Australian Broker 16.19 by Key Media

OCTOBER 2019 ISSUE 16.19

Getting back on track The trends driving the latest arrears activity in Queensland and WA /16

The customer is always right ASIC’s commissioner outlines the new expectations of brokers /18

GLENN HASLAM Suncorp’s executive GM of lending talks about the bank’s renewed focus on tech and brokers /14

Australian Mortgage Awards What to expect at this month’s awards ceremony /22

ALSO IN THIS ISSUE… From the forum Brokers have their say as they’re asked to step up /20 Market data Tasmania’s new challenge as affordability declines /26 In the hot seat Bike-riding broker Evelyn Burton on creating career success /30

NEWS

IN THIS SECTION

Lenders NAB outlines lending and policy changes /04

Associations Market takes a toll on third party channel /06

Technology Smartbank app gets the green light /10 p

Regulators Legislative approval for first home buyer scheme /12

Market Commercial property boom on the horizon /08

www.brokernews.com.au OCTOBER 2O19 EDITORIAL Editor Melanie Mingas News Editor Madison Utley Production Editor Roslyn Meredith

DATES TO WATCH

Upcoming can’t-miss events

Contributor Mariam Gabaji

ART & PRODUCTION

11 OCTOBER

16 OCTOBER

MPA Major Banks Roundtable Live Stream

CAFBA Annual General Meeting

Join MPA editor Rebecca Pike as she quizzes leaders from the major banks during MPA’s next live-streamed roundtable. The discussion kicks off at 12.30pm, and industry professionals can register to watch it live on the MPA website, or access the recording afterwards at www.mpamagazine.com.au/tv.

Starting at noon, the commercial broking association’s AGM will take place at Sydney’s Shangri-La. Featuring a surprise keynote speaker, the three-hour meeting is open to staff, board and association members. It will be followed by regional cocktail functions in Queensland (20 Nov), Victoria (21 Nov) and NSW (28 Nov).

1 8 O C T O B E R   Australian Mortgage Awards   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 Samantha Duke, Urzila Carlson, Duke Music and Linden Furnell.

Designer Martin Cosme 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

28 – 30 OCTOBER

30 OCTOBER

8 NOVEMBER

AFG National Broker Conference

MPA Non-Banks Roundtable Live Stream

FBAA Gold Coast conference

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.

For the second time in October, MPA editor Rebecca Pike will host a live lender roundtable, this time with a panel of non-banks. Starting at 12.30pm, the discussion will cover trends and opportunities in the non-bank space and can be accessed via www.mpamagazine.com.au/tv.

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.

tel: +61 2 8311 5831 fax: +61 2 9439 4599 subscriptions@keymedia.com.au

ADVERTISING ENQUIRIES

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

10 – 12 NOVEMBER COBA 2019: Stronger Together 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.

27 – 28

NOVEMBER

5 DECEMBER

National PD Convention

Three-day ethics course

This invitation-only event for FAST brokers and their staff returns to Sydney in November, this time tackling business diversification and growth opportunities; updates on the industry, economy and FAST itself; and information on enhanced business practices, latest market trends and high performing behaviours.

Melbourne-based Deakin Business School is offering an intensive, face-to-face, threeday course in Ethics for Financial Services. Combined with “comprehensive” online learning materials, the course is intended to ensure students gain the theoretical and practical knowledge needed to fulfil new requirements of the Financial Adviser Standards and Ethics Authority.

Fast money. Short term. $100k - $10million. Real Estate backed lending.

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.

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NEWS

LENDERS NEW HOME LOAN OPTION FOR FIRST HOME BUYERS is offering a new Platinum Prime home loan that caters for first home buyers who do not have 5% in genuine savings. The loan is available to PAYG and self-employed borrowers and has no monthly or annual fees and an 100% offset account “[It] takes the stress out of saving to buy a new home and provides the next generation of homeowners with a gateway to the property ladder,” said the lender’s executive director, Allan Savins. BETTER CHOICE

VALUE OF HOME LOANS SETTLED BY BROKERS DECLINES Source: MFAA Industry Intelligence Service Report, Sept 2019

Annual value of home loans settled $250bn

$200bn

$150bn

$100bn

Year to March 2019

Year to March 2017

Year to March 2015

Year to March 2016

Year to March 2018

Year to March 2014

$50bn

PEPPER MONEY STEPS INTO NEW ZEALAND has officially launched mortgage lending operations in New Zealand, having identified a “clear gap” for flexible loans. The new operation will be headed by New Zealand-born Aaron Milburn who has acted as the director of sales and distribution in Australia for the past three years. “Today’s launch is the culmination of more than a year of close consultation with advisers and intermediaries, lending partners, regulators and borrowers,” Milburn said.

$0bn

PEPPER MONEY

“Some policies determining bankability are based on rudimentary ratios; one ratio fits all, without actually looking at the risk mitigation of the [customer] business” Ian Robinson Founding director, Robinson Sewell Partners

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NAB OUTLINES LENDING AND POLICY CHANGES Responding to new regulatory requirements, National Australia Bank has underlined broker responsibilities under its revised credit policy has implemented a series of changes to its credit policy and ramped up support for vulnerable customers in response to the new Banking Code of Practice – and the developments have placed new responsibilities on brokers. According to NAB, the changes to its home lending policies “provide greater clarity for brokers” in the current environment of heightened regulatory considerations. The bank updated its document validity requirements and rules for customers on parental leave. Further, rental income thresholds were changed to accommodate emerging rental arrangements for investment properties. NAB has also removed the requirement for borrowers who are NAB

on a repayment break to return to work within 60 days. However, brokers are now required to record the details of the customer’s plan to maintain their repayments and living costs while on leave, as well as to sign off on the budget seeming “reasonable”. Further, the bank announced the creation of its NAB Customer Support Hub, a specialist team of bankers dedicated to detecting early stages of financial hardship – from scams to fraud, domestic and family violence, elder abuse and low financial literacy. “We want to be there for our customers no matter their circumstances, and this new team of bankers provides support well beyond that of traditional financial

hardship assistance,” said NAB chief legal and commercial counsel Sharon Cook. “This Support Hub enables us to be more proactive by identifying hurdles our customers are experiencing and providing them with extra care.” The new team was officially announced following a successful trial in June. Its creation was just one step in the development of what NAB has termed its “customer vulnerability framework”, an initiative geared towards producing more inclusive banking services and better support for its customers. “We have also set up a dedicated Indigenous Customer Service Line for our Aboriginal and Torres Strait Islander customers living in remote locations, which is making a huge difference to how they access banking services,” Cook added. NAB estimates it has assisted 1.4 million customers who have experienced financial difficulty due to events such as injury, illness and unemployment every year.

A $2,000 blockbuster bonus for your customers. Home Package Plus home loans now come with a $2,000 cash bonus.^ Talk to your BDM or visit businesspartners.suncorp.com.au to find out more. ^Apply by 13 December 2019, settle by 5 March 2020. Available for eligible new to bank home lending of $250,000 or more taken with “Home Package Plus” and an LVR of 90% or less. Further T&C’s and eligibility criteria apply.

Home Loans are provided by Suncorp-Metway Ltd Australian Credit Licence 229882 (“Suncorp Bank”), to approved applicants only. Please read the relevant Information Documents before making a decision regarding any Suncorp Bank products. ^The $2,000 cash bonus (the “Cash Bonus”) is applicable when you are approved for and settle an Eligible Home Loan with Suncorp Bank. An Eligible Home Loan is a home loan that is: (1) applied for between 2 September – 13 December 2019 and settled by 5 March 2020; (2) a loan amount of at least $250,000 in new to bank lending with a Loan to Value Ratio of 90% or less; (3) Purchase or Refinance, for Owner Occupied or Investment purposes; (4) a Standard Variable or 1, 2, 3 or 5 Year Fixed Rate loan in the Home Package Plus; (5) Back to Basics & Line of Credit / Access Equity is excluded, except when application is split with another eligible loan product of at least $250,000; (6) not established in the name of a company, business or trust. Refinancing of an existing Suncorp Bank home loan or pre-approvals are ineligible for the Cash Bonus. The Cash Bonus cannot be taken in conjunction with “Switch & Save” Offer or any other cash promotional offer, unless expressly stated otherwise. A limit of one (1) payment of $2,000 will be made to a borrower and if there is more than one borrower, one (1) payment will be made to them jointly. Each borrower, whether individually or jointly, can only ever receive a payment of $2,000 once. If any of the borrowers have received a payment whether individually or jointly under the Cash Bonus previously then no further payments will be made. The $2,000 cash payment will be credited to the linked Everyday Options account which forms part of the Home Package Plus, within 30 days of the settlement date. Suncorp Bank reserves the right to vary or withdraw the Cash Bonus at any time. Applications subject to credit approval. Fees, and charges may be applicable. Full terms and conditions will be included in our loan offer. Depending on your financial circumstances, you should obtain independent advice before making any decisions regarding the Cash Bonus.

NEWS

A S S O C I AT I O N S BROKER CONVERSION RATES Source: MFAA Industry Intelligence Service Report, Sept 2019

Number of home loans settled as proportion of loans lodged 90% 80.3% 73.7%

60%

73.7%

75.6%

72.1%

73.6%

73.8%

50% 40% 30% 20% 10% 0%

has collaborated with major bank Westpac to create the curriculum for its Broker Academy. Launched on 30 September, the academy offers thousands of courses, including modules from CAFBA’s Cert IV and Diploma of Financial Services, both provided via the Institute of Strategic Management. Association president David Gandolfo said, “One of our objectives is to raise commercial finance broking to a profession, just as we regard banking to be a profession.” CAFBA

80% 70%

CAFBA SUPPORTS NEW BROKER ACADEMY

Oct 15–Mar 16 Apr 16–Sep 16 Oct 16–Mar 17 Apr 17–Sep 17 Oct 17–Mar 18 Apr 18–Sep 18 Oct 18–Mar 19

COBA BACKS ACCC CALLS

MARKET TAKES A TOLL ON THIRD PARTY CHANNEL Industry insights survey reflects a turbulent year in lending, with brokers bearing the brunt of industry challenges. However, the customer ratio is now at 1,495 per broker eighth edition of the MFAA’s Industry Intelligence Service report has confirmed the broker channel settled $87.56bn in home loans in the latest reporting period – the lowest six-month value recorded by the association. The new figure, down 10.32% on the previous period, was derived from data supplied by 12 major aggregators from October 2018 to March 2019. While the broker channel achieved a record-high market share of 59.7% during the period, the average value of new home loans settled per broker declined at a rate “far greater than ever before”, down 10.66% year-on-year. The number of loan applications THE

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also dropped by 8.53% from the period before and 13.39% year-on-year. Further, the average number of applications lodged per broker declined across all states except Tasmania. The broker population also fell from a record high of 17,040 industry participants, and net industry turnover – of those joining and leaving the industry as well as moving between aggregators – rose to 10.9% from 9.6% a year ago. Notably, despite the proportion of new female recruits increasing by 10% compared to new male recruits, the total population of female brokers declined by 1.79% over the six months. Combined, these factors contributed to a fall in average total

broker remuneration, which now sits at “the lowest levels ever observed”, the report said. Average combined remuneration dropped 3.49% period-on-period and is down 3.08% year-on-year. This represented a decline of 9.64% from the high of April to September 2016. Lower upfront commissions in favour of higher trail is said to be a major contributor to the results. However, the MFAA reiterated that inhospitable credit environments meant home loans settled directly with lenders declined 15.71% in the last six months and 19.1% since the year before. On the plus side, the national average customer-to-broker ratio now sits at 1,495 borrowers per broker, enhancing competition. Victoria has the highest concentration of brokers per person, followed closely by WA. The NT has the lowest saturation, with 4,098 people per broker, and Tasmania follows closely behind with 4,057.

of the Customer Owned Banking Association Michael Lawrence has backed the ACCC’s calls for an enquiry into competition in banking. COBA said the regulatory framework that had developed over time had “entrenched the dominant position” of Australia’s major banks. “We don’t have sustainable banking competition at the moment,” Lawrence said, adding that the Productivity Commission report had sent “strong messages” to policymakers that regulation was hurting competition. CEO

“The broker channel is fundamental to us delivering on our core purpose. That’s why we’re focusing on it in the coming year” Jamie McPhee CEO, ME

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NEWS

MARKET RATE CUT TRIGGERS P&I SURGE has recorded a 14% increase in the number of existing home loan customers switching from interest-only to principal and interest since the first round of rate cuts in June. CEO Sally Bruce said, “Over time the customer could save thousands of dollars in interest as a result of paying off debt sooner.” Average interest-only home loan rates are currently 50bps higher than P&I rates for owner-occupiers, according to RBA rate data for June. AMP

MARKET RECOVERY COULD TIGHTEN CREDIT of a dramatic market rebound could lead to a new round of credit tightening, CoreLogic has warned. Research director Tim Lawless said, “High levels of household debt are manageable, while interest rates are very low. However, if debt levels remain elevated when interest rates eventually rise, the risk is that households will need to dedicate more of their income towards servicing their debt and less towards spending.” EXPECTATIONS

“With macroprudential policies eased further, it wouldn’t be a surprise to see a moderate increase in demand for non-standard and higher-LVR mortgages” Cameron Kusher Analyst, CoreLogic

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COMMERCIAL PROPERTY BOOM ON THE HORIZON Increased activity in the private sector, in line with RBA economic forecasts, could create 100,000 jobs a year, driving demand for workspace Reserve Bank of Australia’s commitment to pushing for “full employment” could contribute to a boom in commercial property investment in the near future. According to the minutes from the central bank’s September monetary policy meeting released on 17 September, members noted that while employment continued to grow, the unemployment rate had held at around 5.2% in recent months. They concluded that there was spare capacity within the labour market and the Australian economy could sustain lower rates of unemployment. For the RBA to achieve its goal of a 4.5% unemployment rate by 2025 – the level at which it believes spare capacity would be THE

eliminated – a large number of employees would need to be added to the workforce, significantly increasing demand for office space, research from Colliers International has shown. “If the RBA succeeds in getting Australia to ‘full employment’ of 4.5%, circa 100,000 white-collar jobs would be created each year. This equates to about one million square metres of office demand Australia-wide each year,” said Colliers International’s Australian research director, Anneke Thompson. More than 300,000sqm of new office space will be added to national supply during the second half of this year, with more than 600,000sqm due to be added to

CBD markets in 2020, according to the Property Council of Australia. With yields from CBD office space reaching as high as 6.7% in Brisbane, 7% in Perth, 7.2% in Adelaide and 7.5% in Canberra, the increased demand likely to arise from growing employment would create an unprecedented opportunity for commercial property investment. “While reaching an unemployment rate of 4.5% seems like a lofty goal, consider that Australia’s unemployment rate globally is high compared to other G20 nations,” said Thompson. Australia’s unemployment rate fell below 5% in December 2018 and February 2019 but has never dipped below 4%. Meanwhile, the US, UK, China and Germany all have sub-4% unemployment rates. “With two further cash rate cuts in Australia likely over the next 12 months, it is not too high a growth scenario to consider strong employment conditions will continue,” Thompson concluded.

NEWS

TECHNOLOGY

FINTECHS DOMINATE TOP START-UPS LIST Australian fintechs have been recognised in LinkedIn’s second annual Top Start-ups list – and four of the six received their banking licences in the last 12 months. Ranking the companies that are “altering how we work and live”, LinkedIn’s list featured GetCapital (at number 17), Moula (14), Athena Home Loans (6), Xinja (5), Volt (3) and Judo (1). They were marked on employee growth, jobseeker interest and member engagement. SIX

SMARTBANK APP GETS THE GREEN LIGHT After receiving its full banking licence in July, 86 400 is now available on Apple and Android app stores, with a mortgage offering in the pipeline new, app-based smartbank is now available to consumers across the country, with the primary aim of taking smartphone banking mainstream. 86 400, which received its full banking licence on 18 July, is now available via Apple’s App Store and Google Play, with two account products – Pay and Save – currently live and a mortgage offering in the pipeline. Enticing new customers, 86 400 says it is possible to create an account in as fast as 120 seconds, but the app’s real USP is built around financial management: alerting customers to upcoming bills, subscriptions and direct debits so they “never A

get stung by nasty late fees again”. Even those who aren’t yet ready to switch banks can utilise the app’s features. CEO Robert Bell said, “Managing your money shouldn’t be so hard, but the simple fact is that staying on top of your finances has become too complex, leaving many Australians feeling anxious, stressed and frustrated.” The zero-fee current account Pay is based on a dashboard model that helps account holders manage money and payments across all their accounts – there are more than 150 different compatible institutions – in the one app. Account holders also receive “personalised nudges” to

help them avoid late fees or charges on their bills and subscriptions. Meanwhile, Save offers an interest rate of 2.5% per annum, made up of an annual base rate of 0.4% and a bonus rate of 2.1% per annum paid on balances of up to $100,000. The new app debuted almost nine months after its beta launch, which saw upwards of 26 updates and amendments as the product was refined for general release. “We’ve launched a bank which uses smart technology to show customers what’s actually going on with their money so they feel in control every second of every day. All eighty-six four hundred of them,” Bell said. The smartbank processed its first mortgage back in July for a staff member and is due to launch an official mortgage product “in the coming months”. As a lender, 86 400 is already on the panels of Vow and Specialist Finance Group.

‘HOW TO PROSPA’ SME GUIDE LAUNCHED lender Prospa has launched a multifaceted education initiative for brokers entitled ‘How to Prospa’. The guide is supported by a series of webinars. Alex Brgudac, Prospa’s head of partnerships, said, “[Brokers] have a strong grasp of the ‘why,’ but not so much the ‘how’. [Our] program offers access to independent industry experts who will tackle a different business funding topic in each series and answer broker questions.” BUSINESS

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NEWS

R E G U L AT O R S

AFCA HITS THE ROAD has launched a Financial Fairness Roadshow that will visit 77 metropolitan, regional and rural communities between September and April. It will “serve as a roaming information centre” for consumers and SMEs, covering the new official complaints process in financial services. “We’re also letting people know they have a one-year window to lodge complaints dating back to 2008,” said chief ombudsman and CEO David Locke. ‘Legacy complaints’ will be accepted until 30 June 2020. AFCA

LEGISLATIVE APPROVAL FOR FIRST HOME BUYER SCHEME While the scheme is good news for buyers, the compliance costs for lenders and brokers could reach $2.17m per year

government has introduced legislation to support the rollout of its First Home Loan Deposit Scheme, which formed a key part of the Liberal’s federal election campaign earlier this year. Every year, the scheme will provide 10,000 eligible Australians with access to a 95% LVR home loan. The legislation outlines income tests to assess first home buyer eligibility for the program, as well as modest dwelling price limits. To implement the scheme, the National Housing Finance and Investment Corporation (NHFIC) will contract with a panel of lenders, and mortgage brokers will then assess scheme eligibility based on the normal considerations for a borrower going through the loan THE

CANBERRA HEARS ABOUT COMPETITION than 30 CEOs and directors from customer-owned banking institutions convened in Canberra on 11 September to urge MPs to protect competition while implementing the royal commission recommendations. Supporting the principles of proportionate regulation, they want government to invest in boosting competition in retail banking. “Government must keep competition front of mind if consumers are to receive a better outcome from their banking,” said COBA CEO Michael Lawrence. MORE

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process, such as loan serviceability. However, the scheme has compliance costs for lenders and mortgage brokers, estimated at $2.17m per year. Lenders, before offering the guaranteed loans, will need to update their internal systems and train frontline lending staff, including on how to apply the eligibility criteria. Non-participating lenders will not face any additional regulatory costs, and lenders are able to choose to participate in the scheme only if they feel that the commercial benefits of doing so offset the associated regulatory costs. Brokers looking to offer the guaranteed loans will require training or self-education, the details of which have yet to be provided.

The legislation has also established a research function of the NHFIC to examine housing demand, supply and affordability within Australia. Since preliminary consultations were initiated in late May 2019, a broad range of stakeholders in the home loan process, including lenders, industry associations, mortgage brokers and financial regulators, have weighed in. The Customer Owned Banking Association welcomed the legislation. CEO Michael Lawrence said, “There are many customerowned banking institutions that are eager to be a part of this scheme after the government said it would prioritise smaller lenders to help boost competition. Customer-owned banking institutions have a long tradition of helping first home owners enter the property market. “Australia’s customer-owned banking institutions are excited to work with government to help more Australians enter the property market,” he added.

TECHNOLOGY UPDATE

WHY DIGITISING LOAN VARIATIONS IS A NO-BRAINER now a given that new loans are digitised. The elephant in the room is variations, declares NextGen.Net Chief Customer Officer Tony Carn. “Loan variations, which include term extensions, doing a principal decrease on a loan, product splits and security swaps, consist of on average about a third of brokers’ transactions. Yet some lenders are still conducting the customer self-service option or the unwieldy, time-consuming, outdated, manual method,” says Carn. “Doing variations electronically with ‘ApplyOnline Variations’ replicates the process for new loans and therefore is correspondingly efficient, fast and compliant. “Lenders who provide brokers with the ApplyOnline Variations tool and standardised approach for in-life variations to manage customers throughout the life cycle of their loans don’t just empower brokers; they ensure retention of ownership of the loan.” By adopting ApplyOnline for use in variation applications, lenders are giving brokers a clear process and tools to efficiently and effectively manage their customer throughout the life of the loan, at the same time eliminating any fear or perception of channel conflict. By having a standardised approach to variations in ApplyOnline, brokers quickly become familiar with the process for submitting variation applications regardless of the lender. ApplyOnline Variations is also an excellent mechanism for brokers and lenders to provide information for the upcoming review of practices regarding trail commissions. At a time when brokers are being asked to justify the trail they are paid in order to service the ongoing needs of borrowers, a tool that assists with the exercise is invaluable. “There’s been a lot of dialogue and political posturing around IT’S

Tony Carn, Chief Customer Officer, NextGen.Net

trails,” says Carn. “We know what brokers do for lenders regarding the ongoing management of customers, and that the vast majority of brokers act in the best interest of the customer and retention to a lender. “However, in many instances we’re not seeing lenders empower brokers to easily facilitate that transaction by using a clear, auditable and traceable process for variations.” Adherence to responsible lending provisions triggered by any change to the current or originally approved loan conditions is fully supported through ApplyOnline Variations with the introduction of the ‘Combined Industry Compliance’ tab. This new compliance tab, which is currently being rolled out to lenders for new loans,

is available for variations, thereby further streamlining the application process for brokers within the familiar environment of ApplyOnline. Carn notes that, to date, responsible lending has focused almost exclusively on new customers and excluded existing customers. “There is a regulatory obligation that encompasses existing customers,” he says. “If the circumstances of an existing customer loan change, what is being approved needs to be aligned to regulatory requirements and objectives, and, bottom line, the customer’s best interests. “The best way to do that is by having not only a clear process but also a robust one that is auditable and demonstrable with what was done initially. “There’s currently a spotlight

on variations, so ensuring that regulatory requirements are not limited to new customers is mandatory. Providing the ApplyOnline Variations tool with the compliance tab demonstrates a lender’s commitment to delivering smart and empowering solutions for brokers,” says Carn. Broker groups also benefit from ApplyOnline Variations in that it gives visibility in their pipeline. “To date, lenders have relied on brokers to assist customers with managing their loans on an ongoing basis, but sometimes neglected to make the variation process more streamlined. “Lenders who provide the ApplyOnline Variations tool and standardised approach for in-life variations are going to see significant benefits,” maintains Carn.

FE AT URES

SPECIAL REPORT

BANKING ON BETTER

As the non-majors take the market lead, Suncorp is positioning itself to offer a superior experience for brokers and their customers. Executive GM of lending Glenn Haslam reveals the strategy to Australian Broker

KEY BUSINESS METRICS

70%

of Suncorp mortgages are originated by the broker channel

400

brokers attended the annual Suncorp Synergy Sunrise PD event nationally

120

brokers have registered and enrolled in 140 Suncorp Learning Campus courses

200

brokers have attended the SunEducation SME program, comprising 30 courses nationwide

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the last financial year, growth in all its forms has taken a hit, and loan books have not escaped unscathed. At Suncorp, full-year financial results were released in August, confirming loan portfolio growth of 0.4%, which spurred then-acting CEO Steve Johnston to implement a plan to tackle the trend. Johnson found his solution in the third party channel, and in a pledge to brokers he said the bank would be focusing on “the way we service, deal with, and make commitments to our very trusted and supportive partners in the broker community”. Now officially the group CEO, Johnston is bringing the vision to life with his team. As the executive GM of lending, Glenn Haslam has a vital role to play in this work, but crucially, there is one market factor already in his favour: when it comes to loan volumes, the non-majors have consistently outperformed their major rivals over the last six months. The trend was first confirmed by APRA’s April banking statistics, which showed that investor mortgage volumes across the 10 top-performing non-majors had climbed by $0.36bn, while declining $0.5bn at the majors. The same data showed the nonmajors’ owner-occupier loan book had increased by $1bn when compared to the previous month. Specifically, Suncorp was the second highest performing non-major lender for owner-occupier loan volumes over the month and third for investor loan volumes. In July, the AFG Index confirmed that in the fourth quarter of the last financial year the non-majors IN

received a record-high 42% of all mortgage lodgements. For the first time, the non-majors also accounted for more than a third of first home buyer mortgages. “I believe the strength of the product and overall sophistication of the non-majors’ service propositions are driving a truly differentiated proposition for brokers and their customers,” says Haslam. “Technology is enabling a change in landscape, and the program of work we are undertaking at Suncorp

be leveraged to enhance customer interactions, with self-service and branchless banking being a major focus to date. The new Suncorp App includes features such as fast payments and digital wallets, and savings products are now digitally enabled, too. Secondly, taking a longer-term view, Suncorp is supporting innovation with its Brisbane-based Digital Incubator Program. The first 90-day program commenced in June and saw fintech start-ups provided with much-needed resources, from business mentors to designers and data experts, to support them in creating new digital banking solutions. Thirdly, the digital drive will extend to broker channel activities. “Our focus is to use technology and increased automation to deliver a consistent and reliable service for our broker partners and customers,” Haslam says.

“Our focus is to use technology and increased automation to deliver a consistent and reliable service for our broker partners and customers” Glenn Haslam, executive GM of lending, Suncorp to deliver a reliable, seamless and efficient experience will drive growth into the future.” Suncorp’s commitment to digitisation was initiated by former CEO and MD Michael Cameron, who stepped down in August. During his four years in the role – and seven years as a board member – he was credited with kick-starting a “significant digital transformation”, creating the foundations for Suncorp’s next-generation approach to banking. Today, Haslam reports that technology and digitisation of services will take priority over the coming 12 to 18 months. There are three main ways in which this will happen. Firstly, tech will

“We recognise over recent times this has been a challenge for us, and we are absolutely committed to improving how brokers experience Suncorp. In addition, our marketleading retail banking digital platforms will help underpin our overall banking relationship with customers. Make no mistake – we are committed to a market-leading broker and customer experience.” Behind the scenes Possessing all the bells and whistles of a digitally enabled bank is one thing, but the impact is limited if back-of-house systems and processes aren’t watertight. A major bugbear for brokers in any

In partnership with

Glenn Haslam, executive GM lending, Suncorp Group

lending environment, turnaround times and serviceability requirements make or break a client relationship – especially when that client has become accustomed to instant, personalised and automated service as a result of the digital age. Taking direct accountability for Suncorp’s operations team and the origination systems that support broker partners, Haslam says he is “acutely aware” of these challenges. Having completed a “comprehensive end-to-end review” of the bank’s processes and systems, Haslam has identified key opportunities for automation and improved efficiencies to make those processes more reliable and decisions more consistent.

“We now have this investment well underway with our key technology partners on board, supporting us with significant upgrades to our origination processes, speeding up our document preparation, and automation of expense verification, to name a few,” he says. “The work is progressing quickly, and we’re pleased to see our broker partners are starting to experience the difference already. We are committed to ensuring Suncorp’s loan processing turnaround times continue to sustainably improve.” Suncorp’s broker school Another area of significant focus will be education. Following the rollout of the Banking Code of Practice,

Suncorp has devised an extensive support program for financially vulnerable customers, which uses the code as a springboard rather than a rulebook. Taking this a level higher, the Suncorp Learning Campus now offers more than 1,000 courses to help brokers build a diverse range of skills and capabilities. The idea is to provide comprehensive yet affordable learning programs to support staff retention in broker businesses, as well as new industry entrants in their professional development. “Professional standards are increasing, and we see this program as a meaningful way to support brokers with their professional development,” Haslam says.

The next piece of the puzzle is diversification. Doing its part to coax brokers out of their credit comfort zones, an SME Education program has been created to build “skills, knowledge and capability” in SME and commercial lending. More than simply providing another ‘business lending for beginners’ course, the program includes content suitable for experienced commercial brokers, too. “Our SME Education program was driven by the desire for aggregator partners and their broker networks to expand the services and solutions they offer to customers,” says Haslam. “We have developed a comprehensive program designed to help a broker take their business to the next level, so no matter where they are in their journey with diversification we can cater for those brokers.” Suncorp has been a vocal advocate for choice and competition in financial services, especially throughout the Productivity Commission and royal commission, and Haslam reports that work to lobby for greater choice is ongoing. His stance is that greater choice and access “will deliver better customer outcomes and drive innovation and professionalism”. However, more choice can often mean a higher rate of confusion among consumers, sharpening the demand for brokers as well as the need for those brokers to be professional, transparent and trustworthy in an increasingly complex marketplace. Sensing an opportunity, Haslam says there is a chance to “tell a better story” about what brokers do in their daily work. “If you ask most brokers why they are in business, they will say it’s about helping people get ahead. What we do as an industry is help Australians with the biggest financial investments and decisions they will ever make,” he explains. “It’s our combined responsibility to do this professionally, with integrity and by working together to achieve the best outcomes for our customers.” AB www.brokernews.com.au

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NE WS ANALYSIS

GETTING BACK ON TRACK Despite a favourable interest rate environment and APRA’s removal of interest-only caps, arrears data highlights a new trend across Queensland and WA. Australian Broker examines the prospects for mortgage-stressed borrowers in the country’s most challenged markets

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lending, and Patterson points out that ripple effects are still being felt five years on – with property investors being hit the hardest – despite the caps now being lifted. “Many borrowers are stuck in loans

“In some states there is the added issue of declining rents and property values. While renegotiating the terms of their loans could save them thousands and alleviate some of their financial stress, borrowers are

“While renegotiating the terms of their loans could save them thousands… borrowers are trapped in old contracts due to overzealous lending terms” Bianca Patterson, director, Calculated Lending with higher interest rates or less attractive terms as a result of APRA’s intervention with the interest-only cap, the resulting capital holding requirements and high serviceability assessment rates,” she says.

trapped in old contracts due to overzealous lending terms.” With economic performance muted, Patterson doesn’t expect to see a break on the horizon for these borrowers for “at least two or three

years”. The current lower interest rate environment and reduction in assessment rates will ease the mortgage repayment stress for new customers, but the borrowers who are already in trouble require urgent help from their brokers. The hardest hit Of the top 20 areas with the highest arrears, 16 are in Queensland or WA, while the top six suburbs with the lowest arrears are in Sydney. The S&P report suggests that “borrowers in areas with protracted property market declines have found it more difficult to ‘self-manage’ their way out”. Tracy Kearey, managing director at Home Loan Connexion, believes that perhaps Australia has a two-speed economy, with the WA and Queensland markets still struggling post-mining boom. The decline in the required workforce in the last five

RMBS PERFORMANCE WATCH Source: S&P SPIN Index

Non-conforming arrears statistics 32%

10 31–60 days

61–90 days

90+ days

TCLB (total current loan balance)

28% 8

24% 20%

6 $bn

refinancing conditions, lower property values and slow wage growth have created the perfect storm for mortgage arrears in Australia. But, for a country that generally boasts a healthy and diversified economy, emerging trends don’t quite add up: full-doc and low-doc borrowers are experiencing more mortgage stress than those with non-conforming loans. The latest statistics from S&P Global Ratings show that arrears of 90-plus days for full-doc prime loans increased from 0.7% in July 2018 to 0.8% in June 2019, while the same figure jumped from 3.1% to 3.7% for low-doc prime loans. On the contrary, arrears of 90-plus days for non-conforming loans improved over the year, albeit by an equally small margin, inching down from 1.57% in July 2018 to 1.52% in June 2019, while outstanding loan values for this sector of the market soared. Bianca Patterson, director of Calculated Lending, attributes the trend to multiple historic factors; however, she also notes that Australia is currently facing its worst economic growth since the GFC, and that is clearly affecting those who, on paper at least, should be best placed to pay their mortgages. “Borrowers are facing uncertain employment conditions and minimal salary increases while the cost of living continues to increase,” says Patterson. Backed by what the S&P report suggests, she says this income pressure leaves the “highly indebted household sector vulnerable to a sudden shift in economic conditions”. The situation only seems to have worsened following APRA’s aggressive caps to limit interest-only TOUGHER

16% 4

12% 8%

4% 0%

0 Apr 2001

Apr 2003 Apr 2005 Apr 2007 Apr 2009

Apr 2011

Apr 2013

Apr 2015

Apr 2017

Apr 2019

Tracey Kearey, managing director, Home Loan Connexion

years has drastically affected both states’ economies. “Due to industries being affected in non-metropolitan areas, employment opportunities aren’t as easily available compared to major cities such as Sydney and Melbourne,” says Kearey. “Lower employment naturally affects property prices following the rules of supply and demand, making it, as the report states, ‘more difficult to manage their way out of arrears’ by refinancing and selling.” Patterson reiterates the challenges faced by the two states. The borrowers’ negative equity positions prevent them from selling, as there will be residual debt and no security for them to hold. “Not being able to sell or convert their loans back to interest-only, or to lower rates, leaves some borrowers with no other option than to allow them to fall into arrears,” she says. Early intervention In the last 18 months, Patterson has been referred to more clients experiencing mortgage stress than at any other time in her eight-year career. “Many are taking responsibility and genuinely trying to get ahead but are forced to face default interest rates,

dishonour fees and unclear hardship processes as some of the roadblocks to getting on track again,” she says. A lender’s hardship team will often be unwilling to speak to the broker, despite the latter being best placed to know the

Bianca Patterson, director, Calculated Lending

addressing this issue in the near future. In the chapter ‘What to do when things go wrong’, it advises consumers to be “open and realistic” about their financial position, adding, “In turn, we will be compassionate in trying to

“We have found that regular contact with the client gives them the opportunity and comfort to discuss any financial issues which could alleviate future arrears” Tracy Kearey, managing director at Home Loan Connexion borrower’s financial situation. “When I have been allowed to sit with a customer on a call to the lender’s hardship line, it’s easier to see how much work needs to be done to assist the client, what solutions are offered and how these conversations should be handled in general,” she says. Patterson hopes the new Banking Code of Practice will assist lenders in

understand your situation and when discussing any way we can help.” Kearey believes it’s crucial for brokers to continue maintaining contact with their clients so that when the first loan repayment is missed brokers can quickly jump on the situation and speak to the hardship team to put a plan in place to get them into a better financial position. “Now more than ever, brokers need

to have systems in place to be regularly contacting the client at key events such as the anniversary or the fixed and interest-only expiry,” she says. “We have found that regular contact with the client gives them the opportunity and comfort to discuss any financial issues which could alleviate future arrears.” However, a step back from the coalface confirms that bigger forces are at play in the lending environment. The total current loan balance among full- and low-doc prime loans has slipped from $122.6bn to $116bn in the year to date, reflecting muted economic conditions as well as the tighter lending and serviceability criteria around these loans. The pendulum swing is an uptick in non-conforming loans, which posted a combined total current loan balance of $9bn this June, up from $4.6bn in July 2018, and their loan books continue to grow while their arrears, so far, remain low. How the trend will develop from here remains unclear, but what can be deduced from recent events is that, when it comes to serviceability, regulation does not always reflect reality. AB www.brokernews.com.au

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IN THE NE WS

THE CUSTOMER IS ALWAYS RIGHT ASIC’s latest report reveals concerning trends around the expectations placed on brokers, as well as the financial literacy of consumers. Australian Broker examines the findings and how they could influence future regulation of the industry

Sean Hughes, commissioner, ASIC

last working week of August was another big one for the mortgage broking industry. Hot off the heels of the government’s draft NCCP amendment, ASIC released its landmark report Looking for a Mortgage: Consumer Experiences and Expectations in Getting a Home Loan. According to ASIC commissioner Sean Hughes, the timing of the report is purely coincidental. However, over 77 pages, more than 2,000 customers told the regulator how their experience of dealing with a broker compared to dealing with their bank. There were seven headline findings (see box), but ultimately what ASIC wants is for lenders, brokers and aggregators to make it easier for consumers to compare loans, while better communicating the loan THE

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selection process. It’s a topic on which Hughes doesn’t mince his words. “My personal view on this is that if mortgage brokers want to be viewed by their customers as a profession,

then, like any other professional group, it’s important they source the best information and present it objectively so all the cards are on the table and people understand what their various options are.” Although ASIC says brokers need to be more consistent, little to no provision is made in the report for a consumer’s misaligned expectations or general lack of financial literacy. It’s merely the start of the catch 22s. Further, ASIC takes issue with the fact that 33% of consumers receive only one loan option from their broker – apparent empirical evidence that brokers are slacking on the job. Yet direct customers came out with even fewer options, as 69% borrowed from an institution they already banked with. Hughes maintains that ASIC is “not a black-letter regulator” and that the body has no interest in, for example, setting a minimum number of options to present to a customer. However, it is interested in tackling the “inconsistent” nature with which brokers present these options. “What is clear from this consumerdriven report is that [consumers] were disappointed. There were quite a few stories where people thought they were going to be getting

something better than they ultimately did,” says Hughes. Consumer expectations aren’t unfounded; many are rooted in such things as the figures pumped out by online loan calculators, and picking up after this is already a major bugbear for brokers. Consumers dislike it too, as detailed in the report, but ASIC plans to unveil its own interest rate comparison tool next year to “improve price transparency for consumers”. It will also collaborate with aggregators to standardise “what brokers do in terms of assessing the requirements and objectives of customers”. The Financial Rights Legal Centre claims that ASIC’s research provides “further evidence the broking sector needs reform”; however, industry associations report that broker market share continues to climb, largely on the back of customer satisfaction. The true picture likely lies somewhere in between, but unless moves are made to enhance the transparency of consumer surveys, brokers will remain vulnerable to the vested interests they can so easily promote. AB Turn to page 20 to see how readers reacted to news of the ASIC report

KEY FINDINGS OF ASIC REPORT 1. Consumers expect brokers to find the ‘best’ loan

5. Consumers have a mixed understanding of broker remuneration

2. 60% of consumers take out a loan with a lender they have an existing relationship with 6. The importance of finding a good rate decreases throughout the mortgage journey

3. Consumers who use brokers are different to those who go direct

4. How brokers present loan options is inconsistent 7. One in 10 (surveyed) consumers struggle to meet their repayments

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PEOPLE

Get involved in the discussion Share your thoughts at

brokernews.com.au

FROM THE FORUM

Top comments from trending stories on brokernews.com.au

ASIC DEMANDS BROKERS STEP UP On 29 August, ASIC released a report detailing the consumer experience of looking for a home loan, with a strong emphasis on the broker’s role in the process. The report found that all participants expected their broker to get them the ‘best’ home loan, which hinged on their understanding that the crucial difference between brokers and lenders is the access a broker has to a wide range of lenders and products. However, the report concluded that mortgage brokers were “inconsistent” in the ways they presented home loan options to consumers, at times offering little to no explanation for the reasoning behind their recommendations.

ASIC is just concentrating on interest rate – how naive. Our aggregators and peak bodies have supposedly been educating ASIC about our industry. With comments such as this coming from ASIC, it seems they are not doing it too well. Brokers are more accountable than banks when it comes to making recommendations. A staff member at Westpac (for instance) does not have to say that you can get a cheaper loan at ANZ or by going through a broker. They just push their own products knowing that there are most likely cheaper alternatives out there in the marketplace. It is a fact that since the broking industry was established banks have had to become more competitive by reducing margins and fees. I do hope that our peak bodies and aggregators aggressively challenge ASIC’s comments in the media. I would go as far as asking for a retraction and an apology. Mike

If brokers are to provide recommendations based on best interest of the client, then one simple solution would be to force all aggregators to have all lenders on their panel. Another solution would be for a standardised list of living expenses that all lenders and brokers would use. This list should be split into a mandatory list of living expenses and a discretionary list of living expenses. Stop targeting brokers and start implementing common-sense solutions. Robert Barto

ASIC needs to sit down with actual brokers and ask how they do their job, what drives their business model, etc. They might then actually be able to get some sensible feedback.

Reports like this don’t consider the detailed questions asked by a broker in the lead-up to an application. Moreover, you can’t ask a borrower to remember why and what policy dictated [what] the lender advised. Brendan Jordan

The percentage of broker-introduced loans is through the roof, NPS results rival Apple’s, and the public speaks out in favour of brokers. Yet another carefully crafted survey to make brokers look bad. Who doesn’t have a little whinge about their loan if asked? Seriously, we don’t need to launch a thousand ships just because someone says that they thought they were getting a better deal than they wound up with. This is the thinnest of excuses. Can we all just admit that a percentage of the public would make this claim even if they got exactly what they were promised? Are we supposed to pretend that nobody does that? Even the way the comments are made is an admission/ apology that the regulator realises that commission after commission and report after report is harming the industry. Who is benefiting from this? Young people are finding it much harder to get on the property ladder, investors are struggling to invest and retirees are losing their shirts while the Reserve Bank tries to counteract diminished revenue with lower interest rates. It’s not the rate; it’s the constant tinkering from regulators making banks not lend money. Everyone with a brain knows this, and now we have another excuse to “do more”. Aaron

Warwick Plumsted

I was going to suggest Commissioner Hayne might like to join. However, thought better of that as we would want some common sense to prevail. Mega Broker

www.brokernews.com.au

Agree entirely, Mike. Interest rate is almost always the last filter used in the process after the client’s needs are fitted to the lender’s specific policies and practices. Dozza

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Andrew Crossley

Friday 18 October 2019 The Star Sydney

Homeloans Ltd 2018 winner â&#x20AC;&#x201C; Best Non-Bank BDM

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PEOPLE

THE AUSTRALIAN MORTGAGE AWARDS 2019

Returning to Sydney next week, the 2019 Australian Mortgage Awards will recognise the outstanding talent that has helped the broking industry thrive during what has arguably been its toughest year to date

ON THE NIGHT

Date Friday 19 October 2018

Time 7.00pm – Networking drinks 7.30pm – Sit down for awards program 10.30pm – Drinks and dancing

last year has been anything but plain sailing for the finance industry. Although broker market share reached a new high of 59.7%, a turbulent market meant the third party channel settled its lowest volume of mortgages since the MFAA began reporting in 2015, with total broker loan values down 10.32% year-on-year. The mainstream banks have also had it tough, with changes to responsible lending obligations and the criteria borrowers must meet to secure finance. As a result, the major THE

AWARD SPONSORS

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Dress code Black tie

banks’ share of broker-originated mortgages declined 24.75%. Nonetheless, there have been some wins, from the government’s pledge to protect trail commissions to the rise in popularity of non-major, international and non-bank lenders. Proving that competition is alive and well, this year’s edition of the Australian Mortgage Awards will take place at The Star Sydney on 18 October. Helping brokers, lenders, aggregators and industry advocates celebrate the industry’s top talent,

Venue The Star Sydney

the awards comprise 29 categories, including awards for brokers, brokerages, BDMs, aggregators and lenders. Nominations opened in May and, despite the challenging year, thousands of entries were submitted. The nominations have been read and scored by a panel of independent judges and shortlisted in preparation for next week’s ceremony. The AMAs wouldn’t be possible without the support of the industry’s top names. This year they include event partner Westpac and award sponsors Adelaide Bank,

ALI Group, Bankwest, Bluestone, BOQ Broker, Deposit Power, Equity-One, FAST, the FBAA, La Trobe Financial, Liberty, the MFAA, Mortgage Choice, MSA National, NextGen.Net, OnDeck, Pepper Money and Vow. The event will be hosted by comedian Urzila Carlson and, helping to celebrate the talent that will drive the industry through 2020 and beyond, Samantha Jade, Duke Music and Linden Furnell are set to get the dance floor going quicker than a cash rate cut can boost the economy. AB

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AGGREGATOR AWARDS AGGREGATOR OF THE YEAR (UP TO 500 BROKERS) C entrepoint Alliance Lending F inconnect L iberty Network Services

AGGREGATOR OF THE YEAR (OVER 500 BROKERS) Astute Financial Management Connective FAST Finsure Loan Market Group Mortgage Choice Outsource Financial Specialist Finance Group

LENDER AWARDS BANK OF THE YEAR delaide Bank A ANZ B ankwest I NG M acquarie M yState Bank S t.George Banking Group S uncorp Westpac

A qua Door Home Loans Birdie Wealth Essendon Finance Innovative Homeloans Red Door Financial Group Red10 Finance Simplicity Loans & Advisory Small Business Loans Hub

FINTECH LENDER OF THE YEAR

LOAN SERVICES TEAM OF THE YEAR

F unding.com.au M oneyPlace O nDeck

Australian Broker of the Year

Australian Brokerage of the Year

This award recognises the most outstanding mortgage broker in Australia. This category was not open for nominations; instead the finalists will comprise the winners of the individual broker categories.

This award recognises the most outstanding brokerage operation in Australia. This category was not open for nominations as the finalists comprise the winners of the brokerage categories.

NEW BROKERAGE OF THE YEAR

P rospa S ocietyOne W isr

NON-BANK OF THE YEAR B etter Mortgage Management B luestone E quity-One F irstmac L iberty M ortgage Ezy P epper Money R esimac

OFFICIAL PUBLICATIONS

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MOST EFFECTIVE DIGITAL STRATEGY â&#x20AC;&#x201C; LENDER ankwest B Heartland Seniors Finance MyState Bank Pepper Money St.George Banking Group Westpac

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BROKER AWARDS BROKER OF THE YEAR COMMERCIAL aniel Green, Green D Finance Group Greg Samuel, Samuel Finance J ean-Pierre Gortan, Simplicity Loans & Advisory J igar Modi, Small Business Loans Hub J osh Egan, Astute Melbourne City South and Gippsland Kevin Wheatley, Bayside Residential and Commercial Mortgages Larry Zhou, Link Capital Finance T ada Souvannavong, Iconic Financial Services

BROKER OF THE YEAR PRODUCTIVITY A dam Burstein, Nu-age Lending Damian Medici, Damian Medici Loan Market J osh Bartlett, Loan Market Bayside J osh Egan, Astute Melbourne City South and Gippsland Kapil Virmani, Smartline Mark Davis, The Australian Lending and Investment Centre Michael Gavan, Innovative Home & Business Finance Michael Vasilaras, Loan Market, Bayside T rong Vivienne Than, Home Loan Experts

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BROKER OF THE YEAR INDEPENDENT lex Veljancevski, Eventus A Financial Anthony O'Flynn, IFA Mortgages & Finance Fabio DeCastro, Oxygen Home Loans Jigar Modi, Small Business Loans Hub Josh Egan, Astute Melbourne City South and Gippsland Louisa Sanghera, Zippy Financial Group Mark Davis, The Australian Lending and Investment Centre Stephen McClatchie, Loans Australia Trent Lee, Mates Rates Mortgage Brokers William Unkles, 40 Forty Finance

BROKER OF THE YEAR REGIONAL my Small, Professional A Lending Solutions Craig Russell, Priority 1 Lending George Mihalopoulos, Connected Finance George Smith-Roberts, Realestate.com.au Jarred Spurr, Sphere Finance Narelle Kerstan, Gloss Finance Robyn Beath, Astute Gippsland Trent Lee, Mates Rates Mortgage Brokers

BROKER OF THE YEAR - INSURANCE (MORTGAGE PROTECTION) D arryl Bevan, Direct Financial J ames Florance, Mortgage Choice North Lakes and Redcliffe M aria Nicoli, Loan Market â&#x20AC;&#x201C; Caroline Springs M axine Farmer, Maxon Finance R ichard Wright, V Home Loans R obyn Beath, Astute Gippsland S hareek Mohammed, Aussie Home Loans T ony Bice, Finance Made Easy

YOUNG GUN OF THE YEAR FRANCHISE A dam Wadley, Realestate.com.au Home Loans B rice Booker, Mortgage Choice Brisbane City D amien Page, Loan Market G race Gardner, Aussie Home Loans K amal Aeri, Smartline M elissa Truong Huynh, Loan Market

BROKER OF THE YEAR SPECIALIST LENDING my Small, Professional A Lending Solutions C lemens Zhang, Ayers Financial Group D aniel Green, Green Finance Group Jigar Modi, Small Business Loans Hub Jonathan Preston, Home Loan Experts M argaret Wilcock, MW Mortgage & Wealth M ark Davis, The Australian Lending and Investment Centre Tada Souvannavong, Iconic Financial Services

YOUNG GUN OF THE YEAR INDEPENDENT my Small, Professional A Lending Solutions C hristian Stevens, Shore Financial E velyn Clark, Accession Finance H oang Nam (Stephen), The Financiers Group Jonathan De Sensi, The Australian Lending and Investment Centre Jordan Beh, Insight Property Finance Joshua Trevitt, JT Home Loans M ohit Lal Pradhan, Home Loan Experts Thomas Kyle Kane Morison, Smart Move Home Loans Pty Ltd Vivian Wu, Ayers Financial Group

Event partner

BROKERAGE AWARDS BROKERAGE OF THE YEAR (1-5 STAFF) A telier Wealth A ussie Queanbeyan Birdie Wealth iChoice Pty Ltd InReach Finance Loan Market Bayside Mortgage Lending Specialists (MLS Finance) PFS Financial Services Small Business Loans Hub Zippy Financial Group

BROKERAGE OF THE YEAR (6-20 STAFF) 1 st Street Financial Astute Melbourne City South and Gippsland Empower Wealth Mortgage Advisory Entourage Finance Loan Studio Mortgage Choice Melbourne My Home Loan One Network Broking Option Finance Australia Pty Ltd Simplicity Loans & Advisory

BROKERAGE OF THE YEAR (>20 STAFF)

A stute Melbourne City South and Gippsland A telier Wealth Empower Wealth Mortgage Advisory Gloss Finance Home Loan Experts Loan Market Mordialloc Smartmove Professional Mortgage Advisors Supra Finance and Property Group X IN Mortgage Zippy Financial Group

BEST INDUSTRY SERVICE B roker Essentials C oreLogic E zidox F insure Broker Academy H LE Nepal Pvt. L oanworks N extGen.Net T rail Book Loans

BEST AGGREGATOR BDM Anthony Zveglic, Finsure Finance & Insurance Ben Livera, Mortgage Choice David Vizza, Finsure Finance & Insurance James Brett, Connective Jesus Herrera, Aussie Home Loans Matthew Cusworth, Connective Tim Schneider, Choice Tracey Najjar, Centrepoint Alliance Limited

BROKERAGE OF THE YEAR REGIONAL

A cceptance Finance Home Loan Experts Oxygen Home Loans Red Rock Group Shore Financial T he Australian Lending and Investment Centre

BEST CUSTOMER SERVICE FROM AN INDIVIDUAL OFFICE

BDM AWARDS

A stute Gippsland A ussie Queanbeyan G o Mortgage M ates Rates Mortgage Brokers M ortgage Choice Erina M ortgage Choice Nowra R egional Finance Solutions T ungsten Home Loans

MOST EFFECTIVE DIGITAL STRATEGY - BROKERAGE oan Base L Option Finance Australia The Perth Mortgage Specialist XIN Mortgage Zippy Financial Group

BEST INDUSTRY MARKETING CAMPAIGN NZ A La Trobe Financial Liberty NAB Prospa Suncorp

BROKERAGE OF THE YEAR DIVERSIFICATION A stute Melbourne City South and Gippsland A yers Financial Group L oan Market Picton M ortgage Choice Morphett Vale O ption Finance Australia Pty Ltd S mall Business Loans Hub S uccessful Ways S upra Finance and Property Group Pty Limited

BEST MAJOR BANK BDM Amanda Borg, CBA Tony Agliozzi, CBA Blake Hauber, Westpac Jane Arthur, ANZ Linda Oates, NAB Sam Tang, Westpac William Xi, ANZ

BEST NON-MAJOR BANK BDM Andrew Downie, MyState Bank Clem Marcocci, ING Emma Fiorentino, Bank of Melbourne Geoff Murphy, ING Grace Munro, MyState Bank Mira Doolabh, St. George Nancy Georgy, Bankwest Stuart Moore, ING

BEST NON-BANK BDM hitresh Luthra, Bluestone C Darren Stratford, Redzed Denya Dean, Bluestone Erin Manhood, Prospa Pasquale Caia, Pepper Money Patrick Moore, Liberty Suzanne Hemsworth, La Trobe Financial

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DATA

WESTERN AUSTRALIA

TAS SPOTLIGHT

Recovery underway but capital growth remains muted The WA property market is finally in a state of recovery following several years of steep decline, but investors shouldn’t look to it for capital growth any time soon. The strong restrictions on credit are a factor, as is the fact that Perth’s economy is still not particularly strong, limiting the potential for population growth and demand to soak up the existing housing stock. BIS Oxford Economics’ Residential Property Prospects 2019 to 2022 report foresees growth on the horizon for Perth, but not at significant levels. “Total median house price growth of 7% is forecast in the three years to June 2022, with a corresponding rise of 8% for median unit prices,” reports Angie Zigomanis, associate director at BIS Oxford Economics. “With conditions unlikely to improve in the immediate term, notable price rises are not expected to return until 2021/22 as the economy shows stronger signs and excess stock is absorbed.”

Area

Type

Median value

Quarterly growth

12-month growth

Perth

$875,000

-2.7%

-6.7%

WA Country

$320,000

1.5%

0.0%

Perth

$685,000

-1.4%

-2.8%

WA Country

$200,000

-2.2%

QUEENSLAND

State snags the crown for luxury homes worldwide For the first time ever, the Gold Coast has been named a top worldwide location for premium residences, placing 27 out of 46 in KnightFrank’s Prime Global Cities Index for Q2 with 1.1% annual growth in prices to the end of June. The report indicates this “reflects stability and depth in the city’s established luxury home market”. There are several residential projects in the pipeline for downsizers with money to burn, and vacancies have also eased up slightly, with the average rate rising to 2.8%, according to the Real Estate Institute of Queensland’s June quarter data. This means the Gold Coast rental market is in a healthy place for the first time in 10 quarters. However, the state capital is not to be disregarded, as it was second only to Sydney and landed higher than Melbourne in the Prime Global Cities Index, following 2.2% year-on-year luxury market growth.

Area

Type

Median value

Quarterly growth

12-month growth

TASMANIA’S NEW CHALLENGE Following Hobart’s market-defying performance in the face of a national downturn, affordability is now in decline, placing even more pressure on population growth had a nigh-unchallenged run at the top of the mountain throughout the national property downturn, but as things pick back up in major markets, the city may have already started burning out. CoreLogic’s Home Value Index indicates that over the three months to July 2019 Hobart had to share the spotlight for best-performing capital city with Melbourne, as both were the only capitals to record positive growth during that period. And in the month to July, Hobart’s 0.3% growth was outstripped by Darwin’s 0.4% increase. “Affordability is becoming more challenging. Despite an undersupply and strong population growth, growth in the median house price in Hobart is estimated to have slowed to only 3% in 2018– 2019,” explains Angie Zigomanis, associate director of BIS Oxford Economics, in the company’s Residential Property Prospects 2019 to 2022 report. “With net migration inflows expected to begin to ease as the affordability of the Tasmanian market becomes less attractive, house and unit price growth is expected to remain modest and total 4% in the three years to June 2022.” The loss of affordability is certainly a blow to Hobart, which initially gained fame for being the most affordable capital city in the country. CoreLogic research analyst Cameron Kusher affirms that rising prices have caused the share of properties sold at a price point of under $400,000 to plummet – the proportion of such houses nosedived from 43.0% in the 2017/18 period to just 31.8% in 2018/19. This issue was not limited to Hobart, as the spillover effect caused values in regional Tasmania to rise as well. In 2017/18, almost all units in this market sold at under $400,000, but over 2018/19 only 85.8% sold at that price point. AB HOBART

$475,000

-0.5%

0.0%

Median price (houses)

QLD Country

$435,000

0.0%

-1.6%

$256,374

Brisbane

$305,000

-6.0%

-12.3%

QLD Country

$362,000

-1.2%

-1.3%

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Tasmanian property market's solid run to continue for some time yet The Tasmanian property market has performed exceptionally well over the last two years, and while growth has slowed somewhat, I’m optimistic that we will continue to see strong demand in this property market. According to CoreLogic, annual dwelling values grew 3.1% in Hobart in August, while regional Tasmania was the only major region where values sat at historic highs. In recent months, we have seen a good mix of buyers and refinancers thanks to the record-low interest rate environment that has been created by back-to-back cash rate cuts from the Reserve Bank of Australia. Looking ahead, demand from buyers is likely to be fuelled by the short supply of units in Hobart, while in Launceston a number of infrastructure projects should help sustain employment growth, which will have a knock-on effect on demand for property.

Peter Reynolds Broker, Mortgage Choice, Launceston

SUBURB TO WATCH: NEWNHAM

Brisbane

BROKER PERSPECTIVE

Median price (units) $201,815

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

1.4%

22.1%

27.5%

5.7%

12-month growth

3-year growth

5-year growth

Indicative gross rental yield

4.1%

22.0%

28.1%

6.7%

HIGHEST-YIELD SUBURBS IN TASMANIA Suburb

OPPORTUNITIES AND KEY INFRASTRUCTURE

Type

Median price

Quarterly growth

12-month growth

BERRIEDALE

$155,000

-8%

-39%

ZEEHAN

$87,100

ROSEBERY

$89,000

19%

ACTON

$172,500

GAGEBROOK

$210,000

20%

HERDSMANS COVE

$216,000

22%

CLARENDON VALE

$230,000

19%

BRIDGEWATER

$195,000

WAVERLEY

$182,500

MAYFIELD

$185,700

15%

RAVENSWOOD

$179,500

12%

GEORGE TOWN

$183,500

15%

AUSTRALIAN CAPITAL TERRITORY

Area

$500m

$711m

to be invested over 10 years in upgrading highways and improving road safety

allocated to the Plan to Build Your Future initiative in 2018

$324m

4,000

earmarked for teachers, schools and education infrastructure

new hotel rooms reportedly in the pipeline as tourism grows

Type

Median value

Quarterly growth

12-month growth

Canberra records strong economy, jobs and population growth In terms of its economy, Canberra is one of the best capitals in Australia. As the political centre of the country, it has a consistently strong job market, leading to steady population growth and high demand for housing. “The ACT is home to the country’s largest employer, the APS, which has little or no chance of large redundancies, and guaranteed growth,” explains Michael Kumm, president of the Real Estate Institute of the ACT. “Because of the increasing population, new regions have been created in Canberra, but some are lacking both shopping facilities and work areas. This is placing a strain on our road system and subsequent local inner migration.” The state government has increased the supply of medium- to high-density land for construction, but Kumm says the ACT has “vast tracks of land that are unsuitable for residential accommodation”. “In the not-toodistant future, the state will start to face restrictions in regard to its borders,” he predicts.

Canberra

$695,000

2.3%

3.6%

Canberra

$425,000

0.6%

1.2%

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DATA

VICTORIA

Melbourne

$471,000

-1.0%

-3.0%

VIC Country

$370,000

0.6%

3.4%

Melbourne

$370,000

-1.3%

-6.3%

VIC Country

$278,000

1.1%

-1.5%

MEDIAN HOUSE AND UNIT PRICES

Sydney units outperform houses as investors seek high yields

$1,000,000

Median value

Quarterly growth

12-month growth

Sydney

$461,875

1.3%

2.7%

NSW Country

$467,000

-0.9%

0.0%

Sydney

$338,500

0.6%

1.5%

NSW Country

$400,000

0.0%

1.5%

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Cleared

Uncleared

Clearance rate

62.5%

PERTH Total auctions

Cleared

Uncleared

2 60%

Houses

Sydney Melbourne Brisbane Adelaide

Perth

Hobart

$477,500

$330,000

$100,000

$450,000

$200,000

$355,000

$300,000

$470,250

$500,000 $400,000

$538,000

$600,000

$715,000

$700,000

$685,000

$800,000

$870,000

$900,000

Throughout its period of decline, Sydney’s units outstripped houses. CoreLogic head of research Tim Lawless points out that, despite the “unprecedented” amount of new apartment stock available, unit values in Sydney and Melbourne consistently outperformed detached housing during the downturn, and are continuing to do so as the market recovers. In addition, what the downturn may have also shown investors is that a strict focus on capital growth may not always pay off, as Real Estate Investar CEO Clint Greaves has observed. “An interesting trend that we have seen is the focus on higher cash flow and equity or addedvalue property investment opportunities – there has been an increased focus on high-yield and positive cash flow properties by investors,” he says. “This is likely to be driven by the fact that investors cannot rely on capital growth to generate returns in the current market, along with the need to meet increasingly strict bank servicing criteria.”

Type

Clearance rate

NEW SOUTH WALES

Area

Total auctions

Darwin

Units

$436,000

12-month growth

ADELAIDE

$312,000

Quarterly growth

$441,000

Median value

$410,000

Type

The number of homes taken to auction across the combined capital cities increased to 1,633 this week, returning a preliminary clearance rate of 75.7%, while the previous week saw 1,533 homes taken to auction, returning a final clearance rate of 72.3%. This is the fifth consecutive week with an average clearance rate higher than 70%. Over the same week last year, auction activity was higher, with 1,983 homes taken to auction, but the clearance rate of 51.8% was significantly lower. Melbourne was host to 824 auctions this week, returning a preliminary clearance rate of 75.7%. Over the same week last year, a clearance rate of 54.1% was recorded across 988 auctions. Sydney recorded a preliminary clearance rate of 80.3% from 580 auctions, whereas one year ago 669 auctions were held across Sydney, returning a final clearance rate of 48.6%.

$535,500

Area

WEEK ENDING 15 SEPTEMBER 2019

$643,000

CoreLogic’s Home Value Index for July 2019 indicates that Melbourne made a strong recovery in the three months to July, with an overall growth rate of 0.1% – on par with the growth of Hobart, which had led the national market for quite some time. Melbourne held on to its momentum over June and July, with prices rising by 0.2%. CoreLogic head of research Tim Lawless pinpoints low interest rates, easier access to credit, post-election market confidence and tax cuts as the major drivers. These factors are creating a favourable environment for vendors as demand soars – that demand is expected to soak up the wave of unit supply and sustain this market’s performance. “Despite an unprecedented amount of new apartment stock, Sydney and Melbourne unit values have consistently outperformed the detached housing sector through the downturn, and this trend is continuing into the recovery phase,” Lawless says.

CAPITAL CITY AUCTION CLEARANCE RATES

$300,000

Tide changes in Melbourne as growth turns positive

Canberra

CAPITAL CITY HOME VALUE CHANGES Capital city

Weekly change

Monthly change

Year-to-date change

12-month change

Sydney

0.5%

1.6%

-1.8%

-5.9%

Melbourne

0.6%

1.7%

-1.5%

-4.9%

Brisbane

0.1%

0.3%

-2.0%

-2.1%

Adelaide

-0.1%

-1.6%

-1.2%

Perth

-0.2%

-0.7%

-6.4%

-8.9%

0.3%

1.2%

-2.2%

-5.3%

Combined 5 capitals

*The monthly change is the change over the past 28 days

BRISBANE CANBERRA Total auctions

Cleared

Uncleared

Clearance rate

Total auctions

Cleared

Uncleared

Clearance rate

57.1%

76.1

SYDNEY Total auctions

580

Cleared

335

Uncleared

Clearance rate

80.3%

TASMANIA

MELBOURNE Total auctions

824

Total auctions

Cleared

521

Cleared

Uncleared

167

Uncleared

Clearance rate

75.7%

NORTHERN TERRITORY

Investor dreams shattered as minimal growth is forecast Darwin’s investors may be hoping for a break, but BIS Oxford Economics forecasts minimal growth. “Without a strong turnaround in the economy or the demand-supply balance, only moderate house and unit price growth of 7% and 8% respectively is forecast to June 2022, mainly toward the end of this period as supply begins to tighten,” says the firm’s associate director, Angie Zigomanis. The lack of employment opportunities and job security in Darwin has held back demand as well as population growth. Stringent limitations on obtaining credit are also making it difficult for buyers to snag established properties. In addition, the market is languishing in oversupply, with vacancy rates off the charts. Over the 2018/19 period, total returns from residential property also declined throughout the state, according to CoreLogic data. Rents fell by 4% in the 12 months to July, with very few premium sales.

Area

N/A

Type

Median value

Quarterly growth

12-month growth

Darwin

$535,000

0.0%

1.9%

NT Country

$415,000

-2.3%

-3.4%

Darwin

$380,000

0.0%

-1.8%

NT Country

$267,500

-3.1%

-1.3%

All data sourced from CoreLogic.com.au

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PEOPLE

Aggregator Aussie Home Loans

IN THE HOT SEAT

Franchisee and broker Evelyn Burton explains how she turned a gift for numbers and a knack for customer service into a successful broking and mentoring career

Who or what inspired you to become a broker? Right from the start, having achieved good A results in maths at school I have always felt I was good with numbers. It seemed to come easy, and I enjoyed the challenge of searching for appropriate solutions. So when the opportunity came up to join a large bank I jumped on board and within a few short years became the head teller of their largest branch in Sydney. Whilst there I enhanced my financial skills and found a real passion for customer service, so when the mortgage business that my husband started had grown to the point where I could join him and have flexible working hours to suit our daughter, I dared greatly and left the safety of the full-time PAYG world. This is where I have since found my purpose, my true vocation.

What’s one of your recent career highlights? This year I was graciously nominated by A one of my mentees for the MFAA’s Women in Finance awards, in the category of Mentor of the Year. I was absolutely delighted. It was only in late 2018 that I started a mentoring program for new brokers and support staff. Being named a finalist was more than I could have expected, but to me the biggest highlight was being able to celebrate with my fantastic staff and colleagues.

If you won $1m, what would you do with it? Well, this is a tricky one with so many A possibilities, but I think I would ensure my family are all OK and managing, then I would want to donate a goodly sum to two charities close to my heart: Starlight Children’s Foundation, where I am a volunteer wish granter, and Aussie’s charity partner Oz Harvest, which provides food for the destitute and homeless. I would possibly want to save a

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small sum for myself and maybe buy a bigger motorbike too. What’s one thing, personal or professional, that you hope to achieve before 2020? On a professional level I am working A towards assisting my two new mentees to

achieve $2m a month in settlements and then make this a consistent goal through 2020. On a personal level, I hope to have built my profile on social media such as LinkedIn, Google and Twitter to become a recognisable presence, and to utilise the skills that I recently acquired while attending the ANZ Doyenne program. AB