Australian Broker magazine Issue 6.17

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ISSUE 6.17 September 2009

NAB promises brokers certainty and support  NAB Broker

During these tough economic times, it is important for sales people to remember one of their key tasks: establishing creative sales openers

positive about Challenger purchase NAB Broker’s regional general manager, Matt Lawler, says the decision to snap up Challenger’s mortgage management business, including aggregators PLAN, Choice and FAST, will bring certainty to brokers and a higher level of support.

The $385m deal, subject to regulatory approval, gives NAB control of a network of 5,700 brokers.

“It gives them some certainty.

We are saying to the whole market that this industry is now an embedded part of the financial services landscape,” Lawler said.

“There has always been speculation about how much the banks support the industry. We think it’s very viable and has an exciting future, and we want to part of that,” he added.

Besides the certainty, Lawler said NAB would look to support brokers via a broader mix of products, services, better infrastructure and technology to improve efficiency. He added that NAB would use its balance sheet strength to push on with white-labelling. “Challenger had a plan for mortgage management, but was unable to implement it when they got into trouble. Now we are able to help,” he said.

Aussie executive director James Symond said while the proof

The point of sale

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Selling to your segment There are various ‘segments’ of customers that brokers deal with.

We help you to categorise your clients Page 24 would ultimately be in the pudding, he could not see it being anything other than a positive for the industry.

“This shows strong commitment and strength from NAB that we have not seen from them before,” he said. “It puts to bed any doubt in the industry that the broker

More on the NAB/ Challenger deal: • turn to page 12 for more reaction and analysis • broker reaction: www. brokernews.com.au/forum/

profession will do nothing but thrive.”

“The fact that the major banks are investing in non-bank lending and the broker channel vindicates the broker model as an extremely effective and appropriate way to reach consumers,” he added.

“In my experience, having the CBA as a one-third shareholder of Aussie has only added value to key relationships,” Symond said.

He urged brokers from PLAN, FAST and Choice to “give their new owner a go” before any hasty reaction.

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Credit unions seek liquidity solution Credit unions face twice as many fees for government wholesale funding as the Big Four, so they want to establish their own fund Page 20

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News MFAA says proposed licence fee fair

The MFAA appears satisfied with the fee schedule for Australian Credit Licences (ACLs) proposed by the government.

Draft regulation documents have set the entry level application fee for an ACL at $450, provided the application is made electronically. Nonelectronic applications start at $565.

This entry-level fee applies to an application that includes only one credit representative, and then rises depending on how many representatives are included in the application.

Applications with between two and five representatives will cost $1,050 for electronic submission, rising up to as much as $21,000 if over 100 representatives are included in the application.

Fees for the lodgement of an annual compliance certificate will be charged using the same scale.

“The fees proposed are about what we expected,” said MFAA CEO Phil Naylor.

The industry body is also happy with the 10% discount offered to applicants that qualify for the

streamlined licensing process, which includes ADIs and brokers already licensed in WA. “We did not expect any discount associated with streamlining,” Naylor said. “The more important issue is to ensure that there is no double dipping by brokers who have already pre-paid their state licence fees. We are working with ASIC and Treasury on this.”

But Sarah Eifermann from SFE Loans said $300 would be a more reasonable entry fee, “at least in the first few years”.

“The $450 fee seems a bit steep, especially when we are then expected to pay [for membership of an] industry body, EDR and PI insurance. As a sole operator, that puts my annual costs upwards of $2,000,” she said.

Eifermann said licence fees would make brokers question the need for industry body memberships.

Sarah Eifermann

Key points  government proposes a $450 entry fee for licences  MFAA says cost in line with expectations  broker Sarah Eifermann disagrees, believes $300 fairer  raises questions about fees to industry bodies  financial planning fees as high as $17k “Up until now, the benchmark for perceived ‘professionalism’ has been based on your accreditation with either the FBAA or MFAA. This will no longer be the case.

“Someone at the MFAA would need to justify being a member to me,” she said.

However, even if the fee charges remain as proposed, they will still dwarf those that financial planners must pay to become authorised representatives of some dealer groups.

Broker-turned-planner Mandy Kilgore, from Lomond Financial Services, said fees were around $16,000–$17,000 for the first adviser and $4,500-$5000 per adviser thereafter.

“That covers systems, PI and I assume any ASIC fee. But it does vary from one licensee to another,” she said. She added that fees were usually deducted from fortnightly commissions.

“Licensees then also take a commission split – the same kind of model as aggregators really,” she said.

Membership of the FPA is not mandatory for advisors, but Kilgore said most groups insist on having a Diploma in Financial Services.

www.brokernews.com.au Publishing director.... Justin Kennedy Managing editor.....George Walmsley Editor........................Larry Schlesinger Journalist.............................Tim Neary Production editor............ Tim Stewart Design manager..... Jacqui Alexander Designer...................Jonathan Phillips HR manager.................. Julia Bookallil Marketing manager.........Danielle Tan Marketing coordinator... Jessica Lee Traffic manager............. Stacey Rudd Advertising sales Simon Kerslake t: 02 8437 4786 f: 02 9439 4599 simon.kerslake@keymedia.com.au Rajan Khatak t: 02 8437 4772 f: 02 9439 4599 rajan.khatak@keymedia.com.au Editorial enquiries Larry Schlesinger t: 02 8437 4790 f: 02 9439 4599 larry.schlesinger@keymedia.com.au Distribution Australian Broker is available by subscription. E-mail all subscriptions and mailing enquiries to: subscriptions@keymedia.com.au t: 02 8437 4731 f: 02 8437 4753

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 can accept no responsibility for loss. © Key Media 2009 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

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Survey: Australian brokers valued as information providers Top reasons borrowers use a broker …in Australia (ranked in order of importance)

• to see a range of loans from

range of lenders • to save time • to get a better deal • they offer independent advice • available outside working hours

…in the UK (ranked in order of importance)

A new survey, that looked at what motivates UK and Australian borrowers to use a mortgage broker, found that Australian brokers are valued more highly for the information they provide.

But in the UK, convenience is the major factor.

Carried out by Retail Finance Intelligence (RFI), the survey asked borrowers if they agreed with various statements about why they would use a mortgage brokers. Nearly four out of five (79%) Australian respondents agreed that seeing a broker

CBA: more brokers moving aggregators The Commonwealth Bank has defended its $100 “accreditation transfer fee” imposed on brokers that switch aggregators, saying that it is necessary to cover the administrative cost of “changing details”. The bank has also noted an uptick in the number of brokers switching groups.

“There are quite a lot of brokers moving between aggregators

at the moment, which places a demand on our resources,” a spokesperson for the bank said.

In response, the aggregator Connective, which has seen a big rise in broker numbers, said it would pay the transfer fee for newly joined brokers, provided they met its “quality performance requirements”. Connective principle Mark Haron said he

• to save time • to get a better deal • they provide advice on

all products • available outside working hours • they offer independent advice

Source: The Lucky Country?

(Retail Finance Intelligence)

was disappointed by the latest fee being imposed on brokers by the bank, and questioned the explanation given. “Other banks appear able to do the process cheaper, or just see it as a cost of doing business the in third party market,’ he said.

Haron said the decision to pay the transfer fee was taken to “promote competition and free market movement in an industry that’s becoming restrictive”.

One reader on Brokernews backed Haron: “How much does it cost to give a broker a new code?

The answer is not much. A couple

meant they saw “a range of loans from a range of mortgage lenders”, while just over twothirds (67%) agreed that brokers “can save me time”.

In comparison, 62% of UK borrowers that had taken out a loan through a broker or were planning to do so strongly agreed that using a broker saved them time, while 57% agreed that brokers were useful because they could show consumers a wide range of loans.

In the report, RFI commented that it appeared that “convenience was a greater factor for UK borrowers using a broker, while Australian borrowers were more likely to see brokers as having more information, and therefore able to provide more mortgage options and be able to negotiate from a position of strength”.

Key points  CBA charging brokers $100 if they transfer aggregators  bank says fee is to cover admininstration costs  also notes increasing number of brokers transferring aggregators  Connective will pay transfer cost for brokers joining up  Brokernews reader claims it takes “five minutes” to transfer accreditation of pieces of paperwork and five minutes of data entry.”

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News

Frustrated broker questions motives of educators A broker who spent nearly $3,000 and 18 months completing a mortgage diploma has been left with a qualification that no one will recognise.

Mark Caesarowicz, director of Positive Lending Solutions, said he now wondered if some education providers were driven purely by a desire to make money out of the industry. From 2000 to 2002, Caesarowicz studied for and obtained a Diploma in Mortgage Lending (DML) through the Securities Institute of Australia (subsequently taken over by Finsia, now part of the Kaplan educational group).

He said he undertook the course following a joint presentation made by the MIAA (now the MFAA) and Securities

Institute at the time. According to Caesarowicz, the DML was “a hundred times” more complex than the required Certificate IV. But when he applied for membership of the MFAA this year (the Certificate IV is the minimum requirement), he was told his qualification was not recognised and that he would need to apply for recognition of prior learning (RPL).

“The education unit of MFAA told me that FINSIA had not registered it with the Australian National Training Authority (ANTA). They said I could apply for RPL via a NSW University.”

On 2 July this year Caesarowicz applied for an RPL for both Certificate IV and Diploma in Financial Services with Kaplan.

St.George: new commission model easier to explain With the industry on the verge of becoming regulated, Steven Heavey, St.George Bank’s GM for intermediary distribution, says its new commission structure

Steven Heavey

makes it as easy as possible for brokers to explain their earnings to customers.

His comments follow the bank’s recent announcement of a new commission structure, which he said would prodide certainty about commission earnings.

He said the process started in June last year when St.George first addressed some of the elements it believed to be important in its broker commission structure.

“There was an opportunity to earn high levels of commission in that version, but it was also highly complex. And in some areas, the broker could not influence the outcome,” he said.

Under the new structure, upfront commission will by 0.50%

At the end of July he was told by Kaplan that he did not meet the requirements for a Cert IV RPL due to not meeting “all the competencies covered by this qualification”; nor did he qualify for a Diploma in Financial Services RPL due to having “not completed a course which covers the same competencies as this qualification” At this point Caesarowicz became “frustrated” and contacted an alternative training provider (AAMC) where he obtained his Cert IV RPL based on his experience.

“I have been in the banking and finance industry for 38 years, but only AAMC was sympathetic.”

Caesarowicz finally achieved MFAA, aggregator and COSL memberships on 20 August.

On 27 August Kaplan told Caesarowicz that due to a mismatch in the “units of competency” between the Diploma of Mortgage Lending and the Certificate IV it was “not able to give an automatic exemption into the certificate for students that have completed the diploma”.

“The best that we can do is to go through the Recognition of Prior Learning (RPL) procedure for students that have completed the Diploma and determine, on a case by case basis, that coupled with appropriate industry experience they should be given an exemption into the Certificate,” a Kaplan representative said.

Caesarowicz called the offer “unacceptable”.

on standard loans, with an extra upfront of 0.10% earned for a conversion ratio greater than 70%. Trail commission of 0.15% per annum will be payable from year one, with extra trail of 0.05% per annum paid where run off is less than 15%.

Further changes include trail payments being calculated on gross balances (meaning offset account balances are no longer netted off), mandatory electronic lodgement and the removal of the utilisation clawback on portfolio/ line of credit loans Heavey also made the point that St.George was one of the major lenders who paid trail in year one – “something that a lot of brokers find disappointing with some of the other lenders.”

He said that the feedback to the changes had been “extremely positive” so far. “Knowing exactly what you are going to earn makes life a lot simpler.”

Supporting the St.George initiative, Colin Lamb, director at Mortgage Solutions Australia in Perth, said that it was always good to keep commission structures simple.

“Complex commission structures are very hard for the aggregator, broker and for the bank,” he said.

Key points  upfront commission 0.50% on standard loans  extra upfront of 0.10% for conversion greater than 70%.  0.15% trail from year one  extra 0.05% trail per annum where run off less than 15%.  trail calculated on gross balances  mandatory electronic lodgement  utilisation clawback removed

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News

Read informative profiles of broker industry leaders at www.brokernews.com.au

Industry under fire from HSBC NAB Broker and BankWest have come to the defence of mortgage brokers, after they came under a blistering attack from HSBC Australia’s head of personal financial services, Graham Heunis.

John Flavell

HSBC quit the broker space in December 2006, selling its broker originated residential mortgage book to FirstMac – and Heunis said it had no plans to return to the third-party market.

Heunis said it was not possible for HSBC to be a trusted advisor while working through intermediaries, and suggested that brokers were driven purely by which lender was offering the best price at the time.

Whoever is offering the best price, gets the volume, he said.

“We exited the broker market because we did not believe we could add value to customers through brokers,” Heunis said.

“It’s not an area we want to play in, and we have no intention to do so,” he added.

However, fresh from acquiring the mortgage management and aggregators businesses from Challenger, John Flavell head of sales at NAB Broker, hit back.

He said it was up to the lender to

enable brokers to become trusted advisors, and to build great relationships with customers.

And Ian Corfield, chief executive of retail at BankWest, backed Flavell, and said regulation would help sort out the issues raised. ‘Some of the advice has been poor, but there are also some fantastic broker businesses out there,” he said.

When HSBC quit the broker space in December 2006, brokers had helped the bank generate a portfolio of over 10,000 customer accounts with a total book value of $2.26bn – more than a third of its loan book at the time.

It stopped accepting residential mortgage applications from brokers after 16 February 2007 when Stuart Davis, then CEO of HSBC Bank Australia, said the decision to quit the broker space was because it precluded two of its greatest strengths – “our service proposition and the ability to cross-sell our products”.

Ironically, in the time since HSBC exited the third party market, cross-selling of mortgages via brokers has become a major feature of the industry – and currently there is a big drive to transform the

Ian Corfield

broker service proposition to focus on advice.

Heunis, Corfield, Flavell, along with Bendigo Bank’s chief GM for retail and distribution, Russell Jenkins were part of a panel discussion at the Retail Financial Services Forum looking at how to rebuild retail financial services in the aftermath of the GFC.

For more on this discussion go to: www.brokernews.com.au/news/ breaking-news/hsbc-australia-noreturn-to-broker-market/36693

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www.brokernews.com.au

News movers & shakers Name: Paul Cameron From: IMB Banking and Finance.

To: Better Mortgage Management (BMM) Title: Lending Operations Manager Better Mortgage Management (BMM) has appointed Paul Cameron to the position of Lending Operations Manager in BMM’s Brisbane office. Paul joins our team after 20 years in various roles with the St.George Bank and more recently as a BDM for IMB Banking and Finance.

Name: Grant Levitas From: NAB Broker To: Solution4 Software Title: Sales Manager Levitas has joined Solution4, a software vendor that recently launched ‘SENRO’ – an independent industry CRM for mortgage brokers and financial planners. Having gone through the introduction of mortgage regulation in the UK and product diversification as a financial planner, he brings with him 10 years of international experience in the financial services industry. Grant will be helping Australian mortgage brokers unlock value from their existing client bank using an independent client/business management system, which supports product diversification and mortgage regulation.

Name: David Bell, CEO From: Australian Bankers’ Association (ABA) To: TBA Following almost nine years in the role, David Bell, CEO of the Australian Bankers’ Association, will step down from the position once a replacement is found. ABA chairman and CBA chief, Ralph Norris, said Bell would be moving to another role, but would remain as ABA CEO until a replacement is found. Bell’s contracted period ends in July 2010. “While I have announced that I am stepping down, there still remains a lot of work for the ABA to do to make sure that the numerous regulatory proposals and Parliamentary Committee reviews are dealt with in the best possible way. I will continue working at full speed on these issues,” Bell said.

Life gets harder for smaller groups as RAMS cuts ties The struggle for smaller aggregators to operate independently has become harder, after RAMS confirmed that up to 18 aggregators would have their accreditation with RAMS cancelled.

This follows moves made by BankWest and ING last year to limit their relationships to the country’s largest aggregators.

At the time, BankWest urged smaller aggregators to join up with bigger groups to keep the bank on their panel. James Hickey, a banking partner with Deloitte Actuaries and Consultants, said that banks would look to reaffirm that control “by encouraging consolidation ... and by trying to be selective about the groups that they work with”.

Explaining the RAMS decision, Lynne Wyatt, head of brand and marketing at the non-bank lender, said it was ‘rationalising its broker panel” due to being inundated with business this year and battling to operate within its SLAs. “To service the majority, we are looking at brokers that don’t do a lot of business with RAMS,” Wyatt.

She said RAMS was looking at cutting ties with between 16 and 18 broker groups. “We are trying to rationalise our numbers to keep service levels up.”

A very disappointed Paul Gollan, CEO of Australian

Lynne Wyatt

Mortgage Brokers (AMB) said he was one of the groups that would lose accreditation with RAMS. “I have just been told…that AMB is among the 18 aggregators who will be advised in writing next week that they are losing their accreditation,” he said in an e-mail to master franchisees. Gollan said the decision had been taken despite AMB lifting its volumes in August with $5m RAMS applications pending approvals.

He said volumes had been low in the past six months (and RAMS had told him they needed to be higher) but he blamed this on “outrageously slow service for much of the period”.

Wyatt said RAMS would look to honour all deals in the pipeline.

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News – NAB buys Challenger

FAST: NAB buy a Lawler: no pressure to win for all brokers sell NAB products NAB’s acquisition of Challenger’s mortgage business is a significant win – not only for brokers, but for the industry in general, said David O’Toole, FAST’s national sales manager.

He said that many brokers had been wondering if banks were trying to push brokers out of the industry, but the scale of this purchase confirmed that NAB held the view that brokers would be part of the mortgage landscape for the long run. “Other major lenders have also commented publicly on improved ROEs from the broker channel, and that they have a long-term commitment to the broker industry,” he said.

O’Toole said FAST would not be changing how it operated, as a result of its new parentage. “On a daily basis, our commitment is to continue to work with all FAST brokers to assist them to grow organically and through diversification – especially now as we approach the new regulatory environment,” he said.

“The purchase is not about operational efficiencies or costing savings. In fact it is an expansionary move that we believe will allow us to consider a number of service and product alternatives for existing FAST brokers,” he said.

A turning point for the industry: O’Donnell In time, NAB’s acquisition of Challenger’s mortgage business will become recognised as a key turning point for the mortgage industry, said Brendan O’Donnell, CEO of Choice.

“I believe this is just the beginning. We can expect to see the other major banks reviewing their strategic positioning in the market,” O’Donnell told AB. O’Donnell also said it spelled an end for brokers to the uncertainty many had experienced in the past 18 months.

And along with the increased sense of security, NAB’s involvement gives the Challenger group access to additional lines of funding.

Challenger business to be rebranded - Lawler

O’Toole said questions may be raised about pressure to increase NAB Broker volume from FAST’s broker base, but assured brokers that they would not be obliged to write any particular loan.

NAB CEO Cameron Clyde described the deal as a “compelling opportunity” to enhance the bank’s growth opportunities.

The Challenger mortgage management business will be re-branded, following NAB’s successful acquisition. “There will have to be a name change,” confirmed Matt Lawler, who said a decision on a new name would be made in the coming weeks. Lawler confirmed that the Challenger business would remain a separate entity, with Drew Hall remaining as CEO,

while the three aggregation businesses – PLAN, FAST and Choice – would also remain separate brands. He said there would be no change to the business model operated by Challenger, except that NAB would be able to better support the mortgage management side of the business – something he said Challenger was unable to do due to the economic environment.

and paid along “similar financial metrics “when it acquired the remaining 85% of PLAN in September last year. Challenger acquired its 19% stake in FAST for $9.4m, valuing the total business at $49.5m. This comes to a total of $375.5m.

For its $360m investment NAB will acquire 100% of PLAN, Choice, and FAST as well as Challenger’s multi-brand lending business, (including its white

label mortgage product capability) and its relationships with distribution associates (including Homeloans Ltd) in addition to approximately $4bn of residential mortgage loans in existing warehouse structures.

It will also acquire a distribution business generating mortgage broker settlements of $33bn and inherit relationships with 5,700 loan writers and 400 mortgage managers.

NAB scores a bargain with Challenger buy Back-of-envelope calculations suggest NAB has bought Challenger’s three aggregation businesses at a discount to their original cost, with the bank describing the deal as offering “attractive pricing”. In a note explaining the transaction, NAB

Brokers at Choice, PLAN and FAST will not be under any pressure to sell NAB products – despite these aggregation businesses now being owned by the bank.

Regional GM for NAB Broker, Matt Lawler, said the bank expected brokers to continue to recommend products that best fit the needs of clients and should not be influenced by “special deals, quotas, restrictions or volume targets”.

“Our approach has always been consistent. We will not provide additional incentives, biases or quotas. The four-star rating system will continue to apply. ANAB, HomeSide or MLC product must only be chosen on its merits,” he said.

Lawler said this message would be put across at every opportunity there was to talk to people in the business.

“We will be getting around to see as many brokers as we can,” he said. He added that this did not just include brokers of the three aggregation groups, but the broader broker market.

“We want to let them know exactly what is happening and what our motivations are,” he said.

said it would acquire Challenger’s mortgage management businesses – along with the mortgage distribution platform and PLAN, Choice and FAST – for $360m.

When Challenger announced its purchase of Choice in September 2007, it set a price tag of $163m

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Optimism and uncertainty – responses to NAB/Challenger deal After the initial shock wears off, the industry will begin to accept the NAB/ Challenger transaction for what it is – a commercial decision that ensures NAB is a major player in mortgage management and mortgage broking, said Ray Hair, CEO of PLAN Australia.

Furthermore, he said the deal reflected the dislocation in the wholesale funding markets and NAB’s desire to participate in this sector.

Hair added that concerns about broker independence and NAB’s commitment to the third-party market probably reflected competitor envy or spin. “I believe we will see further consolidation in the industry.

Regulation and the after effects of the GFC will require all businesses to review their strategy, competitive position and viability,” he said.

Steve Weston, general manager for distribution at Challenger, described the deal as being terrific – for both mortgage managers and brokers – in that it showed commitment to both sectors by a significant player.

So, he said, the longevity of the industry is now guaranteed.

“Funding certainty will provide a major boost to the mortgage managers who have done it tough in the last couple of years. They have been the pioneers of driving competition in Australia and they will once again be able to do that,” he said. Weston added that NAB has a very strong track record in keeping brands independent.

“Through the experience they have in the wealth side of their business, with MLC and the like, they understand third party and advice businesses particularly well,” he said. He added that feedback from Challenger brokers and mortgage managers had been positive as it was a “terrific time for all of us to get back into growth mode.”

Peter White, CEO of the FBAA, told AB that the jury was still out for the association on the merits of the transaction. “I would like to think it is a very positive thing for the industry, and we need to see how things evolve over the coming weeks before we can accurately say what effect it will have,” he said. He said that if NAB were “truly committed” to supporting the broking sector and the non-banking sector, then the Challenger of the future would have access to a very large balance sheet – and that could bring some enormous capabilities to its aggregators.

Alternatively, he said it would be disappointing if the transaction proved to be a deceptive power play by a major bank to damage an industry sector.

Ray Hair

“But what we are hearing is that it is all good, and that it is a positive thing for the future,” he said.

Colin Lamb, director of Mortgage Solutions Australia in Perth, described it as being “a huge step” for NAB with far-reaching implications for the industry. “NAB hasn’t been a player of significance in the broking industry.

They have had HomeSide as their mark but they haven’t been serious in regards to it. I see this as a huge step forward as long as they are doing it for the right reasons,” he said.

He said that he was “quite excited” by it as it promised to bring new blood and new life into the mix. “I definitely think that it is good for competition. CBA and Westpac have been allowed to take a huge stranglehold. I think that NAB has seen the light that they need to engage brokers, and we need this competition in the broking market,” he said.

Lisa Sanders, director at Professional Loan Management on the Gold Coast, said the deal would play out to be a good thing if NAB allowed Challenger to operate in its current capacity.

“It has been said that Challenger have some innovative new business ideas that they haven’t been able to implement, so if it means that NAB will provide some more financial backing to be able to bring innovative products to the market, then I think it is fantastic,” she said.

But she cautioned that if it was NAB’s way of securing one of the major non-bank lenders with a view to squeezing out non-bank lenders, then there was a huge risk that the broker market would disappear altogether.

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News

Credit tightening underway

Predictions that the next wave of credit tightening by the banks is on its way have been confirmed by a mystery shop carried out by Deutsche Bank.

The mystery shop, reported in The Sydney Morning Herald, revealed that between November last year (when the boosted FHOG grants started to flow into the system) to April this year, six banks have cut the maximum amount of money they are prepared to lend.

This followed Mortgage Choice’s claim in June that the decline in first homebuyer commitments as

a percentage of owner occupied housing finance was due to stricter lending criteria.

In July, Australian Broker reported that changes made to the CBA’s serviceability calculator was likely to reduce the amount of money customers could borrow from the bank.

Deutsche Bank called all nine banks claiming to be a buyer with an annual income of $70,000, a full-time job, no dependants and a good credit history, SMH reported.

Researchers found that St. George had made the biggest cut to its maximum loan amount by lowering it by $55,000 to $400,000, Westpac cut its by $33,000 (down to $456,000), ANZ dropped from $485,000 to $439,000, BankWest fell by $28,000 to $442,000 while Bendigo dropped by $10,000 to $420,000.

NAB, which has largely stayed out of the first homebuyer market, cut its maximum loan amount in April by $20,000 to $290,000.

Club Financial tops AMA nominees list

South Australian franchise group Club Financial Services has topped the list of nominees for this year’s Australian Mortgage Awards.

Club, which only began operating as a franchise in September last year, received nominations in no less than seven categories – including best customer service from an individual office, best new office

on the block (for its Norwood franchise) and franchise operator of the year. Its Gippsland and Maitland franchisees were also nominated as brokerages of the year.

Not far behind was fellow franchise LJ Hooker Financial Services, which received six nominations including one for its East Perth office (commercial brokerage of the year) and its

Somewhat surprisingly though, the mystery shop revealed CBA as one of the banks that has not explicitly cut its maximum loan amount.

CBA has kept its limit at $420,000 and Suncorp at $450,000. Bank of Queensland was the only bank to raise its limit by $7,000 to $425,000.

In July, Kathy Cummings, executive general manager for third party banking at the CBA, confirmed that changes made to its loan serviceability criteria had been effective since 1 July 2009.

She said the changes had been made to ensure customers can manage and service their loan, adding that the combined changes may reduce the borrowing power for new and existing customers.

However, she said the changed serviceability requirements would help to protect customers from over-committing themselves and avoid any issues with falling into arrears.

Both National Mortgage Brokers (nMB) managing director

Sydney office and Hunter region franchisees (brokerages of the year).

Other multiple nominees included Loan Market Home Finance Brokers with four and Oxygen Home Loans, St. George Bank and CBA all with three nominations.

The finalists for all 20 categories for Australia’s most prestigious awards night were revealed after months of research.

Winners will be announced on the awards evening to be held on 25 September.

Event organizer Key Media scoured hundreds of nominations to determine which candidates triumphed in the face of global economic adversity and continued to strengthen their business and customer relationships throughout 2009.

Winners will be chosen by a panel of judges, all of who are well-known and respected industry players in their own right, and will be announced on the evening of the awards.

Event partner Westpac and award sponsors Commonwealth Bank, Royal Bank of Scotland, St. George Bank, Finance Tools, Mortgage House and Australian First Mortgage are supporting this year’s event, which will be held in the swish confines of the main ballroom at the five-star

Gerald Foley and Smartline MD Chris Acret, said at the time the CBA move could have big knockon ramifications for the market.

Firstly it could force borrowers, who had previously qualified for a higher loan amount, to look at other lenders who are prepared to lend the amount they require.

And secondly, if this resulted in other lenders seeing an increase in business, they in turn may look to review their credit rules to reduce the amount of new business.

“This could see the next wave of a tightening credit market, and a possible easing of property values as buyers can’t obtain finance,” Foley said.

Key points  mystery shop shows six banks have reduced their maximum loan amounts  changes in effect following outflow of FHOG stimulus boost  credit tightening foreshadowed in earlier AB article  could have wider ramifications for borrowers obtaining finance

AMAs: role of honour Seven nominations Club Financial Services Six nominations LJ Hooker Financial Services Five nominations Smartline Four nominations Loan Market Home Finance Brokers Three nominations Oxygen Home Loans, St.George, and CBA Westin Hotel in Sydney’s CBD. Key Media would like to congratulate all of the 2009 finalists and wish them the best of luck on the night, which promises to be an evening filled with live entertainment, fine food and wine and plenty of anticipation of the announcement of the winners.

It will be a fun, ‘science fiction’ inspired event.

For a full list of all the AMA finalists read MPA 9.10 or go to: http://www.brokernews.com.au/ news/breaking-news/amafinalists-announced/36708 For more info, visit http://www. australianmortgageawards.com.au Profiles of all the winners will appear in MPA 9.11, out in October.

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Mixed response to “segment the industry” Brokers have agreed with the CBA’s Kathy Cummings that the market needs to segment itself and separate out the professional brokers from the rest, but say setting volume targets is not the answer.

Cummings, executive GM for third party banking, pointed to the bank’s new accreditation policy as a way of ensuring it deals only with quality brokers that have a “level of competency and confidence”.

Elle McKenzie, consultant at Crawford Mortgage Services, said the suggestion was all “well and good” but questioned who should make the decision about “who is ‘professional’ and who is not”.

“There needs to be a universal measure of what is a ‘professional’ broker…and [one that is] recognized by all lenders, regardless of volume,” she said.

McKenzie said there were ‘professional’ brokers out there who might not necessarily give the CBA 20 deals a month, “but are still extremely good at what they do, and are honest and reputable”.

She also questioned how a new broker would reach a professional standard if they did not have access to the same products, policy and service as others.

“I am all for recognising professional brokers … however, recognition should be for the purpose of setting a benchmark of professionalism that we can all aspire to, rather than to the detriment and deter those that are the future of the industry,” she said.

Robert Seton, from Mortgage Simplicity, said he’d been “watching, reading and learning” about “new market segmentation” with great interest.

However despite comments from the CBA and BankWest that their new accreditation requirements are to ensure that the customer experience is the best it can be, he quoted the June BankWest/ MFAA survey suggesting that service from brokers compared with lender’s own proprietary channel is superior and went up over the last year.

“There is a constant theme that certain segments of the broking industry are holding back more professional

Kathy Cummings

segments of the industry – yet no actual figures or in depth information has been supplied to back up these comments.

At best, we have heard anecdotal stories from lenders pushing this theme,” Seton said.

“This lender is saying that I need to give them “X” applications over “Y” period to prove I am professional. In fact they are dragging my professionalism down. It makes no sense, and their words are difficult to correlate with their actions,” he said.

Steven Bayly, managing director of Go Loans, said he agreed with segmenting the ‘professional’ brokers from the ‘also ran’ but, like McKenzie, said the issue was defining the “parameters that classify a professional broker” “Lodging a certain amount of loans with a specific lender doesn’t make someone a professional broker,” he said.

Clayton and Shuttleworth consultant Clifton Warren said he agreed with Cummings. “Brokers should start to model their service similar to other professional providers including [using] target marketing and positioning themselves as experts. This will in turn educate the market and provide a greater focus for future marketing and professional development. You cannot be all things to all people,” he said.

ASIC to become financial markets watchdog Having taken on the role as credit market regulator, ASIC is preparing to become chief watchdog of all Australia’s financial markets, including the ASX. The transformation of ASIC’s supervisory role will give it powers similar to those bestowed on UK’s chief markets watchdog, the Financial Services Authority (FSA) in 2000, which also regulates UK mortgage brokers.

Financial Services Minister Chris Bowen

said that the current system, where each individual financial market supervises the operation of its own market, was “no longer desirable or sustainable.”

“Australia will have a single unified supervisor for market participants. This will bring Australia into line with international best practice and is consistent with decisions of the leaders of the G20 in relation to financial supervision," Bowen said.

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News

Pepper’s new product to benefit from credit fallout director for sales and marketing at Pepper Homeloans.

His comments follow news that Pepper Homeloans had launched a range of mortgage products targeted at consumers who fell foul of the major banks’ and mortgage insurers’ current lending criteria.

The new products – a Full Income Documentation Loan (Full Doc) and an Alternative Income Documentation Loan (Alt Doc) – are geared towards

Key points

Duco Sickinghe

Two new low-doc products will allow Pepper Homeloans to clean up some of the fallout from changes to the major bank’s lending policies, according to Duco Sickinghe, executive

 Pepper Homeloans introduces two low-doc products  geared towards self employed and small business owners  sizable market ready after effects of GFC  well received by brokers  market activity set to restore market confidence

self-employed or small business owners or otherwise good quality customers denied access to housing finance as a result of the GFC. Sickinghe said the low-doc market in Australia is worth a couple of billion dollars, and events in the economy made it “very timely” to come out with products like these.

He told AB that the early results had been promising.

“People need to be offered an alternative in the market, now that the majority of the non-bank lenders have disappeared out of the market.”

Lisa Sanders, director at Professional Loan Management on the Gold Coast, said that any new low-doc product brought into the market on a competitive interest rate was brilliant, “because we have gone from every lender doing a low-doc product to it having gone down to a very select few.”

“Its exciting, and I’ve said for a long time that we are going to see a huge market of people bringing out some of these innovative products and making a killing in this current market.”

Colin Lamb, director at Perth’s Mortgage Solutions Australia, agreed with Sanders and added that when these sorts of players see the risk is gone and that the property market is now starting to turn up, it goes a long way to restoring market confidence.

BNZ dodges mortgage broker question NAB-owned Bank of New Zealand (BNZ) has dodged a question about whether or not it will return to using mortgage brokers.

Asked by NZ’s Good Returns if it planned to start dealing with brokers again (after closing its

mobile mortgage manager channel), a spokesperson for the bank said: “We are changing the way we sell home loans by shifting the responsibility from mobile managers to the store network.”

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industry NEWS IN BRIEF Real Estate Institute upbeat about property market

Improving auction clearance rates, solid ABS housing finance data and the return of property investors are all signs the property market is consolidating, according to the Real Estate Institute of Australia (REIA) president David Airey. He highlighted Australian Property Monitors (APM) statistics that showed that Sydney clearance rates were up to 69.3% in the first weekend of August (compared to 47.5% twelve months ago), with Melbourne auction clearance rates at a 12 month high of 87%, as signs optimism.

He also pointed to June ABS figures which showed house finance commitments – excluding refinancing – at 18-month highs, with investment housing finance also up again following three straight months of increases.

RBA: Stevens upbeat, but wary of China

The global economy is improving, the Australian economy has proved resilient, but risks remain, particularly in China, RBA governor Glenn Stevens warned.

Delivering his opening statement to House of Representatives’ Standing Committee on Economics, Stevens warned that the global economy “could suffer another setback of some kind”. He said the likelihood of this occurring had declined in the RBA’s view, “but the possibility remains. Perhaps the growth in China’s demand will falter.

Certainly the pace of China’s growth seen in the June quarter, which was extraordinary, cannot continue for long, and may be moderating now.”

Investors rush to With securitisation markets effectively frozen, ME Bank ME Bank bond (formerly Members Equity issue

Bank) has used the government guarantee to place a $500m bond issue, Reuters reported.

Paul Garvey, manager financial market at ME Bank, said the issue was part of plans to continue to “diversify the funding base available to the bank ... Further deals will be considered overtime.

ME is just one of a few triple B rated banks to make use of the government guarantee because of the sizeable fee of 150 bps attached to it. Major banks, which only pay a fee of 70bps due to their higher credit rating, have raised $112bn in funding by issuing government guaranteed bonds offshore and onshore since the scheme was announced in October last year, according to Deutsche Bank data.

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News

Proposed Islamic retail bank to work with brokers

Akhtar Kalam

The Muslim Community Cooperative of Australia (MCCA) is looking to work with brokers as it sets its sights on becoming Australia’s first Islamic retail bank. This ambition was highlighted at

Latrobe University’s recent Islamic Banking Finance Symposium, which coincided with the university introducing a new masters course in Islamic banking and finance.

Dr. Akhtar Kalam, chairman of the MCCA, said the ultimate goal was to turn the co-operative into a bank in the next four to five years. Kalam said the MCCA aimed to grow “gradually”. “We have applied for an AFSL licence.

We want to become an ADI.” He said the MCCA had worked with mortgage brokers and would continue to do so.

He said most of the brokers that worked with the MCCA were Muslims, but this did not preclude any non-Muslim brokers from becoming agents once they had received the necessary training.

Set up in 1989 with just a dozen

Mortgage Choice profits decline Key Mortgage Choice numbers: • Cash profit – $13m • Loan book – $36bn • Approvals – $10.1bn • Settlements – $8.6bn • Loan life (new settlements) –

five years • 350 franchises • 165 retail sites Source: Mortgage Choice annual results

Michael Russell

Listed franchise Mortgage Choice posted a $13m net profit after tax for the year to 30 June 2009 – a 23.9% decrease on the 2008 financial year cash result.

Calculated on an AIFRS basis (international accounting standards), the profits were buoyed by a one-off non-cash balance sheet adjustment of $15.6m after tax, resulting in a net profit of $26.8m.

Its loan book stood at $36.03bn for the financial year, up 8.3% on the previous 12-month period.

The cash received for trailing

commission was $85m, up 3% on the previous financial year, and a total of 65.9% of residential commission revenues was paid to franchise owners, up slightly from 64.6% in 2008. But the dollar amount of housing loan approvals took a little tumble – down from $11bn in 2008 to $10.1bn. The broker said the results were in line with expectations and guidance given in February 2009 and reaffirmed on 14 August.

Mortgage Choice CEO Michael Russell added that the company has delivered “a sound result during a challenging year”.

Russell remains positive about the economic outlook, and said low interest rates, housing undersupply, strong population

members and $22,000 in the bank, the MCCA now has $30m in the bank, more than 7,500 members, and $400m worth of mortgages on its balance sheet.

Besides the $30m invested by members, Kalam said the MCCA receives Sharia-compliant wholesale funding from the likes of Challenger and GE Money.

The money is used to help its members secure mortgages that comply with Islamic law, which forbids the charging of interest.

Like other financiers, funding has been affected by the GFC, while it has also struggled to compete with the major banks.

Kalam said an even bigger challenge was educating the Australian public about the “advantages of Islamic banking”, an option, which is available for all Australians, not just the growth and low rental vacancy rates will encourage further interest in the property market.

“While housing finance figures at present show strong demand from first homebuyers as a percentage of owner-occupied loans, we expect this trend to soften while upgraders, refinancers and investors increase their presence over the coming year. “The mortgage broking market continues to be a valuable consumer proposition, with Genworth Financial Mortgage Trends Report for July 2009 showing that 41% of new home loans in Australia are sourced by mortgage brokers. The report also uncovered a further 16% of borrowers who had never used a mortgage broker, but would consider it in the future,” he said.

Mortgage origination 3% - other 4% - building (non-banks) societies

33% other banks

60% - Big Four (excluding BankWest & St.George)

Source: Mortgage Choice annual results

country’s 350,000-strong Muslim community. Islamic finance is one of the fastest growing markets in the world. It’s currently worth US$1.3trn, and according to Kalam is growing by 15% to 20% a year – though it only accounts for 1.7% of the total market.

The IBF symposium was opened by assistant treasurer, Nick Sherry, who said Islamic finance was a growing field in Australia, and referred to the retail opportunities the industry offered to Muslim and nonMuslim customers. The MCCA Income Fund is the first product to market, and the investment strategy is mandated by the MCCA using Islamic principles.

Key points  MCCA sets five-year goal of becoming Islamic bank  brokers acting as agents for MCCA  Sharia financing not just available for Muslims  Islamic law forbids the charging of interest

FBAA ‘co-op’ The FBAA is just weeks away from launching a new cooperative platform designed to bring onboard a “raft of financial services” for the benefit of members, but which will also be available to the broader market.

To be called the “TFP Cooperative Ltd” – with TFP standing for “The Finance Professional” – it will give brokers access to loan products, plus a whole suite of services relating to the industry.

Things like buying a new car, telephone contracts and insurance will all be made available from the central hub, FBAA national president Peter White explained.

White said the co-op had been in the plans for a very long time and was part of aligning the organisation for the future.

“We have already done our strategic review. If you’re only doing it now, you’re a bit behind the eight ball,” he said.

He said the association was continually looking at how its sits from a strategic point of view, pointing to its ongoing relationship with consultants Deloitte.

“We’ve been expanding whole host of value-added service,” he said.

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For all the latest mortgage industry news visit www.brokernews.com.au

Fee-for-service popular across the pond While Australian mortgage brokers debate the merits of charging a fee for service, more than half of UK brokers are already charging clients to source a mortgage for them A new survey carried out by RBS Intermediary Partners found that 56% of mortgage intermediaries have already started charging their clients fees, UK magazine Mortgage Solutions reported. And more appear to be heading down the fee-for-service path with another

Geoff Brieger

14% saying they were actively considering introducing fees.

One in five UK brokers (21%) do not plan to charge a fee.

Geoff Brieger, managing director of fee-for-service mortgage broker Vanilla Loans, said it was “inevitable” that similar take-up would occur in Australia as in the UK. “The current broker model is not just flawed (in that brokers are paid by lenders and somehow representing borrowers) it’s broken for borrowers and their increasingly toothless brokers.

“At the same time, the model is working very well for the banks that control the channel. The only way for brokers to break free is to start charging the clients they represent – and then the borrowers will start getting better deals and mortgage advice that is not conflicted. Only then will brokers gain any respect and power,” he said.

Judging by comments expressed by readers on Brokernews, many brokers would disagree, arguing that charging a fee would merely see customers choosing to get

their loan through a broker that does not expect payment of a fee.

To justify charging a fee, senior industry figures including the CBA’s Kathy Cummings and National Mortgage Broker’s Gerald Foley have argued that a broker must be offer something extra. Offering origination services like everyone else is not a good enough reason.

Brieger said the take-up in fee-for-service in the UK was driven by market dynamics: ie, a reduction in broker numbers, fewer loans being written and the struggle to actually get an application accepted.

Giving a local perspective on the survey, David Hollingworth, head of communications at London & Country Mortgages, said the UK broker market has always had some brokers that have employed a fee charging strategy “whereas others have chosen to survive solely off the procuration fee without charging a broker fee in addition”.

“However we will undoubtedly see more brokers considering the fee charging option in the current

Key points  56% of UK brokers charging fees to source loans  Geoff Brieger says same thing will happen here  he says current commission model is flawed, favours lenders  industry sentiment says fee-forservice hard to justify

economic climate. With a dramatic fall in the number of transactions, brokers will inevitably look to replace lost income, either by moving into alternative product sectors, by charging a fee or through a combination of the two,” he said.

According to the RBS survey, drumming up business is a major problem at the moment for UK brokers. More than two-thirds (69%) said the biggest challenge they faced was replacing the lost income from the lower demand for mortgages, followed by the issue of finding new clients (40%), managing cashflow (34%) and dealing with regulation (29%).

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News analysis

Credit unions seek liquidity solution Mark Genovese

 Australian Broker’s Tim Neary spoke to the chair of a group of credit unions seeking APRA approval for the creation of a wholesale liquidity fund on the impact it might have on the lending landscape

G

overnments action to shore up the financial system has placed the Big Four in a much more dominant position, and now credit unions are intent on creating opportunities to give the majors a challenge on the home lending front, said Mark Genovese CEO at Maritime Mining Power Credit Union.

Genovese is the chair of a group of credit unions seeking approval from the Australian Prudential Regulation Authority (APRA) for the creation of a $1bn liquidity fund to be funded by super funds.

Speaking exclusively to AB, he said the idea was to set up a trust as a special purpose vehicle (SPV) to attract and manage funds from industry super funds and other sources for direction into credit unions by way of wholesale deposits.

“The idea is to restructure our balance sheet to give us two sources of funding: one from retail deposits, and the other from wholesale funding.”

He said the SPV would allow for an aggregation of the balance sheets of the “thirty or so credit unions” for the purposes of getting a favourable rating.

“So that Standard & Poor’s looks at the security that sits behind the notes the super funds and other investors are buying, and provide a rating based on all of the credit unions,” he explained.

The group is also considering creating a loan loss reserve fund of 5% of all the money it raises to act as a first port of call, in order to increase its rating and improve its pricing.

Should APRA allow the fund, more than 25 credit unions will have access to another source of funding that could see more balance in home lending.

Genovese said he would prefer not to make any comment on how he thought APRA may or may not rule.

“They do this in a thoughtful and measured way, as you’d expect, so we don’t try and pre-empt or comment on what they may or may not do,” he said.

But he did say that assuming the APRA approval was granted, it could still take two to three months to get the rating sorted out.

“So our expectation is that we will be launching it either late this year or in the first quarter of next year – as long as we get through the hurdles that we need to get through,” he said. Once investors get used to the idea, the fund would be opened up to other mutuals.

Genovese said that he expected that over time as much as 25% of all the mutuals funding will come from the wholesale market.

Industry body Abacus’s CEO Louise Petschler believes the group of credit unions working together “to compensate for their lack of individual scale to develop an innovative structure for diversifying their funding sources” is an exciting initiative.

“And we are very supportive of this response,” she said.

The current fee structure (for government-backed wholesale funding) penalises building societies and credit unions twice She added that if successful it would enable credit unions to accelerate lending growth, and agreed that it would increase the degree of competition the market could offer against the major banks.

“We are looking for as many tools as we can to be able to lift our overall competitive position, so that we can deliver some stronger alternatives to more Australians,” she said.

Although she was also hesitant to predict how APRA would rule, Petschler felt it would support prudentially sound initiatives to assist the competitive position of smaller institutions.

Mutuals have said in a submission to the Federal Government that the current fee structure (for government-backed wholesale funding) penalises building societies and credit unions twice as lower-rated ADIs issuing government guaranteed debt pay a fee of 150 or 100bps compared to the big banks, which pay 70bps.

Mutuals also pay an additional premium despite the guarantee.

Currently the majors write more than 90% of all home loans.

While banks have been able to raise money using the government-backed guarantee, credit unions say they’ve been unfairly disadvantaged by the scheme.

Louise Petschler

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Inside economics

Dr Shane Oliver is head of investment strategy and chief economist at AMP Capital Investors

Another housing bubble is unlikely I

t seems that Australian house prices have defied fears of big declines in the wake of sharp falls in US and UK house prices. My expectation was for national capital city average house prices to fall 10% or so this year. After falling 6% or so from their peak around the beginning of 2008 to the March quarter this year, house prices have since started to recover again.

ABS data shows average gains of 4.2% in the June quarter, confirming the rise already seen in various private sector surveys. The question is: where to from here? Why has the Australian housing market been so resilient? Are we going to see another unsustainable surge in house prices, or is the 30–40% slump in house prices some were warning of still to come?

And how does housing compare with other potential investments?

Why the resilience?

Despite Australian house prices having had a stronger run up than those in the US and UK, they have fared remarkably well by comparison over the last couple of years. From their peaks, US house prices have fallen 32% – and UK house prices have fallen 19%.

By comparison, Australian house prices have only had a modest dip and already seem to be on the way back up.

Several considerations explain the relative resilience of the Australian housing market. These include Australia’s housing shortage, as well as the fact that lending standards were far higher in Australia than in the US. The surge in debt focused on older, wealthier Australians; and the use of full recourse loans in Australia provides a powerful incentive to keep servicing a mortgage, even when the value of the debt exceeds the home value. These considerations, along with the view that Australia was not going to have a US-style recession, led us to reject the view that house prices would fall 30–40% as some were suggesting.

Rather, we thought that prices might fall 10% or so – but even this now looks too pessimistic. The big surprise has been that Australia’s economic downturn has turned out to be even more modest than earlier thought. The economy is yet to have a technical recession, and the rise in unemployment has been mild. As such, the generational lows in mortgage rates and the increase in the First Home Owner Grant have dominated the housing market.

Average capital city house prices seem to be on the way back up again, with the slump in mortgage rates drowning out the impact of rising unemployment. The housing correction has been headed off, and Shane Oliver argues that with housing remaining very expensive it’s hard to see the housing bubble starting up again

Outlook

While house prices seem to have turned the corner, we find it hard to see a return to boom-time conditions.

The positives are that affordability is much improved.

Australia is still suffering from a housing shortage and the upswing in most housing related indicators such as auction clearance rates and housing finance suggest that confidence has returned to homebuyers. This includes both owner occupiers and investors – and people at the top end as well as the bottom end of the market.

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Against this, several factors are likely to constrain the upswing in house prices. Firstly, despite the correction over the last 18 months Australian housing remains expensive.

•

In real terms, Australian house prices remain well above their long term trend. Over the last 80 years the trend rate of growth in real house prices has been 3% per annum, which is consistent with long-term real GDP growth. But since the mid 1990s house price gains have been well above trend growth (see above chart). Historically, after a run up in house prices they spend many years working off the excess (such as in the 1930s or from the early 1970s). This has been occurring in Sydney, with average prices remaining stagnant for the last five and a half years.

•

Australian housing remains expensive by global standards with a ratio of house prices to median household income roughly double that in the US.

•

Despite strong growth in rents, rental yields remain low. Gross rental yields of around 5% are well below the 7% plus net rental yields available on directly held commercial property, the 10% distribution yields on listed property trusts, and a grossed up dividend yield of 7% from Australian shares.

Secondly, the improvement in affordability has mainly been driven by lower mortgage rates, and could vanish pretty quickly if interest rates go back up again, leaving recent investors vulnerable. This contrasts with the US and UK, where a surge in affordability has been mainly driven by the collapse in house prices.

Thirdly, unemployment is still trending up and poses a constraint on house prices. Historically, rising unemployment has been associated with falls in real house prices. It should be said that unemploment seems less of a threat than initially feared.

Finally, the ending of the First Home Owner Boost from December will also act as a dampener on the lower end of the housing market. These considerations suggest that while a US-style collapse has been averted, house

prices are unlikely to just go back into boom territory.

The more likely scenario is that house prices grow, but at a rate below that of nominal incomes so that the ratio of house prices to incomes gradually continues to decline.

That said, considering Australia’s history with house price bubbles, and given that much of this can be traced to restrictive land release policies, the risk of another unsustainable surge cannot be ignored. The downside though is that having dodged a bullet this time, we will be very vulnerable to the next global economic downturn, given Australia’s very high household debt to income ratio.

Housing as an investment

While a US-style collapse has been averted, house prices are unlikely to just go back into boom territory

History suggests that once proper allowances are made for costs, residential investment property and shares generate a similar long-term return.

Over the long term, the returns from housing and shares tend to cycle around each other at similar levels.

In fact, both have returned an average of 11.5% pa over the last 80 years or so.

While housing is less volatile than shares and for many seems safer, it offers a lower level of liquidity and a low level of diversification. The bottom line is that once the similar returns of housing and shares are allowed for, and these characteristics are traded off, there is a case for both in investors’ portfolios over the long term.

Right now, after the second-worst bear market in the Australia’s share market history and with the yield on shares running well above the yield on housing property, shares are arguably a better short-term bet.

Concluding comments

Thanks to a housing shortage, fewer problems with credit quality and a far milder than expected economic downturn, Australian house prices have proven to be pretty resilient.

While they now appear to be on the way up again, a return to boom time conditions seems unlikely. Over the very long-term, residential investment and shares have provided similar returns and so there is a role for both in an investment portfolio.

CBA: brokers part of hardship solution The CBA expects brokers to play their part helping borrowers that are facing financial difficulty.

Kathy Cummings, executive GM for third party banking at the CBA, told Australian Broker that brokers needed to be professional and adopt a ‘customer for life’ approach with their customers.

“They need to support them in both the good times and bad times. By discussing an arrears issue in the early stages, brokers with the bank’s support can play an important role in turning the customer’s situation around,” she said.

The CBA runs a Hardship program available for all customers of the bank who, due to personal circumstances changing, may experience difficulty meeting their monthly home loan or credit card commitments.

“If a broker identifies a customer facing financial difficulties, they can help by interviewing the customer and completing a Personal Money Plan with them. They can then send the plan to the bank’s Customer Assist team who assess the plan and make a decision based on the preferred course of action for the bank and the customer,” Cummings said.

She added that involving its brokers helped customers and provided an opportunity to manage the relationship together.

“When a customer is experiencing financial difficulties, each individual is affected differently. Rather than offering a standard approach, we endeavour to tailor a solution to help our customers during this period,” she said.

CBA piloting repayment alert program Besides involving brokers in assisting customers through hardship issues, the CBA is currently conducting a repayment alert pilot program with a few brokers from one head group.

Kathy Cummings said from the bank’s records it is possible to identify if a borrower has missed a monthly payment.

“We then notify the head group of the borrower and their broker. The head group then informs the broker who contacts the borrower to discuss the situation. If necessary the broker and customer can then complete a Personal Money Plan and send it to the bank’s customer assist team,” she explained.

Cummings said the key to the program is early engagement with the customer. “The more a customer gets behind with payments, the more difficult it is to catch up.”

Possible solutions include deferring or reducing normal loan commitments to assist customers while they are experiencing financial difficulties.

“In circumstances that are longer term, we review the

customer’s financial position to see if a restructure to their loans facilities with Commonwealth Bank can be considered which may result in a reduction to their overall financial commitments,” she added.

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Feature

Selling to your segment For brokers working in Australia’s multicultural society, delivering just one type of experience to all customers has its limitations.

To be successful, brokers must understand the changing global customer base

A

ccording to Accenture, customer centricity is founded in mastery of three key elements: knowing the customer, reaching the customer and delivering an experience differentiated according to consumer needs and preferences Mastering these three elements involves many activities, but ultimately just has one prerequisite: a sustained commitment to developing deep customer understanding, and to operationalising these insights across marketing, sales and customer service through intensive capability development.

To protect the value of existing relationships and help minimise the cost of churn and acquiring new customers –particularly during periods of economic uncertainty – companies are well served by confirming their understanding of what consumers expect and value and ensuring they are reaching and serving their consumers in ways that are customer-centric.

To achieve these goals, a high-performance business will develop a segmentation model that provides a complete, multi-dimensional picture of target

segments—one that complements demographic, value and behavioural variables with information about buyer attitudes and needs.

Segmenting brokers Some questions to ask about your customers: • What drives your existing customers in terms of attitudes, needs and behaviours?

• How are you integrating the behaviour changes due to specific economic circumstances?

• How well do you know prospective consumers outside your current customer base?

• What segmentation and insight dimensions should you consider when trying to acquire new customers in existing markets?

• What dimensions should you consider when attempting to enter new markets?

• How can you leverage complementary insight sources (for example, from third parties) to enrich your existing segmentation?

Source: Accenture’s Customer Centricity Report

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This is an extract from “New Faces, Places and Spaces Customer-centric principles for acquiring customers in today’s multi-polar world” by Accenture. For more Accenture insights on customer acquisition and retention in uncertain times, go to accenture.com/centricity

Segmenting brokers The major banks have for some time now been segmenting the brokers they deal with in order to align themselves more closely with better quality, professional operators.

Even before NAB introduced its star rating system, banks have separated their top brokers from the rest – a prime example being St.George’s FLAME group of brokers, along with the CBA’s Diamond brokers.

NAB Broker’s star rating system is designed to pay better commissions to higher-rated brokers (that meet benchmarks around education, application quality and portfolio performance). It has recently been modified to give its fourstar brokers access to higher LVR loans and new services including access to real-time online customer information.

Recent changes to accreditation policies by the CBA, BankWest and Westpac include minimum volume requirements aimed at raising the quality of applications.

Brokers that don’t meet these requirements lose their accreditation and the banks believe this will see them working with better quality brokers as a result.

A powerful tool

This integrated view will be especially powerful for identifying the most attractive segments and designing value propositions and experiences aimed at these target segments. The organisation’s specific customer objectives (eg, new market entry, retention) should determine which specific dimensions to focus on when developing this view.

Actionable segmentation is not a goal in itself, but a step towards creating true customer relevance. Highperformance businesses also build the operational capabilities in marketing, sales and customer service required to translate a deep understanding of customers into differentiated propositions and the consistent delivery of differentiated experiences.

They focus on generating profit, building a strong business case that reflects a clear understanding of the potential value to be created by developing and delivering differentiated customer experiences.

Delivering the customer experience

Understanding and satisfying the expectations and preferences of any target segment requires an in-depth analysis of that segment. A ‘one size fits all’ experience cannot be successful – particularly one designed to serve an altogether different segment.

However, we have found that the nine segments profiled in this paper do share certain ‘themes’.

Understanding these common characteristics that can help companies interested in building new relationships with these customers begin thinking about experiences that reflect their distinct needs, preferences and sensibilities.

First-generation consumers

‘Accelerator’ segments are just entering the market place and are the most unpredictable of all these emerging segments. They are aware of mass market brands, make trial purchases and make economic tradeoffs to meet their basic needs, such as lowpurchase spends and small purchases that meet their affordability criteria.

The growth of these segments reflects the increasing economic importance of their home economies, as well as the realization that the so-called base of the economic pyramid provides as large an opportunity as the middle or top, albeit at different price points and per capita volumes.

Organisations wishing to tap opportunities in these growing segments must develop customised offerings delivered by segment-specific capabilities that meet the relationship-driven and tentative search for value by individuals in these segments.

Family Focus

Consumers in both the ‘Life Manager’ and ‘Fresh Starter’ segments care deeply about earning for their families, and take a pragmatic approach to spending.

Both spouses may work to provide the dual income that provides a wider scope for investments and greater, if still limited, access to discretionary luxury items.

Neither segment is very brand conscious. Both groups are very conservative, opting for ‘tried-and-tested’ offerings. This provides existing players that can leverage value-based and future-oriented propositions with an opportunity in the segment, as long as they stick to these risk-averse and information-seeking customers through their relatively long decision cycles.

Established Players

‘Young Royals’, ‘Rough Diamonds’ and ‘Family Enrichers’: these groups share several traits. They are affluent, search for value at the top end of the market and have an inclination towards well established brands and services. With a higher disposable income, they are more likely to spend on brands they value.

A ‘one size fits all’ experience cannot be successful, particularly one designed to serve an altogether different segment

Lifestyle Orientation

‘Moment Maximizers’ and ‘Trend Seekers’ are the latest segments in the consumer mix, requiring sophisticated organisational capabilities in marketing, branding and delivery. These small segments have a higher disposable income, though Trend Seekers rely heavily on credit.

Both segments value their status as trend setters, making them attractive marketing targets. The main challenge with these two segments is to maximize the return on investment to reach them and transform them into long-term customers. These are the consumers coveted by firms such as high-end consumer electronics, boutique automobile customisers, expensive apparel brands and limited-access credit cards and clubs.

Each organization needs to assess its current capabilities to develop relevant customer segmentation and to translate this analysis into differentiated customer experiences.

Which of your customers are these?

Life Managers: these working-class earners balance a demanding work life and family commitments. Pragmatic, value-driven and family-oriented, they opt for ‘tried-and-tested’ brands to accommodate a systematic approach to building their savings. Occasionally, they plan on purchasing big-ticket luxury items for personal enjoyment or family enrichment – especially during holiday and family occasions Moment Maximizers: These well-off and well-educated consumers comprise a ‘live-for-the-moment’ group interested in experiences. They purchase and use new products and technologies to access new experiences, but show little loyalty to the products themselves.

Fresh Starters: These consumers often own small start-up businesses and have limited financial resources. They are value buyers, seeking durability and value for money.

Family enrichment is a significant driver, as is affinity to trusted vendors. They typically seek out expert advice when making purchases.

Rough Diamonds: These established members of the mainstream business community are typically business owners or senior executives, at ease with complex offerings and premium brands. Time stressed, dynamic and very self-directed, they appreciate and seek quality and brand status and have little price sensitivity Young Royals: These urban, white-collar workers have high disposable income, and feel the need to live up to their high social status through strong affinity to famous international brands. They tend to be impulse buyers, in response to peer pressure and to reward themselves.

Trend Seekers: Young, westernized and typically living in large urban areas, these consumers aim to be recognised as ‘trendy’ irrespective of brand association. A limited income doesn’t prevent them from purchasing the latest – especially in technology, fashion and entertainment. As a result, they are heavy credit card users.

Family Enrichers: This mature group comprises many retirees, interested in using their accumulated wealth to try new experiences and products they missed out on when younger –especially high-end durables and personal leisure activities. Strongly opinionated, they indirectly affect family purchasing behaviour. Pragmatic and valuedriven, they have a strong sense of satisfaction in their purchasing power and take pride in ownership.

Source: Accenture’s Customer Centricity Report

26

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Sales advice

Barry Urquhart is from marketing and business strategists, Marketing Focus.

He is renowned internationally for his strikingly accurate forecast of the finish of the economic boom in 2008. His warnings of the credit meltdown, increasing unemployment levels and branch, plant, model and services closures have enabled companies, large and small, to gain and sustain competitive advantages.

support initiatives. The point is that all businesses, products, services and people need a new, fresh aspect.

Relevance is an overriding imperative. So mortgage brokers need to use an alternative sales opener.

Give them a reason

The point of sale Those responsible for sales often rationalise a reluctance to call on and canvas existing prospective and past clients with the contention that there is little point in doing so, because “nobody’s buying”. So what’s the point?

A strong focus on outcomes, rather than processes, is now essential for closure

O

n the other side of the fence, ‘timestretched’ prospective purchasers have their own take on the question.

They rightly see little or no advantage, benefit or point in a call from a sales representative who simply presents themselves once again. The key issue in business today, with the consequences and real or perceived fallout from the GFC, is not how to develop a sale, nor to extend the sale or even to close the sale. Instead, the richest rewards will be enjoyed by those who enhance their ability to open a sale.

Establish a salient presence

All good strategies recognise, respect and provide a well conceived, documented and implemented means to establish a salient presence in the market place and in the mind of consumers and clients. In the military parallel, this equates to establishing a beach head from which all developments, growth and control emanate.

Sadly, too many good endeavours in the current marketplace falter because of continuing use of obsolete advertising, promotional literature, packaging, sales call routines, buying packages, products and services. Those can be and are often considered to be boring.

Times have changed. So too have client needs, perceptions, expectations, preferences and buying criteria. Most challenging is the realisation and reality that many competitors and substitutes have also changed their sales strategies, products, services and

Existing and prospective clients need a reason to pause, to contemplate and to conclude a purchase.

Tim Treadgold is a well respected and well read business journalist. Each day he is the recipient of countless news briefs and media releases. Most are summarily discarded. In his disarming manner, Tim explains that many of the missives are interesting.

However, interesting is not good enough.

Tim’s challenge cuts to the chase. “What’s the angle?” he asks. For a story or a proposition to offer value to a publication, editor or journalist, it needs to be unique, captivating and compelling.

The same principles apply to industrial sales. Success will not necessarily gravitate to those who are industrious or more industrious. Winning business on price competitiveness and tendering is increasingly marginal, with margins being wafer thin. Therefore, seek out, establish and introduce creative sales openers.

A little homework

“Know thy enemy.” In contemporary business, clients are not deemed to be the enemy – but the principle still applies.

Customers and clients don’t necessarily want more, they simply want to get more. The distinction is subtle, but significant. In short, the product or service on offer needs to be an accelerator or leveraging factor in the prospective purchaser enjoying more satisfaction, more protection, more profit margin or more presence in selected target audiences.

Intuitively, a fundamental element in a strategically advantaged sales opener extend beyond qualifying, extending or closing the sale. A strong focus on outcomes, rather than processes, is now essential for closure.

Marketers refer to a well reasoned philosophy: “The objective of marketing is to make selling superfluous” Customers respond to, welcome, endorse and get enthusiastic about a great sales opener. The result is that they buy, rather than be sold.

Overcome objections

A great sales opener rarely ever encounters objections, which tend to be conditioned responses to stale, standard and repetitive representations. There is little to object to when the focus is on the positive, the upside and the consequences and benefits of a prudent investment. That’s a superb opening line!

So considerable rewards will be enjoyed by those who concentrate on the front end (of the sales process – the opening) and then immediately orient the prospective customer and clients to the outcomes.

www.brokernews.com.au

27

Web guru Sam Benjamin answers questions from readers on how to get the most out of their online presence. If you have any questions on online marketing, please email them to asksam@financetools.com.au

Source: These tips are provided by Smarttraveller.gov.au, part of the Australian Department of Foreign Affairs and Trade.

top ten tips

techie corner Online marketing

Q

Should I include testimonials on my website? Do people really pay any attention to them anyway?

(Roger, Penrith NSW) Sam: Including testimonials on your website is a sure-fire way to build instant credibility with your site visitors. It is important to feature them prominently on the site possibly in the header or top section of the website if the design allows for it.

While you may not believe people read these or pay them any attention, I daresay you would be mistaken! Whether consciously or not, people look for positive confirmation for decisions they are about to make or have just made. How many times have you thought about buying something but needed to look for just one more good reason to make that buying decision? Whether it is affirmation that the product is superior in quality which justifies the price or something else, we naturally look for a justification of our decision making process on some level.

Make it easy for potential clients to trust your organisation and your services by giving them reasons to do so which come from past clients.

It is a simple addition to any website and will be one from which you will reap the rewards.

Improving the bottom line

Q Planning an overseas trip Heading overseas to negotiate an important business deal or just taking a break from writing loans? Here are ten things you should keep in mind before you head off to the airport Tip 1: Check the latest travel advice for your destination. You can subscribe to receive free e-mail notification from the government each time the travel advice for your destination is updated at www. smarttraveller.gov.au Tip 2: Take out appropriate travel insurance to cover hospital treatment, medical evacuation and any activities – including adventure sports – in which you plan to participate.

Tip 3: Before traveling overseas register your travel and contact details online or at the local Australian embassy, high commission or consulate once you arrive, so the government can contact you in an emergency.

Tip 4: Obey the law. Australian consular assistance cannot override local laws, even where local laws appear harsh or unjust by Australian standards.

Tip 5: Check to see if you require visas for the country or countries you are visiting or transiting. Be aware that a visa does not guarantee entry.

Tip 6: Make copies of your passport details, insurance policy, travelers cheques, visas and credit card numbers. Carry one copy in a separate place to the originals and leave a copy with someone at home.

Tip 7: Check with health professionals for information on recommended vaccinations or other precautions and find out about overseas laws on traveling with medicines.

Tip 8: Make sure your passport has at least six months validity and carry additional copies of your passport photo with you in case you need a replacement passport while overseas.

Tip 9: Leave a copy of your travel itinerary with someone at home and keep in regular contact with friends and relatives while overseas.

Tip 10: Before departing Australia check whether you are regarded as a national of the country you intend to visit. Research whether holding dual nationality has any implications for your travel.

I recognise the need for communicating with my clients and do so through regular e-newsletters etc. What other online strategies can I use to improve my bottom line?

(Eleanor, Brighton Vic) Sam: A simple and often overlooked way of talking to your clients is through the use of online surveys. You can improve your business with the valuable data you can collect from your database. E-surveys are quite straightforward to set-up are low-cost and don’t have to consist of hundreds of questions. In fact we would recommend to start off you keep your initial survey short, two to three questions can even be enough as a starter.

For instance one place to start could be in e-mailing your clients a “Customer Satisfaction Survey” at the end of the loan application process. If you structure the questions well, you can receive a wealth of information about the conduct of your team and the level of service your client has enjoyed.

It is important to analyse any feedback you receive. You will more than likely see a pattern emerging in the answers which could turn out to be valuable and constructive criticism or equally, praise for things you are doing right in your business.

Try it! You may be surprised about what you learn about yourself and your business.

Writing about yourself

Q

I want to tweak my website a bit since we have been online for a while now. I am having a bit of trouble with the ‘About Us’ page. What do you suggest I include there?

(Jo, Mermaid waters Qld) Sam: I often suggest to people that the ‘about us’ page on any website gives the business the opportunity to really set itself apart from its competition and to tell the site user why they should choose your business. It is the perfect place to explain to your clients why you got into the business, what your unique story is and how this could benefit your clients – after all, you always have to bring it back to the client!

You need to let the site user know you and in turn your business.

What are your areas of expertise? What can you offer your clients? It is the starting point for building a relationship and trust with the client.

Using a photo of yourself is a good start. You may also like to include photos of your team. But ensure you use a professional photographer as there is nothing worse than the look of a poorly taken photo to ruin your business image quickly and effectively. Talk about your qualifications and organisations you may be affiliated with, list client testimonials, highlight any business achievement awards you may have won, explain how long you have been in business and so on.

The internet is a level playing field where large corporations compete with small (often one man) operations, for the same clients. The opportunities are endless, so don’t throw them away with a poorly planned ‘about us’ page.

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www.brokernews.com.au

News off the cuff Damian Percy Adelaide Bank’s general manager for third-party mortgages

What was the last book you read?

Just finishing Evolution: What the Fossils Say and Why It Matters by Don Prothero. A great primer on the interaction between palaeontology and evolutionary biology with which to feed your inner nerd. Before that I re-read Why Most Things Fail: Evolution, Extinction and Economics which I’d first read before the GFC – but it makes a lot more sense to me now!

If you did not live in Australia, where would you like to live?

San Francisco. Or a little town called Panzano in Tuscany where some friends and I have hired a house a few times. Both places are rich in culture, food, wine and engaging people.

If you could sit down to lunch with anyone you like, who would it be?

Paul Keating. If for nothing more than to expand my repertoire of obscure and interesting insults.

What was the first job you ever had?

My first ever paid job was working part time at the local Foodland: stacking shelves, packing groceries and mopping floors. My first job out of school was as an underwriting assistant for the then State Government Insurance Commission in Adelaide.

At the first one I learnt that mopping floors quickly requires rhythm and aggressive hip-swaying; and at the second I learnt never to allow the ‘perfume of the opportunity to mask the odour of the risk’.

What do you do to unwind?

First I play golf to add to my level of frustration; then I operate power tools and wade through violent video games to alleviate it.

What’s the most extravagant gift you ever bought yourself?

I’m not generally a big spender but treated myself to a set of Ping golf clubs a few weeks ago, based on the delusion that a $50 swing is best corrected with a $1,000 set of clubs.

What CD is currently playing in your car stereo?

Signature Songs and Classic Covers from the Liberation Music Acoustic Series. Awesome CD for anyone who’s a fan of acoustic Aussie rock. James Reyne’s version of Paul Kelly’s How to Make Gravy is worth the price of admission alone.

If you could give anyone starting out in business one piece of advice, what would it be?

“It’s better to be positioned to adapt to whatever the world my throw at you than to have the perfect solution to the way the world looks today.”

If I was not working in the mortgage industry, I would like to be…?

Sitting in Jon Stewart’s chair on The Daily Show.

Where was the last place you went on holiday?

I spent a month in California in early ’07 and failed to realise the implications of all the dead and dying lawns that I saw in the outskirts of Stockton, on the way back from Lake Tahoe. My three-year-old wanted to know why all the people had let their lawns die. I should have found out.

What is the one thing most people would not know about you?

Between 1992 and 2004 I wrote and performed in a musical comedy act called the Enormous Las Vegas Impersonators Society (AKA The Fat Elvises).

cont. from cover

>>

Club Financial Services’ director of sales and marketing, Simon Norris, said the franchise group was “pretty excited” about the announcement.

As one of Challenger’s biggest introducers via its white label product, Norris was hopeful the NAB acquisition would make Challenger the “non-bank arm of a new big bank”.

He was also hopeful of lower LMI premiums with NAB on board as well as better pricing and product availability.

“A higher LVR product funded of the balance sheet would be on the wish list,” Norris said.

Taking something of a contrary view, Connective principal Mark Haron said “things may not be as rosy as they are being made out to be.

“The NAB deal has been fantastic for us,” Haron said, alluding to an increase in interest from disillusioned Challengeraffiliated brokers.

“NAB now has a fair chunk of the industry. It depends on how tightly NAB wants to control the business and use it to extract value by ramping up its home loan and risk product distribution,” he said.

“It will have repercussions – other lenders have some concerns, though there is not a lot they can do about it,” he added.

WBP acquires Newcastle valuation firm Property valuers WBP has made another acquisition, adding Newcastle-based valuation firm Wolthers Property Valuers to its stable.

Wothers Property Valuers will commence trading as WBP Property Group (Newcastle) on 1 October with Mathew Wolthers, Henry Pawlik and David Turner of Wolthers continuing as directors of the business.

25th September 2009 The Westin, Sydney

the wait

is almost over Join us for the announcement of the winners and a night of alternate possibilities...

Book your table online at www.australianmortgageawards.com.au

EVENT PARTNER

AWARD SPONSORS

ONLINE PARTNERS

OFFICIAL PUBLICATIONS

www.australianmortgageawards.com.au

ORGANISED BY

30

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Insider

Got any juicy gossip, or a funny story that you’d like to share with Insider, drop us a line at insider@ausbroker.com

Appearing soon on an Xbox console near you…

T

he Greater Building Society may have employed the services of Jerry Seinfeld, but South Australian franchise Zobel has scored a marketing coup of its own, with its logo soon to be appearing in an Xbox video game.

The broker’s logo and website address will appear in the latest Xbox car racing game – Forza Motorsport 3 – which will be released internationally and in Australia in October.

The unexpected coverage comes after Zobel sponsored the Jay Motorsport Car in Adelaide’s Clipsal 500 event earlier this year – one of the cars chosen for the Xbox game.

“Cars are selected from races around the world to be included in games such as this and we were lucky the one we sponsored was selected,” said Zobel general manager, Andrew Zobel.

And the franchise group is not resting on its good luck. Andrew Zobel said he was hoping Xbox,

will take inspiration from their website game, “Zobel to the rescue” (where the player has to save people from loan sharks) and create a game resembling it.

To launch your own rescue mission go to: http://enabled.com. au/zobel/

Five banks to steer clear of…

T

here are some lists you want to be on – most beautiful, richest, happiest etc – and there are those you pray

you’re never on. And one of those must surely be Moody’s list of “Lowest rated banks globally”.

In its 10th August Weekly Credit Outlook Bulletin, Moody’s listed five banks with stand alone financial strength ratings of ‘E’. School memories suggest an ‘E’ was never and very good mark, and according to Moody’s definition it’s not one you’re likely to rush back to the office to show the company board either.

Moody’s says an ‘E’ rating indicates “very modest intrinsic financial strength, with a higher likelihood of periodic outside support”… (or ‘imminent government bail-out,’ Insider suggests).

Thankfully, none of these banks are based in Australia.

There are two in Kazakhstan (perhaps Borat had something to do with it?), two in Iceland (no surprises there), one in the US and one in Russia.

For the record, the five banks are Colonial Bank (US); Alliance Bank and BTA Bank (both from Kazakhstan); Glitnir Banki hf and Kaupthing Bank hf (both from Iceland) and Moscow Capital Bank.

NEWS FLASH: As Australian Broker went to press, Colonial Bank did indeed collapse.

For the best property advice…

N

ot many brokers would consider getting their property advice from ‘bogans’ – but apparently they are just the people who might have some great tips.

According to a blog on property website Domain.com.au, westies, booners and CUBs (cashed-upbogans) are the real winners in a slow property market.

This conclusion was based on data it analysed that showed that not only were repayments lower in so-called bogan suburbs, but property prices in these areas rose at a much faster rate than in up market neighbourhoods.

www.brokernews.com.au

31

Services

Australian Mortgage Awards 2009, 25th September, The Westin Sydney. Secure your table at www.australianmortgageawards.com.au

Eurofinance 02 9252 8311 www.eurofinance.com.au page 17

Aggregator/wholesale broker AMB Origination 1300 55 11 18 www.ambo.com.au pages 9 & 19

MKM Capital 1300 762 151 www.mkmcapital.com.au page 8

PLAN Australia 1300 78 78 14 www.planaustralia.com.au mail@planaustralia.com.au page 5

MORTGAGE MANAGEMENT/ NON-BANK Better Mortgage Management 1300 662 661 www.bettermm.com.au info@bettermm.com.au page 32

BANKS St. George Bank 1300 137 532 page 3 COMMERCIAL Think Tank 1300 781 043 www.thinktank.net.au deal@thinktank.net.au page 31 debtor finance Scottish Pacific Benchmark 1300 332 867 www.spbgroup.com.au enquires@spbgroup.com.au page 10

Symmetry 1300 723 613 page 15 Trailerhomes 0417 392 132 page 28 short term lender Crown & Gleeson 1800 735 626 www.crownandgleeson.com.au page 2

Mango Media 02 9555 7073 www.mangomedia.com.au page 1

Interim Finance 02 9971 6650 www.interimfinance.com.au page 6

NON CONFORMING Liberty Financial 13 11 80 www.liberty.com.au page 7

NCF Financial Services Pty Ltd 1300 550 707 www.ncf1.com.au page 16

Pepper Homeloans 1800 737 737 www.pepperhomeloans.com.au page 12

LEnder Citibank Mortgages 1300 651 059 www.mortgagebroker.citibank.com.au page 13

RP Data www.rpdata.com page 26

Wholesale Resimac 1300 764 447 www.resimac.com.au newbusiness@resimac.com.au page 21

other services Residential Mortgage Fund 1300 632 737 www.residentialmortgagefund.com.au page 11

CSL Money 1300 361 883 page 4

www.residex.com.au The House Price Information People

Residex 1300 139 775 www.residex.com.au page 30

To advertise in Australian Broker Call Simon Kerslake on +61 2 8437 4786