says, “a lot of physical and mental preparation goes into all the various races I have trained for. “Whether it’s on a fully carbon-fibre performance racing catamaran being sailed on a short course at high speed in Sweden, or a long three- to four-day ocean race, the physical and mental preparation is much the same.”
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