SEPTEMBER 2019 ISSUE 16.17
The power of connection The tech that builds a sucessful broker business /16
Setting the trend ANZ’s Simone Tilley on using data to enhance customer outcomes /20
ANJA PANNEK The CEO of PLAN Australia looks to the future as the aggregator celebrates 20 years in the business /14
A big deal The story of how savings saved the day for one broker client /22
ALSO IN THIS ISSUE… Caught on camera Simplicity Loans & Advisory launches Marketplace.finance /24 Housing market data The latest market insight on Canberra and the ACT /26 In the hot seat AFG’s Hayden Cush talks about his new role as national sales manager /30
NEWS
IN THIS SECTION
Lenders Non-bank posts $500m lending growth /04
Aggregators Non-residential lending leads aggregator’s performance /06
Market The case against 0% loan interest rates /10 p
Regulators Government releases ambitious legislative timeline /12
Associations CIF reveals details of new identifier scheme /08
www.brokernews.com.au SEPTEMBER 2O19 EDITORIAL Editor Melanie Mingas News Editor Madison Utley Production Editor Roslyn Meredith
DATES TO WATCH
Upcoming can’t-miss events
ART & PRODUCTION Designer Martin Cosme
18 SEPTEMBER
26 SEPTEMBER
26 SEPTEMBER
Small Business Finance – Planning for Cash Flow
Social Media for Accountants and Brokers
Finsure and LoanKit Victoria PD Day
Covering the basics of cash flow forecasting for SMEs, this workshop provides learning opportunities for brokers who wish to work more closely with business clients – as well as those who may be new to business management themselves. Taking place in Adelaide’s Tusmore, this morning session will cover budgeting, cash flow, margins and pricing.
Hosted by social media agency Ruby Assembly, this niche afternoon workshop covers strategies for Facebook and Instagram, as well as looking at the mechanics of content planning and online brand management risks. The session will be held in Melbourne and costs $120pp.
Running from 9am to 2pm, the day is kicked off by GM Simon Bednar as attendees sit down to learn about best practice, compliance, fraud and customer care. Concluding with a networking lunch, the event will showcase a number of lenders, as well as speakers from Macquarie Bank, Impact Consulting and ActivePipe.
Production Manager Alicia Chin Traffic Coordinator Freya Demegilio
SALES & MARKETING Sales Manager Simon Kerslake Global Head of Communications Lisa Narroway
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Publisher Simon Kerslake Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
EDITORIAL ENQUIRIES
Melanie Mingas +61 2 8437 4720 melanie.mingas@keymedia.com
SUBSCRIPTION ENQUIRIES
27 SEPTEMBER
4 OCTOBER
18 OCTOBER
HIA Construction Outlook Breakfast
Deadline to respond to NCCP amendment
Australian Mortgage Awards
Queensland-based brokers looking to break into developer finance can register to attend this series that promises to provide the “most up-to-date analysis” of conditions in the residential and non-residential industry, in addition to broader economic activity. Registered delegates will also receive a soft copy of the HIA’s Housing 100 report.
Industry stakeholders have until 4 October to respond to the mortgage broker best interests duty and remuneration reforms, after the government announced it would introduce a new duty for mortgage brokers and reform their remuneration. Entry into force of the reforms is scheduled for 1 July 2020.
The 2019 AMAs will once again see hundreds of mortgage and finance professionals flock to Sydney’s The Star to celebrate the industry’s best and brightest players over more than 30 categories. The 2019 event will feature Urzila Carlson, Duke Music and Linden Furnell.
tel: +61 2 8311 5831 fax: +61 2 9439 4599 subscriptions@keymedia.com.au
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Simon Kerslake +61 2 8437 4786 simon.kerslake@keymedia.com.au Key Media Pty Ltd Regional head office, Level 1O, 1–9 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 www.keymedia.com Offices in Sydney, Auckland, Denver, London, Toronto, Manila, Singapore, Seoul
29 – 30 OCTOBER
8 NOVEMBER
10 – 12 NOVEMBER
AFG National Broker Conference
FBAA Gold Coast conference
COBA 2019: Stronger Together
This is the first annual conference for AFG’s broker network since the aggregator announced its merger with Connective. The 2019 edition is themed AFG Next and will cover three focus areas: evolve, excel and experience. The agenda includes thought leadership sessions, education, professional development and networking.
Returning slightly earlier in 2019, the FBAA’s annual Gold Coast conference will once again take over the Sea World resort. This year’s theme is ‘Challenge the future’, and the association is due to reveal details of speakers and special guests over the coming weeks.
The Customer Owned Banking Association’s 2019 convention will take place over three days on the Gold Coast. Sessions will cover the future of the banking sector and the opportunities for customer-owned institutions, with the speaker line-up featuring APRA chairman Wayne Byres.
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This magazine is printed on paper produced from 1OO% sustainable forestry, grown and managed specifically for the paper pulp industry Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss. Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008. The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.
NEWS
LENDERS MAJOR’S RESIDENTIAL LENDING ABOVE SYSTEM
NATIONAL HOME LENDING TREND (2003–19) Source: CommSec
Australian home lending (excluding refinances)
fifth-largest retail bank has posted a 13.3% drop in statutory net profit as a result of remediation, redundancy costs and unrealised losses. However, Bendigo and Adelaide Bank saw total lending rise 1.1% to $62.1bn, with residential lending above system at 3.5%. “We achieved positive momentum from the implementation of our new strategy, with a strong uplift in performance in our key priority markets, particularly half-on-half,” said managing director and CEO Marnie Baker. AUSTRALIA’S
$18bn Owner-occupiers
$14bn
$9bn
Investors $5bn
RESIMAC ANNOUNCES LOAN DISCOUNTS has discounted selected Resimac Specialist interest rate loans and waived the $299 first-year fee on Resimac Prime Flex Full Doc home loans. The promotion applies to applications on the selected products lodged from 19 August 2019. General manager of third party distribution Daniel Carde said, “We’ve recently reduced rates and enhanced our onboarding processes and now we’re adding more compelling reasons for brokers to do business with Resimac.”
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RESIMAC
“The ATO has long been viewed anecdotally as the fifth-largest SME bank in Australia, with tax debt used pragmatically as a form of affordable working capital” Aris Allegos CEO, Moula
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NON-BANK POSTS $500M LENDING GROWTH MyState Bank’s financial results confirm new lending milestone as arrears fall to 0.26% and its NPS gains almost 20 points non-bank lender has seen its loan book swell beyond the $5bn mark, while its 90-day mortgage arrears have fallen to a historic low. Over the 2019 financial year, MyState Bank recorded lending growth of close to $500m – the equivalent of 10.7% – and the bank plans to continue focusing growth on low-risk, owner-occupied lending with an LVR of less than 80%. In its results, MyState linked this target demographic to the fact that its arrears were well below both peer and major bank benchmark indices, with 90-day arrears at a historical low of 0.26%. “While we anticipate a slower credit growth environment, with increasing competition for highA
quality owner-occupied lending, we will maintain our disciplined focused strategy to build scale, control costs, carefully manage risk and leverage off our technology platform,” said MyState managing director and CEO Melos Sulicich. Citing the “heightened regulatory oversight” following the royal commission, the group intends to continue investing in risk management processes, systems and people skills. Further, while MyState confirmed it remained an “advocate of the mortgage broker model”, it emphasised that greater transparency of ownership was needed to allow customers to make fully informed decisions. The overarching group, MyState
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Limited, recorded a net profit after tax of $31m, down $500,000 from 2018, even with the post-tax contribution of $1.2m from the sale of the retail financial planning business in June 2019. Sulicich attributed some of the challenges faced earlier in the year to elevated wholesale funding costs, but he pointed to the above-system lending growth and lower funding costs in the second half, which have helped stabilise the group’s standing. “It is particularly pleasing to note that, as part of our ongoing focus on meeting and exceeding customer expectations, MyState’s NPS improved from +27 to +42 during the year, amongst the leading scores in the banking industry,” he added. Looking ahead, the bank plans to continue ramping up its digital services after having made a full online banking proposition available to its customers this year. There is also a back-office automation program in the works, intended to change the bank’s operating model and cost profile.
TRANSFORM YOUR BUSINESS WITH THE RIGHT PARTNERSHIP
Thriving in today’s marketplace is easier with the right team behind you. At PLAN Australia, we’re completely invested in your success and business vision. We apply all our experience and expertise as a market leader to help you transform your business. We’ll connect you with the best people, platforms and processes. We’ll enable you to add capabilities that expand your business offering, diversify your revenue and strengthen your relationships with clients.
FIND OUT MORE ABOUT PLAN AUSTRALIA Visit planaustralia.com.au YOUR PARTNER IN PROGRESS Professional Lenders Association Network of Australia Pty Limited (PLAN Australia) ABN 99 086 490 833, as trustee for the PLAN Australia Unit Trust trading as PLAN Australia. PLAN Australia is a Credit Representative (No. 392535) of BLSSA Pty Ltd ABN 69 117 651 760, Australian Credit Licence 391237. A150233-0619TA
NEWS
A G G R E G AT O R S
David Bailey, CEO, AFG
NON-RESIDENTIAL LENDING LEADS AGGREGATOR’S PERFORMANCE For the first time in its history, more than half of AFG’s gross margin has been generated outside of mortgage broking
has posted a 1.8% rise in its underlying profit ($28.56m) and, for the first time in the group’s history, the growth has come from non-residential lending. In the current credit environment, CEO David Bailey said the results represented a “watershed moment” in the group’s development. “The mortgage broking sector has endured a tumultuous 12 months, with unprecedented external forces leading to AFG
residential settlements being down 11.5% compared to last year,” he explained. “However, AFG has emerged with a stronger and more sustainable business by executing our strategy to continue to develop a more diversified earnings base while still recognising the importance of our traditional aggregation business.” It’s been a difficult year for the mortgage industry, but AFG’s diversification strategy has paid off.
According to Bailey, the “standout” contributor to the group’s growth in FY19 was the RMBS program, which has passed the $2bn-under-management milestone. Settlements of $1.06bn through the AFG Securities business were up 108% on last year, while settlements of $129.7m through the AFG Business platform were up 30.9% on the previous six months. “AFG’s entry into the SME market through both its AFG Business platform and its investment in Thinktank is gaining momentum. We fully expect growth from both AFG Securities and AFG Commercial to provide additional contributions to earnings over the coming 12 months,” said Bailey. Further, several months ago, AFG reshaped its executive team to reflect its diversified earnings base and better support the development of the other areas of its business. Looking ahead, Bailey is prepared for the lending landscape to remain challenging for those looking to provide or secure credit. “We fully expect regulatory and compliance requirements will increasingly be a factor for the Australian financial services industry over the short to medium term,” he said. “The mortgage broking industry will need to adapt to the new environment.” However, AFG has also made a commitment to supporting the ongoing diversification of the broker channel, with a pledge to “improve the day-to-day efficiency of our brokers”. The firm will also continue its “ongoing investment” in technology and compliance.
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AUSSIE REVEALS AUTO FINANCE WINNER has awarded an SME customer $10,000 as part of a prize draw to promote its auto finance solutions. The winning customer applied for and settled an Aussie Asset Finance loan with Aussie Neutral Bay, Sydney. Aussie’s chief customer officer, David Smith, said, “Vehicles are often the second-biggest purchase an Aussie customer makes, and our brokers can easily help, plus also support business owners who need to buy equipment or machinery.” AUSSIE
BORROWERS TAKE A GAMBLE ON RATES for fixed rate home loans fell to a new low in July, according to Mortgage Choice’s home loan approval data. CEO Susan Mitchell said, “Demand for fixed rate loans is the lowest we’ve seen all year … borrowers across the country are reluctant to fix. It’s not entirely surprising ... The reality is, the opportunity to save on repayments if the RBA cuts the cash rate is too good to pass up.” DEMAND
“Being able to leverage off the securitisation program that AFG already has will allow us to introduce more white label loans” Mark Haron Executive director/principal, Connective Group
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NEWS
A S S O C I AT I O N S NEW MILESTONE FOR BROKER MARKET SHARE compared year-on-year, quarterly third party market share continues to demonstrate gains, according to the latest MFAA data. Brokeroriginated loans accounted for 55.8% of the total market over the April to June quarter, typically a seasonal low point for the broker channel. However, this year’s result is 1.9 percentage points higher than the corresponding quarter in 2018 and 4.3 percentage points higher than in 2017. WHEN
R U OK? DAY EVENTS SCHEDULED Day returns this week with two broker events scheduled for the east coast. Taking place in Melbourne and Sydney on 11 and 12 September, each event will feature FBAA managing director Peter White; keynote speaker, coach and workplace wellness advocate Sam Makhoul; and representatives from Beyond Blue, A Higher Branch, MSA and Suncorp. Each free-to-attend event will also provide five CPD points from the FBAA and MFAA. R U OK?
“We are very supportive of the recommendations to improve APRA’s accountability, and we look forward to engaging with government on creating the new Financial Regulator Oversight Authority” Michael Lawrence CEO, Customer Owned Banking Association
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CIF REVEALS DETAILS OF NEW IDENTIFIER SCHEME In collaboration with the Treasury, a “unique code” will be issued to industry professionals for use throughout their careers Combined Industry Forum is moving towards the creation of a unique identifier code for each member of the industries it represents, to be carried from role to role and company to company. According to Simone Tilley, chair of the governance, data and reporting stream at the CIF, the forum is “currently working through the best models for how this would come to life”. “The code will be given to every participant across the entire value chain, highlighting the importance of acting with honour and integrity throughout everyone’s career life cycles,” Tilley revealed in an interview with Australian Broker. “Whether you’re a banker or a broker, the same rules apply in THE
terms of acting with integrity. It becomes the focal point.” Although she admitted that implementing such a system would be “hugely complicated,” Tilley remained confident it could be achieved with support from the Treasury and the wider industry. The CIF consists of representatives from bank and non-bank lenders, aggregators, brokers and consumer groups. It was formed following the Sedgwick review to drive better customer outcomes through improved and more structured governance. “We all agree that having a strong unique portable identifier is central to the overall governance program – a reminder to everyone that their behaviours matter.
That’s been a gap that we need to close,” said Tilley. “Ultimately, what we’re trying to do is have a genuine customercentric model, and that requires everyone to be equally accountable for the role that they play in execution.” The accountability introduced by the code will help further shape the framework for the unification of the industry, a shift that will “drive symbiotic benefit across the value change”, Tilley said. “I expect to see our journey with respect to the professionalisation of the industry being amplified and being driven across all facets of industry. I think we all agree this is important and something that makes sense.” Initial reaction from the industry has seen many question the impact of such an initiative, while others likened the scheme to other, existing systems. For the full interview with Simone Tilley, turn to page 20.
NEWS
MARKET AUCTION CLEARANCE RATES CONTINUE TO CLIMB capital city auctions for the week ending 18 August saw the highest preliminary clearance rate in more than two years. Averaging 76.6%, Sydney posted 81.7% and Melbourne 78.3%. During the same week last year, the two cities posted rates of 51.9% and 54% respectively. Kevin Brogan, CoreLogic’s auction commentator, said, “The 70% benchmark is when we start seeing people attaching significance to the clearance rate in terms of their bidding confidence.” COMBINED
THE CASE AGAINST 0% LOAN INTEREST RATES The trend of declining money rates is playing out in a number of markets across the globe, resulting in unprecedented offerings for borrowers founder of a brokerage with nearly 20 years’ industry experience has warned that record-low interest rates carry hidden costs. Last month, Denmark-based Jyske Bank launched a 10-year fixed mortgage at -0.5%, meaning a borrower’s outstanding debt is reduced by more than their repayment amount. While there seem to be clear benefits to not paying interest on a loan, it’s crucial to consider the broader implication of such a rate, according to Ian Robinson, founding director of Robinson Sewell Partners and 2017 Australian Mortgage Awards Broker of the Year. “Borrowing at 0% is not a free kick to society. It can create a serious THE
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social burden with severe implications to income generation,” he said. Robinson highlighted that if Australian banks were able to offer customers a 0% interest rate while still taking a margin, it would mean there were negative interest rates in the market on a wholesale funding level, an indicator of severe deflation. “Yes, borrowing money at zero is great, but deflation means what you purchase with that money is probably losing value,” said Robinson. “Most people are in the mindset that their purchase is going to appreciate and be a wealth creator. With zero interest rates, it’d most likely be the reverse. “There might be various asset
classes that defy that trend, but on the whole, the general economy facing deflation means your asset is likely depreciating.” While the industry has been largely absorbed in watching interest rates drop to historic lows, Robinson suggested that the focus on their continued downward trajectory may be misplaced, especially in business lending situations where fast access to capital is crucial. “At this point, the price of interest or the cost of capital in the market is so low, it shouldn’t have that much of a material impact on someone’s personal cash flow anyway,” he explained. “It’s the access to credit which is actually the concern. Pushing a lower interest rate isn’t going to allow more credit to flow if the credit policy is too tight and the approval rate can’t get through the system. “The constraint on capital or lack of capital supply is the bigger issue,” Robinson concluded.
HOMEOWNERSHIP ASPIRATIONS UNVEILED survey conducted by the Australian Housing and Urban Research Institute has concluded that degree-educated households exhibit higher confidence when it comes to aspiring homeownership, compared to those educated to Year 12 and below. Further, ABS research has found that the share of emerging adults living with their parents increased from 58% to 66% between 2004 and 2016. Simultaneously, the share of early adults living with parents increased from 14% to 20%. A
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Pennley Pty Ltd (ABN 40 071 979 498) as trustee for the Pennley Unit Trust trading as Choice Aggregation Services. Pennley Pty Ltd is a Credit Representative (No. 392528) of BLSSA Pty Ltd ABN 69 117 651 760, Australian Credit Licence 391237.
NEWS
R E G U L AT O R S
RED TAPE MUTES HOME SALE RATES by the Housing Industry Association have found that regulatory and legal costs make mortgages for homebuyers “60% to 100% more expensive”. HIA chief economist Tim Reardon named stamp duty, GST and land tax as among the fees and costs that amount to “$180,000 on a typical new house and land package”. Reardon continued, “This does not include the additional $40,000 in development charges or the $220,000 due to red tape.” CALCULATIONS
GOVERNMENT RELEASES ‘AMBITIOUS’ LEGISLATIVE TIMELINE Treasurer Josh Frydenberg has set out the timeline for delivering Commissioner Hayne’s recommendations, with the first broker rules due before end 2019 government has unveiled its “implementation roadmap” for adopting all the recommendations of the royal commission. The timeline shows that 90% of the commitments will be implemented or introduced into Parliament within a year, with the remainder to follow before the end of 2020, according to Treasurer Josh Frydenberg. Under the plans, a best interest duty for mortgage brokers will be created by the end of 2019. “Around 60% of mortgages are written by mortgage brokers, and they play a critical part in our economy and in our community. We want obviously for them to be acting in the best interests of their customers,” said Frydenberg, who THE
APRA MOVES TO PROMOTE TRANSPARENCY has released the first edition of its revamped ‘Insight’ resource, moving away from the “highly technical” focus of the past to communication intended for a wider audience in an attempt to promote transparency. Chair Wayne Byres explained, “We have intentionally overhauled the structure … to make the contents relevant and accessible. Our goal is to help the public and interested stakeholders to gain a clearer understanding of what we do and why we do it.” APRA
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added that how best interest duty played out would significantly impact the remuneration review in three years’ time. These are “the most significant and far-reaching set of reforms to the financial services sector in three decades”, he said, adding that “we’re moving in record time”. Australia’s banks have welcomed the recently released timetable, according to the Australian Banking Association. Of the 76 recommendations arising from the royal commission, 54 were directed at the government and eight were specifically aimed at the banking industry. Anna Bligh, CEO of the ABA, said the six changes to the banking code called for by the relevant
recommendations were underway. “The ABA has already drafted provisions implementing five of the changes, had them agreed to by banks and submitted them to the regulators for approval. These are now on track for full implementation by March 2020,” she said. “Make no mistake, banks understand what the community and government expect of them and are raising their standards to rightly meet those expectations.” Bligh also said many Australian banks had reviewed their internal culture, restructured staff remuneration, and refocused on customer outcomes. “Banks understand that effective cultural change is not going to come about through implementing the royal commission recommendations alone. It will only be achieved by putting the customer at the heart of every decision our banks make,” Bligh added. See the next issue of Australian Broker for more on this story.
ASIC’S ENFORCEMENT UPDATE Financial services outcomes 1 January – 30 June 2019 Misconduct type
Criminal
Civil
Administrative
Dishonest conduct, misleading statements
2
3
7
Misappropriation, theft, fraud
1
3
Unlicensed conduct
0
Other financial services misconduct TOTAL (REMEDY)
Court enforceable
Negotiated outcome
Total (misconduct)
0
0
12
2
0
0
6
2
0
0
0
2
0
4
19
1
7
31
3
12
28
1
7
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SPECIAL REPORT
PLANNING FOR TOMORROW
Marking 20 years in the market, PLAN Australia is preparing for a future in which broking is diversified, digital and indispensable. CEO Anja Pannek outlines her vision to Australian Broker
KEY BUSINESS METRICS
1999
PLAN Australia is established
1,700
brokers in the network currently
70%
broker market share by 2030, as predicted by Anja Pannek
70+
NPS score consistently achieved by the broker channel
1%
of complaints to Ombudsman between 2013 and 2017 related to mortgage brokers
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in 1999, PLAN Australia has witnessed many developments in the broking industry over the last 20 years. However, as the aggregator celebrates its milestone anniversary, the focus is all about the future. Over the course of this year, PLAN Australia has been asking its network of 1,700 brokers how they feel about the future of their industry. Fresh from the turbulence of the ASIC broker remuneration review, the Sedgwick retail banking remuneration review, the Productivity Commission’s report on competition in the Australian financial system, and a royal commission, it’s a worthwhile question. “This year has been pivotal in determining who we are as an industry and where we’re heading. As an industry, we are continuing to demonstrate that we are doing the right thing for customers, and that is reflected in how highly customers rate brokers,” says PLAN Australia CEO Anja Pannek. Sharing her “optimism and excitement” for the next phase, Pannek says the greatest opportunity right now isn’t simply to demonstrate the value of mortgage brokers but to demonstrate to customers, the government, Treasury and regulators that “we have the right to continue to lead and grow our fantastic mortgage broking industry”. “I believe that we will continue to do this by delivering value and ensuring great outcomes for customers are achieved. As a result, small and medium-sizedbusiness owners will continue to seek out brokers to help them with their business needs, and this will ESTABLISHED
contribute greatly to the overall growth of the market,” she explains. Pannek’s comments come hot off the heels of the mortgage broker best interest duty and remuneration reforms – on which the industry has until 4 October to submit responses. While she has previously described the proposed best interest duty as “enshrining the best of
remuneration has set the tone for the next wave of legislation. “This has put us in good stead for the ongoing dialogue we will need to have with the government and regulators over the next few years. A massive positive throughout all of this has been how we have collaborated as an industry, and this is helping to guide us as we move forward,” she says. The next steps Promoting the opportunity in the challenge, Pannek says there is “no reason” why broker market share can’t achieve – and exceed – 70% of the total residential lending market by 2030, largely because the best interest duty will “create a clear value differentiator for brokers”.
“We believe in self-regulation and want to ensure that a sensible and pragmatic approach is undertaken by our industry” Anja Pannek, CEO, PLAN Australia broking into law”, as the CEO of a major-bank-owned aggregator and a Combined Industry Forum member, her stance remains that self-regulation is vital. “PLAN Australia has been a member of the CIF from the beginning; we believe in selfregulation and want to ensure that a sensible and pragmatic approach is undertaken by our industry,” she says. PLAN Australia has placed diligent focus on promoting the benefits of broking to “key decision-makers” in terms of what the industry contributes to the economy, with regard not only to competition but also customer outcomes. While Pannek praises the industry for its progress and welcomes the government’s clarity on when and how it will implement Hayne’s recommendations, she says proactive addressing of the original 2017 ASIC review of mortgage broker
The next phase of growth, however, will come from continuing to cultivate a culture of “customer obsession”, and there are many ways in which PLAN Australia is helping its brokers achieve this, from promoting meaningful conversations to having a greater presence in the post-settlement phase. “Process and technology will make this increasingly possible and seamless for brokers and customers. For brokers who are looking to move from transactional relationships to those that last the distance, we believe recognising client milestones and leveraging the power of social media will be important in the future,” she says. Another focus area for PLAN is upskilling its brokers’ business expertise with a view to implementing new processes that help them work on their businesses, not just in them. This part of the
In partnership with
“We have and continue to navigate uncertainty and change, and there is greater awareness than ever before of the broker customer proposition. Our industry has and will go from strength to strength in the coming decade.”
Anja Pannek, CEO, PLAN Australia
strategy will be achieved through an education and coaching program that combines a series of face-to-face and digital development opportunities with peer-to-peer learning. “Brokers should focus on what they can control, make the most of every business and personal development opportunity, and continue to support positive growth within our industry,” says Pannek. Among the development opportunities on offer are the boardroom-style 100/100 program designed to transform 100 PLAN Australia businesses in 100 days; the Stanford Strategic Leadership Program, which this year sees a second cohort of brokers undertake
six months of study at Stanford University; and new PD content on commercial and asset finance, an area where Pannek says members are seeing “fantastic growth”. “We believe professional development is essential for brokers to grow their businesses, grow professionally and provide great customer outcomes. We invest heavily in world-class training and education to help our members thrive and excel,” says Pannek. It all feeds into the continued professionalisation of the broking industry, the cultivation of which Pannek considers to be intrinsically linked to its future growth. While customer trust in the banks
has plunged to new lows since the royal commission, mortgage brokers achieve NPS scores of 70 or higher, and only 1% of complaints lodged with the Financial Ombudsman Service between 2013 and 2017 were related to mortgage brokers. The data, quoted by the MFAA in its ‘Your Broker Behind You’ campaign, also shows that while the number of active brokers has increased over the last decade, the Credit and Investments Ombudsman says complaints against brokers have “dramatically decreased”. “I believe that we will look back at this last 12 to 18 months as a critically defining period for our industry,” says Pannek.
Supporting the transition So far, PLAN’s anniversary year has been action-packed. A new, updated version of Podium has been launched, based on a human-centred design approach that prioritises customer engagement, and in July the aggregator held its annual Commercial and Asset Finance conference, attended by 50 topperforming brokers. Among them were three ‘‘rising stars” selected by the PLAN Australia leadership team. The conference featured several keynote speakers, including CAFBA president David Gandolfo; Bob Ansett, the founder of Budget Rent a Car; and Besa Deda, chief economist at St. George Bank. This month, the PLAN Australia National Conference will be held, during which a video montage of broker stories about their business building and customer journeys will be played to delegates. “This anniversary is about celebrating the achievements of our members, how they have built their businesses and, most importantly, helped their customers achieve their dreams and goals,” says Pannek. While regulatory change isn’t going away, with the new era of digital banking comes new ways for brokers to assist their clients. Pannek believes the mobile-first customer journey, and open banking in particular, will give brokers an opportunity to leverage the significant relationship of trust they have with customers. “We remain incredibly optimistic about the future. This is a great industry built on delivering great customer outcomes, and we will continue to work hard with other industry participants to advocate for a viable and vibrant broking industry,” she says. AB www.brokernews.com.au
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BUSINESS TALK
THE POWER OF CONNECTION
Empowered by a new generation of connected technology, not to mention forward-thinking lenders and aggregators, broking is more efficient than ever before. However, when it comes to building a successful business, there’s only one connection that really matters
the first industrial revolution began in the late 1700s, the First Fleet hadn’t even arrived in Australia. With little to no basic infrastructure, let alone any industry, the country was a drastically different place. But it didn’t take long to catch up with the mechanisation transforming the rest of the world. By the time the second industrial revolution occurred 100 years later, New South Wales and Victoria were self-sufficient manufacturing hubs, and a newly separated Queensland was building its own locomotives – a mere 30 years after the first piece of metal was cast in the state. Today, with the fourth industrial revolution in full swing, the world is becoming an increasingly complex place, but Australia is once again embracing its appetite for innovation. Unlike revolutions one to three, 4IR has empowered the consumers of goods and services, rather than their manufacturers, with disruptive technologies utilising Internet of Things (IoT) connectivity, robotics, virtual reality and artificial intelligence. Over the last decade, such technology has transformed the mechanics of how business, banking, government and society operate. Fintech is just one element of this, but it has seen one of the fastest adoption rates of any sector. In fact, a five-fold increase in fintech start-ups between 2013 and 2018 has pushed consumer adoption in Australia to almost 60% this year, and the ripple effect can be felt in broking, too. “The mortgage broking industry is not immune from the rapid WHEN
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disruption brought about by the development of new technology,” says Stephen Moore, CEO of Choice Aggregation Services. “Change brings both challenges
When it comes to broking, technology has led to greater efficiencies in data collection, document signing and even loan approvals, drastically cutting
Stephen Moore, CEO, Choice Aggregation Services
which uses AI to analyse more than 450 unique data points for each application in just 15 seconds. “This delivers fast, informed decisions and a great user experience for customers. We obsess about our customers, and that’s reflected in our 9.9 TrustScore, +77 NPS score, and 68% repeat rate,” says Beau Bertoli, joint CEO and co-founder of Prospa. Such advances have rewritten the rules of customer satisfaction and upped the bar in terms of expectations, with many brokers and borrowers now shunning the lenders that can’t offer near-instant approvals.
and opportunities, so it is essential that brokers are familiar with the tools available to them to help drive efficiencies and mitigate risk across their business.”
Toolkit essentials When it comes to the tech that keeps brokers in business, many industry stakeholders are actively developing new tools, from data
“The mortgage broking industry is not immune from the rapid disruption brought about by the development of new technology” turnaround times and handling vast amounts of data in little to no time at all. One example is Prospa’s proprietary credit decision engine,
COMPARISON OF FINTECH ADOPTION IN SIX MARKETS, 2015-2019 2015
16%
Total average
31%
United Kingdom United States
60% 37%
8%
58%
18%
50% 29% 32%
Hong Kong Singapore
2019
13%
Australia Canada
2017
15%
23%
67%
14% 17%
67%
42% 33%
46%
71%
Stephen Moore, CEO, Choice Aggregation Services
analytics to leading CRM software. Among them is Liberty Network Services (LNS), whose advisers have reported a 25% increase in productivity when utilising the mobile CRM and loan management application system Spark. This is accessible via iPad, and Spark even includes a customer self-serve feature to reduce the administrative burden brokers face. “For most brokers, fast responses and real-time status updates are likely to rate highly on their wish lists. Without exception, every adviser who joins LNS is impressed at the ease, speed and professionalism Spark provides them,” says managing director Brendan O’Donnell. In true 4IR spirit, no modern solution works in isolation. Choice’s, CRM system, Podium, integrates with
various other interfaces to assist brokers in areas such as sales funnel and workflow management, NCCP compliance and product search tools, among others. “Having access to an effective CRM system is a critical component of the modern broking business’s toolkit. The collection and protection of customer data has never been more important, and a good CRM can greatly improve how these processes are managed,” says Moore. Currently, Choice is working on an enhanced version of the system, featuring a simplified user interface, enhanced digital mortgage functionality, the ability to control data visibility within an organisation, and a customer community function. Designed in collaboration with the aggregator’s brokers, the
enhancements will tackle the pressing issue of data management and protection, ensuring that brokers can deliver quality and strong customer outcomes. To maximise the impact, Choice also invests heavily in broker training. “Harnessing the customer data collection, categorisation and provision functions of a CRM system and combining this with the in-depth personal knowledge and the good relationships brokers already have with their clients will, in my view, position brokers well in the future,” says Moore. Other tech solutions can be used to complement and enhance the effectiveness of a CRM, by streamlining customer communications and reducing the time burden of key tasks.
“The most essential tech tools for brokers are those that help them deliver a faster, hassle-free customer experience. Customer expectations around speed and service are changing, and brokers should embrace this,” says Bertoli. “We’ve designed tech tools that make the referral process seamless for our partners and their small business customers.” Prospa’s suite of tools includes the iframe and partner-branded landing pages, which are designed to help brokers reach, and engage with, new and existing customers. “We know it’s tough running a business and staying on top of all the latest marketing tools. We’ve listened to what our partners need and designed solutions that work for them and their SME customers,” Bertoli says. Finance is far from the only industry to feel the effects of a digitised workplace. Organisation, collaboration and time management tools such as Asana, Slack and Zoom can easily be adapted to the needs of brokers. “Time management tools are critical for brokers, and there are some great ones available. If nothing else, take an online course in how to use Outlook to its full potential,” says Bertoli. While time management and automated approvals can bring huge efficiencies to a broker business, Moore recommends caution when it comes to automating the customer relationship itself. “Automated marketing functions can be a great time saver for brokers in a world where more is expected with less. However, if abused or done incorrectly, automation including EDMs can have disastrous and damaging consequences for a broker’s business by removing the personalisation,” he says. Intelligent investment With so many options and tools on the market, knowing where, when and how to invest in new technology can be the greatest challenge. Moore says, “Brokers looking to overhaul or upgrade their technology infrastructure first need to take a step back, look at the world around them and then ask themselves, how can I adapt my business and benefit from this change, and equally, how can I ensure that my customers continue to receive the best possible outcomes? www.brokernews.com.au
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ESSENTIAL TECH TOOLS FOR BROKERS CRM “Having access to an effective CRM system is a critical component of the modern broking business’s toolkit. The collection and protection of customer data has never been more important, and a good CRM can greatly improve how these processes are managed” Stephen Moore, CEO, Choice Aggregation Services
Social media marketing “Social media marketing can be incredibly powerful and can really help brokers differentiate from competitors and attract new customers. LNS advisers are reaping the benefits of investing in these newer media alternatives, with the support of the dedicated LNS marketing team” Brendan O’Donnell, managing director, Liberty Network Services
Cloud computing “Brokers should consider the 100% cloud approach and think mobile first. Being cloud-based gives your business huge advantages, from email applications such as Office 365 or Google’s suite of products, to file storage solutions such as OneDrive, Dropbox, Box.com and Google Drive, which are all great choices” Beau Bertoli, joint CEO and co-founder, Prospa
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Brendan O’Donnell, managing director, Liberty Network Services
“Professionalism is about putting the customer first and designing a business process around target outcomes,” he adds. O’Donnell advises that, ultimately, the aim of any tech investment should be to bring the broker closer to their customer while supporting the growth of the business. “It’s important to think about what you want to achieve, and what matters most to your customers. It’s not about what makes your business most efficient, but rather what technology can enable you to better service your customers’ needs,” says O’Donnell. In a world where there are more demands for personalised solutions, O’Donnell warns that some technology can actually undermine business objectives. “While certain tech tools can help you connect with a broader pool of customers, brokers should always strive to maintain a personal touch
and should avoid anything that could potentially compromise their customer relationships,” he adds. While it can be tempting to rely on email, Skype, Facetime and phone calls to get a deal done, O’Donnell says brokers shouldn’t underestimate
ability to build and maintain strong professional relationships, and the last thing you want is to make customers feel like a number,” he says. A combination of general and specialist tech solutions can meet
“It’s not about what makes your business most efficient, but rather what technology can enable you to better service your customers’ needs” Brendan O’Donnell, managing director, Liberty Network Services the importance of coupling this with face-to-face customer interaction. “Going the extra step to build a good rapport and relationship with customers can make all the difference. I’m a firm believer that a broker’s success comes from their
the needs of almost every broking business, but there are still those who wish to create their own tools and solutions. Sometimes this is because the broker can’t find the tech they need in the marketplace; other times it’s
because they wish to diversify from their business’s core function to package a bespoke solution for the wider industry to utilise. For example, Scott Durrant, the founder and director of Successful Ways, developed Alexus CRM, a system that uses live data to give brokers an edge over the banks. While the near decade he spent developing the system would push many to give up, Durrant was confident about the value that could be achieved with his bespoke CRM. And he was right – in the last financial year he reports that he settled $104m in half the time it would have normally taken. Alexus CRM can now be adopted by other brokers on a subscription basis, and even tailored to the processes of individual brokers and their firms. However, the create-your-own approach isn’t always advised. “Today’s CRM systems are highly versatile and can be integrated with a range of other systems, so before embarking on a custom-designed solution, brokers should check with their aggregator to determine whether the technology solutions offered can be tailored to meet their needs,” says Moore. Bertoli echoes similar sentiments, saying the hard work has already been done by specialist tech firms, so there is only one investment brokers should worry about. “Now more than ever brokers should consider investing in their cybersecurity. Many brokers don’t think of themselves as vulnerable to cyber threats, but small businesses are actually a common target,” he says. “Research from Chubb found that 60% of SMEs had experienced a cyber incident in the last year, so ramping up security is key.” The customer is always connected While technology has developed rapidly over recent years it’s consumer-facing tech, rather than the high-level systems that run in the background, that have revolutionised how we navigate and interact with the world. However, the instant feedback loop of social media, next-day e-commerce shipping and even streaming services have rewired people’s ability to simply wait for the things they want. That has drastically changed service
Beau Bertoli, joint CEO and co-founder, Prospa
expectations and, as a result, we now want – and in most cases need – immediate solutions. Those who provide anything less are second best. Meanwhile, the broker can only be as efficient as aggregator and lender systems allow, and investing in bespoke systems won’t necessarily provide an edge for their business. Couple these trends and, until we know what will trigger the next big change in consumer behaviour, it’s difficult to predict where service expectations and, as a result, broking, will go next. However, what can be considered a given is that service, personalisation and delivery expectations will continue to evolve as 4IR tech reaches further into our lives, bringing conveniences and solutions we didn’t know we needed. How the third party channel leverages that will define its role over the coming years. Enhanced compliance certainly presents a
strong case for more regtech-based solutions, and the utilisation of data will also be paramount. On the rest, time will tell. Deloitte’s 2019 Tech Trends report predicts that cloud computing will evolve to automate key tasks, servers
Whatever the future holds, the need for people to access finance in order to live their lives or keep their businesses ticking over is unlikely to abate and, in order to deliver on that need, the only connection a broker requires is a personal one.
“Many brokers don’t think of themselves as vulnerable to cyber threats, but small businesses are actually a common target” Beau Bertoli, joint CEO and co-founder, Prospa will become redundant, and AI will soon be making data-driven decisions for businesses in all sectors. Such high-level changes are unlikely to transform broking right away, but their impact will be felt over the coming years.
As Moore says, “The broking industry continues to go from strength to strength, and this can be partly attributed to brokers’ abilities to forge long and lasting personal relationships with their customers, who value the advice they receive.” AB www.brokernews.com.au
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IN THE NE WS
SETTING THE TREND With data now considered as valuable as oil, industries are scrambling to monetise the information they hold. But as Simone Tilley, chair of the CIF’s governance, data and reporting stream, tells Australian Broker, data can also be used to deliver better customer outcomes
to consider how their data repositories can be mined to create improved value.” “Whoever is first to market in driving a wave of change with respect to [data] will unquestionably command first-mover advantage.” Further, the embrace of data as a tool for delivering better outcomes will complement the companion trend developing within the industry: a move towards codified unification and professionalisation. Tilley explains, “One of the things we’re trying to do as an industry at the moment is create frameworks for better consistency so that we begin to exchange information more regularly and fluidly with one another so we can swarm on trends.” Tilley, who is also the general manager of retail broker distribution
a level of maturity.” The distribution of data has helped shape the education initiatives that ANZ is providing to its brokers, using both the “top-down and bottom-up approach”, says Tilley. The analysis can be utilised at the “top” aggregator level but equally informs how ANZ shares information with its BDMs and, subsequently, how the data is disseminated to brokers. Additionally, the network of shared analysis enables ANZ to monitor relevant trends and areas of concern – data that it uses to generate content for its newly launched fortnightly webinar series for brokers. “We’re using the insights to identify some of the issues we need
“Whoever is first to market on driving a wave of change with respect to [data] will unquestionably command first-mover advantage” Simone Tilley, GM of retail broker distribution at ANZ and chair of the CIF’s governance, data and reporting stream
the Senate’s passing of the Consumer Data Right (CDR) legislation being the most recent step in the march towards open banking, it has never been more crucial for organisations to intentionally collect, analyse and fully utilise data. According to Simone Tilley, chair of the governance, data and reporting stream at the Combined Industry Forum (CIF), digital disruption is sure to become a defining trend in WITH
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the industry moving forward. While generating the processes to take more strategic advantage of data and analytics will only become more relevant and pressing with the passing of time, Tilley has yet to come across aggregators or broker groups who seem to have considered their full application. “This is an area that has essentially been untapped,” says Tilley. “I have not heard of any major player hiring data scientists
at ANZ, spoke of how the bank’s recent efforts to “completely review” and upgrade the infrastructure underpinning its broker channel and subsequent data analysis have begun opening these opportunities for intra-industry collaboration. “We recognise we need to have a platform that is nimble and one that can accommodate change. We’ve invested time to ensure our master data management is accurate. We want to produce market-leading data analytics,” Tilley says. “We’ll be initially sharing that with aggregators and [will] certainly look to open that up to brokers once reporting reaches
to work through pragmatically together [with the aggregators] so we’re not taking a scattergun approach to education. It’s actually considered,” says Tilley. As open banking continues to unfurl within Australia, with its rules and applications solidifying and more institutions taking part, it is impossible to deny that the industry must embrace data and work together to put it to its best use. Tilley says, “As an industry, I expect to see our journey with professionalisation being amplified and being driven across all facets of the industry. I think we all agree this is important and something that makes sense.” AB
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PEOPLE
Have an interesting deal? Had a particularly difficult or interesting deal? Why not share it with us? Email:
Melanie.Mingas@keymedia.com
BIG DEAL
Michelle Lewis, mortgage broker at Easy Loans, explains how a diligent savings plan helped one of her first home buyer clients to keep their property ambitions on track when all other avenues were exhausted
THE FACTS
Loan size and term $450,000 for 30 years
Client Single female, mid-20s
Goal To purchase first home
Location Darwin, NT
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Aggregator PLAN
process to obtain consent for a second mortgage on her parents’ property. However, they determined that the structure was too complicated, and as a result a second mortgage would not be possible.
THE SCENARIO
Buying your first home is an exciting time, but it’s also a time of stress and worry, which is why so many first home buyers use the services of a broker. The client for this particular deal was referred to me about 18 months ago by her friend, who was a previous client of mine. The client’s goal was to purchase her first home over the next 12-month period. We emailed and met a number of times over the following months to discuss her borrowing potential, savings requirements, ongoing costs, deposit amounts and other considerations. At each meeting we reviewed how she was tracking to reach her goal of homeownership, and after around 10 months we were finally ready to submit the paperwork to the bank for pre-approval. Just as we were getting ready to submit, we looked at using the client’s parents’ property as supporting security. Her parents had already provided a guarantee to their son, which was still in place, but based on the figures available there was still enough equity for a second guarantee. On this basis, the application was pre-approved and the client could finally start shopping for her dream home, which she purchased at auction shortly afterwards. At this stage the bank started the
Lender BankSA
THE SOLUTION
With the first bank unable to provide the solutions we needed, we made the decision to switch to her parents’ bank,
her father’s loans and her brother’s ongoing guarantee. We revalued her brother’s property to see if we could release her parents from the guarantee and also spoke to her father’s broker to review our options from their perspective. While the customer’s preferred option was to proceed with a guarantee and avoid having to dip into her budget for mortgage insurance, unfortunately, after looking at the scenario from multiple angles, we made the decision that we couldn’t proceed with this option. Thankfully, due to the hard work we had put into preparations over the previous 10 months, the client had saved enough of a deposit that we could proceed with a mortgage-insured lend. We submitted the request to the bank and received formal approval. THE TAKEAWAY
It was such a great feeling to tell the customer that she was approved after she had been through such a roller coaster of emotions over the course of the last year. The smile in her voice when I called to congratulate her on both the approval and settlement was priceless. After all, it is customers achieving their dreams that makes this career so rewarding. I have spoken with the client recently, and she is so happy with the house and achieving her goal of homeownership. Due to the service provided, she has also referred other customers to me. In addition to the reward of helping a client, I have also drawn some
I learnt quickly that, as markets change and bank policy is amended, what we do today may not be that easy tomorrow
Michelle Lewis Mortgage broker at Easy Loans
BankSA, and continue the process. Due to the auction conditions in the contract there were time pressures and limited options for extensions. Because of the additional information we had provided through the consent process with the first bank, I made fairly quick contact with the BDM at BankSA so they could review the parents’ circumstances and make sure we were on the right track. All was progressing well until the second round of valuations. Because of the downturn in the Darwin market over the last five years, the parents’ property was short on equity to support the client’s new home loan as well as
professional lessons from this experience. I learnt very quickly that, as markets change and bank policy is amended, what we do today may not be that easy tomorrow. It takes perseverance to work through a client’s choices; you have to find the most suitable loan option to fit their needs and then if that plan A fails you have to dedicate yourself to working through plans B, C and often D. The client also needs to be dedicated. Yes, communication was important in this deal and is key to all applications. However, the client trusted my advice and worked with me quickly throughout the process and, in the end, that made all the difference. AB
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PEOPLE
CAUGHT ON CAMERA A new broker training and referral program debuted last month when Matthew Johnson and Jean-Pierre Gortan, managing directors of Simplicity Loans & Advisory, unveiled their Commercial Lending Workshop in Sydney. Delegates received CPD points and access to Marketplace.finance, a new portal created by Johnson and Gortan that allows brokers to talk about recent transactions and source advice from a network of peers. “Irrespective of whether trail is safe, making yourself an expert in an area is not an overnight thing. For brokers to be able to diversify their business in the next 12 to 18 months, they need to start making changes now,� says Gortan.
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From left: Matthew Johnson and Jean-Pierre Gortan
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DATA
NEW SOUTH WALES
ACT SPOTLIGHT
The time is now for prospective Sydney property buyers The national property market is finally entering a recovery period as Sydney’s correction phase begins to abate. Declines in the market’s top quartile eased over June, in line with the steadying of the national property scene, CoreLogic head of research Tim Lawless believes this is indicative of Sydney’s impact on the downturn. “We are seeing the first signs that the top end of Sydney and Melbourne’s housing markets are leading the recovery trend,” he says. “The subtle rate of decline was heavily influenced by trends across Sydney and Melbourne, and the improving conditions through to mid-May were largely organic, predating the positive boost in sentiment following the federal election and interest rate cuts.” With a rosier outlook for the near future, Tim McKibbin, CEO of the Real Estate Institute of NSW, suggests it could be the perfect time to get into the market as low prices create better conditions. Area
Type
Median value
Quarterly growth
12-month growth
Sydney
H
$888,000
-4.2%
-6.8%
NSW Country
H
$465,000
-1.1%
0%
Sydney
U
$686,000
-2.1%
-3.4%
NSW Country
U
$405,000
1.3%
2%
VICTORIA
Interest rates and lending rules tempt investors back A national market pacesetter, Melbourne – like Sydney – looks to be finally recovering from its recent decline. Dwelling values increased by 0.2% for the first time since dropping from a peak in November 2017, according to CoreLogic’s Home Value Index for June. Although rental performance weakened in the June quarter compared to the March quarter, the city still saw rents rise by 0.5%. “While homebuyers are still dominating the marketplace, investors are starting to come back following the result of the federal election,” says Antony Bucello, Victoria state manager at National Property Buyers. Other factors he believes have contributed to the resurgence of investor activity are “the lower interest rates and the loosening of lending rules from the governing bodies”. First home buyers have their eyes on townhouses and villa units up to and around the $800,000 price point, as well as family homes. A good location has been key to competition for these types of properties. Area
Type
Median value
Quarterly growth
12-month growth
Melbourne
H
$692,000
-2.2%
-3.6%
Vic Country
H
$367,000
0.3%
3.6%
Melbourne
U
$545,000
0%
0%
Vic Country
U
$272,500
0.8%
-2%
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BALANCING THE ACT While the capital territory enjoys stable growth, the symbiosis of its rental and sales markets makes it impossible for everybody to be a winner national property market is still on a downward trend, but that trend is slowing, according to CoreLogic’s June 2019 Home Value Index. “The improvement in housing market conditions over the first five months of the year has largely been organic; however, since mid-May there has been a raft of announcements that should provide a further positive flow through to housing demand,” said CoreLogic head of research Tim Lawless. “Stability within the federal government, along with the removal of uncertainty surrounding changes to negative gearing and capital gains tax discounts, has brought about increased certainty and boosted confidence in the housing market.” As the centre of politics in Australia, Canberra is one market that certainly benefits from the stability of the national government. Indeed, Herron Todd White’s Month in Review report for July 2019 suggests that activity levels are on the up as the residential market settles and consumer confidence improves. Additionally, in response to the demand for industrial land, the ACT state government has developed a four-year Indicative Industrial Land Release Program. However, as Michael Kumm, president of the Real Estate Institute of the ACT, points out, population growth has complicated the government’s task of maintaining the ‘garden city’ appeal of Canberra while providing adequate land for residential accommodation. In the near future, rental growth is also anticipated as tenant demand rises, given the proposal to cut interest rates further. At the same time, sales activity is expected to drop as rising municipal rates dissuade buyers from entering the market. The NSW border city of Queanbeyan serves as an attractive alternative for owner-occupiers looking to stay close to the ACT. AB THE
BROKER PERSPECTIVE
Signs suggest the outlook for the ACT is positive The uncertainty leading up to the federal election in May meant that prospective buyers in the Canberra region had put their buying plans on hold. However, we are seeing renewed optimism from first home buyers and upsizers, thanks to stamp duty changes, two cash rate cuts, and APRA's regulation change around serviceability floors. July saw changes to the home buyer concession scheme, with stamp duty abolished on all properties for first-time buyers with a gross household income under $160,000 a year. There is now increased demand for established properties, which had been previously overlooked by these buyers. This has served to reinvigorate demand from first-time buyers, and we have seen this reflected in a steady stream of enquiries from this market segment. We have also seen an increase in enquiries from those looking to upsize and buy their next property. Looking ahead, I am optimistic about demand in the Canberra property market. Dwelling values increased in Canberra throughout the last financial year, supported by strong population growth and low unemployment, factors that are predicted to continue to bolster the property market going forward. Matthew Hayes Owner/operator, Mortgage Choice Manuka
SUBURB TO WATCH: GARRAN Median price (houses) $1,057,694
Median price (units) $613,670
12-month growth
3-year growth
5-year growth
Indicative gross rental yield
6.1%
5.7%
31.9%
3.5%
12-month growth
3-year growth
5-year growth
Indicative gross rental yield
2.6%
15.1%
21.2%
4.9%
HIGHEST-YIELD SUBURBS IN AUSTRALIAN CAPITAL TERRITORY Suburb
OPPORTUNITIES AND KEY INFRASTRUCTURE
Type
Median price
Quarterly growth
12-month growth
TAYLOR
H
$390,000
7%
9%
CITY
U
$453,250
-1%
-10%
HAWKER
U
$290,000
18%
16%
MELBA
U
$370,000
-7%
-23%
CRACE
U
$349,975
-10%
-15%
CAMPBELL
U
$440,000
-19%
2%
CHIFLEY
U
$325,000
2%
13%
TURNER
U
$419,000
-17%
-17%
WATSON
U
$365,000
-2%
-17%
HARRISON
U
$384,000
-1%
-1%
BARTON
U
$486,500
-9%
-5%
GUNGAHLIN
U
$385,000
6%
12%
SOUTH AUSTRALIA
Area
All signs point to recovery as Adelaide remains top performer A year ago, Adelaide was getting very little attention for anything other than its economic struggles and failing job market. Now, the City of Churches is the perfect example of how easily the tide can turn. Confidence is high and CoreLogic’s Home Value Index for June named Adelaide the best-performing capital. Over the quarter, when all capitals saw prices fall, Adelaide experienced the lowest decline. The research group also reported that over the last few months sales figures had been higher across Adelaide, and market activity was higher than the decade average. Furthermore, in June, regional SA was the only area other than Hobart to record an increase in dwelling values. “Adelaide should be given the nickname ‘the quiet achiever’, as unlike some of the other major capitals around the country, property prices continue to grow,” says Peter Koulizos, program director of the Master of Property at the University of Adelaide.
420,960
700
Population in Canberra as of March 2019
Hotel rooms under construction – vital for MICE visitors
5
28
University campuses across the ACT supporting the ‘knowledge’ economy
Storeys in High Society tower in Belconnen, which will be the city’s highest when complete
Type
Median value
Quarterly growth
12-month growth
Adelaide
H
$465,000
1.1%
2.8%
SA Country
H
$272,250
0.2%
2.8%
Adelaide
U
$337,000
0.3%
1.5%
SA Country
U
$190,000
-3.6%
1.3%
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DATA
QUEENSLAND
Brisbane
H
$535,000
0%
1.9%
QLD Country
H
$440,000
0%
-2.2%
Brisbane
U
$385,000
0%
-1.8%
QLD Country
U
$365,000
-1.3%
-1.3%
MEDIAN HOUSE AND UNIT PRICES
Perth’s downward price pressures reverse following economic growth
$1,000,000
Median value
Quarterly growth
12-month growth
Perth
H
$477,500
-1%
-3%
WA Country
H
$325,000
-0.9%
-2.5%
Perth
U
$365,000
-2.6%
-6.3%
WA Country
U
$240,000
0.8%
2.2%
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Cleared
17
Uncleared
12
Clearance rate
58.6%
PERTH Total auctions
38
Cleared
4
Uncleared
13 23.5%
Houses
$0
Sydney Melbourne Brisbane Adelaide
Perth
Hobart
$464,000
$345,000
$100,000
$457,000
$200,000
$360,000
$300,000
$480,000
$500,000 $400,000
$547,500
$600,000
$670,000
$700,000
$651,250
$800,000
$817,500
$900,000
Western Australia’s economic growth is expected to be the highest of any jurisdiction in the year ahead, according to Sandra Brewer, executive director of the Property Council WA. The availability of credit is regarded as a significant factor contributing to this improved outlook, and it is anticipated that this could in turn generate more employment opportunities for the state’s residents. In fact, the positivity surrounding Perth could be bringing more potential residents into the state, causing vacancy rates to fall. Perth’s vacancy rate was around 6% in January 2017. Today it is sitting at 3%. That’s significant for investors looking at Perth,” says Open Corp director Matthew Lewison. “As vacancies trend down below 3%, the market starts to favour landlords again. Rising rents improve rental yields for investors, which makes it more attractive to buy and will therefore put upward pressure on prices.”
Type
55
Clearance rate
WESTERN AUSTRALIA
Area
Total auctions
Darwin
Units
$413,000
12-month growth
ADELAIDE
$325,000
Quarterly growth
$440,000
Median value
$372,500
Type
There were 1,107 capital city homes taken to auction this week, virtually unchanged from the previous week when final results saw 1,108 auctions held. The steady week-on-week activity returned a preliminary auction clearance rate of 70.4%, coming in higher than the last week’s Sunday preliminary figure of 68.3%, which later revised down to 66.4% at final figures. The strengthening weighted-average results of late can be mostly attributed to Melbourne and Sydney, as both cities have consistently reported clearance rates above 70% over the past few weeks, with Sydney’s preliminary figure this week ticking over the 80% mark. The trend of final clearance rates holding above the 70% mark implies the market is responding to the stimulus of lower mortgage rates, improved sentiment following the federal election, and lower serviceability tests for borrowers as well as low advertised stock levels.
$532,000
Area
WEEK ENDING 11 AUGUST 2019
$635,000
The southeastern regions continue to put their best feet forward for investors. “The resource sector seems to be gearing up, with multiple big infrastructure projects in the pipeline,” says Ian Hosking Richards, CEO of Rocket Property Group. Indeed, the Gold Coast remains active, with CoreLogic’s Auction Market Review for June showing that this area was the busiest among non-capital markets over the June quarter. However, not all regions outside the metro are expected to perform well, as CoreLogic’s Home Value Index for June points out. The Queensland outback has one of the worst housing markets in the country as a result of natural factors like drought and flooding. Meanwhile, there are various initiatives to get things going in the capital. “There are some impressive civil projects [planned] for Brisbane. As with all areas nationally, lack of credit is hampering the property market and will continue to do so until restrictions are eased,” says Hosking Richards.
CAPITAL CITY AUCTION CLEARANCE RATES
$290,000
Best foot forward for Brisbane and surrounds
Canberra
CAPITAL CITY HOME VALUE CHANGES Capital city
Weekly change
Monthly change
Year-to-date change
12-month change
Sydney
0.0%
0.2%
-4.1%
-8.8%
Melbourne
-0.1%
0.1%
-3.9%
-8.0%
Brisbane
-0.1%
0.2%
-2.4%
-2.4%
Adelaide
-0.1%
-0.4%
-1.5%
-1.0%
Perth
-0.2%
-0.4%
-5.6%
-8.8%
-0.1%
0.1%
-3.9%
-7.4%
Combined 5 capitals
*The monthly change is the change over the past 28 days
BRISBANE CANBERRA Total auctions
56
Cleared
30
Uncleared
17
Clearance rate
Total auctions
88
Cleared
21
Uncleared
32
Clearance rate
39.6%
63.8%
SYDNEY Total auctions
365
Cleared
225
Uncleared
52
Clearance rate
81.2%
TASMANIA
MELBOURNE Total auctions
501
Total auctions
4
Cleared
301
Cleared
1
Uncleared
110
Uncleared
0
Clearance rate
Clearance rate
73.2%
TASMANIA
Hobart loses out to mainland rivals as growth period slows Is the tiny state finally slowing down? The CoreLogic Home Value Index for June 2019 reports that while Tasmania still performed well over the previous 12 months, its momentum is easing up. Adelaide has trumped Hobart as the nation’s top dog, and while Tasmania had the number one regional market in the country, this is now anticipated to be heading downhill. “Tasmania broadly is still in growth, but it’s unsustainable. So it will edge back fairly reasonably in the next 12 months,” says Results Mentoring director Brendan Kelly. “Hobart is not in a significant growth phase. What we will see is what we have started to see in Sydney, which is that as the cooling market starts to take effect, it will ripple out to Launceston and other major towns around.”
Area
N/A
Type
Median value
Quarterly growth
12-month growth
Hobart
H
$485,000
0.7%
8.9%
TAS Country
H
$313,500
1.7%
7%
Hobart
U
$380,000
1.3%
9.1%
TAS Country
U
$250,000
0.1%
1.3%
All data sourced from CoreLogic.com.au
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29
PEOPLE
IN THE HOT SEAT
Earlier this year, Hayden Cush took on the role of national sales manager at AFG Home Loans. He explains to Australian Broker what the new role means and shares his advice for brokers
What’s the greatest challenge for brokers at this time? We have just seen a very turbulent 18 to 24 months in the A third party space, caused by a number of external forces. The rapid pace of change in lending policies and lender requirements has made the broker’s job of finding a solution for the consumer challenging. Add on top of this further compliance requirements and an imminent best interest duty, and this will be the greatest challenge for brokers in the short term. But whilst it will be challenging, it also makes the broker proposition so much more attractive for the end consumer, who would find it near impossible to navigate their own way to a competitive lending product.
Q
What was your first job? I worked for the local Mobil fuel station in Kingaroy – the A usual fuel servo jobs of filling up cars and trucks, washing cars, replacing gas cylinders and selling copious amounts of cigarettes and pre-paid phone credit. A number of my siblings had worked there prior going through school, so it seemed like a good fit.
Q
What’s one thing, personal or professional, that you hope to achieve before the end of the year? With the new national role, I was given the opportunity to A relocate back to Brisbane from Melbourne. I am originally from up north but was given the chance to move to Melbourne just over five years ago with AFG, so I am looking forward to settling back into Brisbane and am thankful for the opportunity to return home.
Q
What is one piece of advice you often give your mentee brokers? Ensure you have a variety of referrers set up as early as possible A when moving into the broking world. Lean on your aggregator partnership managers and your lender BDMs for support and get yourself to as many industry functions as possible to network and get an understanding of best practice from your peers. The family and friend referrals are great, but in the long term they won’t be enough to sustain a successful mortgage broking business. As your business begins to grow, ensure you then have the right marketing program automated to keep your client base engaged. AB
Q
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