Australian Broker magazine Issue 8.10

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ISSUE 8.10 May 2011

Soft dollar perks fated for prohibition

Max Franchitto

 A financial

services consultant questions the future of volume-based incentives Alternative remuneration for sales volumes, or soft dollar benefits, should be eradicated from the mortgage broking industry, according to a financial planning industry expert.

Soft dollar benefits above $300, along with commissions in general, have been banned by government regulation of the financial planning

industry. Max Franchitto, a leading financial services consultant and managing principal of MGF Consulting Group, believes soft dollar commissions in mortgage broking should eventually suffer the same fate.

Franchitto said he does not believe it is possible for brokers to accept soft dollar benefits and fulfil their responsible lending requirements under NCCP. He believes it is impossible to remain unbiased when recommending credit products because soft dollar benefits are at stake.

“I say, you can’t. We’re all human, and if you needed one

more sale to qualify for a husband and wife trip to Bangkok, all expenses paid, why wouldn’t you?

Remove the temptation, and you’ll probably remove the sin,” he said.

Franchitto pointed to the ultimate outcome in the financial planning industry of soft dollar benefits, and said the mortgage broking industry can expect public attention to turn towards this form of remuneration, as the industry becomes more heavily regulated.

“This same big issue applied to any soft dollar benefits that financial planners received.

Industry groups either started to reject them or failed to fully disclose them upfront. Now, most don’t accept them – they’re not interested in getting incentivised that way.”

This public attention, Franchitto believes, could centre on the perception that soft dollar remuneration has the potential to erode broker independence. He argues, even if they’re properly disclosed, it could run the risk of jeopardising the broker-client relationship.

“The consumer wants to know they’re getting referred to a product or buying a product that suits them and fits their needs – not one that gives the advisor’s a bonus trip overseas. It leaves a bad taste in the client relationship if they think that’s the only reason they’re being sold a product,” Franchitto remarked.

Page 20 cont.

>>

DEF ban slam Big brokers lambast competition policy after Senate inquiry Page 2

Get unscrewed Non-banks a respite from rough major bank treatment: Driscoll Page 4

‘No quitting’ Westpac forced to defend channel commitment Page 14

Inside this issue Analysis 22 Skype face-to-face face-off Viewpoint 24 Senate inquiry report reaction Insight 26 Old marketing, or new marketing?

Market talk 28 Budget 2011: Winners and losers Toolkit 30 Your fee-for-service guide People 32 Webcke kicks off Homeloans branches Caught on camera Iden celebrates 10 years

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News Leading brokers praise Senate DEF recommendation www.brokernews.com.au

Stephen Porges

Two of Australia’s largest mortgage brokers have praised the Senate banking inquiry’s recommendation to dump the ban on exit fees.

In its report, the Senate Economics Committee argued that banning DEFs could raise upfront costs, and would ultimately hurt smaller lenders. Following release of the committee’s report, Mortgage Choice expressed strong support for the recommendation.

The company made public a letter sent by CEO Michael Russell to Treasurer Wayne Swan, in which Russell warned Swan the unilateral ban on exit fees would reduce lender competition by

disadvantaging non-bank lenders and second tier banks.

Russell has told AB that he would also support the Senate inquiry’s recommendation that non-banks be exempt from the ban.

“That would be fabulous,” he said. “In the absence of second tier lenders not being able to readily access funding as their major bank counterparts do, giving them the ability to be able to charge a conscionable, disclosable exit fee will allow non-ADIs to compete far more aggressively on price and features. This would give them a bit of a leg up from a competitive perspective. It’s good to level the playing field out a little.”

Aussie Home Loans has also expressed its support of the Senate inquiry’s recommendation. CEO Stephen Porges is pleased with the content of the report, but is sceptical the government will take on board the committee’s recommendation on exit fees.

“We’re thrilled that they listened. Do we believe that the government will actually listen to them? That’s the challenge,” Porges said.

Indeed, the government has already dismissed the inquiry’s recommendation on exit fees, accusing the report of catering to the interests of the major banks.

“What’s really disappointing is to hear the Liberals not only think that families should be locked into their mortgages, but they also think it’s understandable that the big banks jacked up their mortgage rates beyond official Reserve Bank movements,” Swan said in a statement.

Porges lambasted Swan’s statement, calling it “unbelievable”.

“Before you even have the chance to read the report, you’re already criticising it?” he asked.

Porges reiterated Aussie’s stance against the DEF ban, saying it would see competition in the sector diminish.

“The scrapping of exit fees is in direct contradiction to an improvement in competition. It’s almost a focused attack on competition,” he said.  For expert opinion on the Senate report, see our Special Report on page 16

Branch growth comes at expense of brokers: ING Major bank branch growth is a mounting risk to brokers, ING Direct has claimed.

Following a recent media kerfuffle in which Westpac was forced to defend itself against claims it was consciously cutting back on distribution to the third party channel, ING Direct executive director of distribution Lisa Claes said the third party channel is at risk from focus on first party branch networks.

“Branches provide these lenders with a wide geographical footprint from which to distribute without intervention of a third party,” Claes said. She commented that the growth of branch networks and

focus on proprietary channels will come at the expense of the broker channel. However, she spruiked ING’s commitment to brokers, saying the bank’s branchless model “goes hand in hand” with the use of third party originators.

NAB Broker general manager of distribution John Flavell has downplayed the concern.

“At the end of the day, consumers will make choices, whether that’s online, the branch network or the broker market,” he commented.

However, Flavell said he remained focused on ensuring the third party remained the largest source of mortgage originations for NAB. He commented that the

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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.

Lisa Claes

atmosphere of the current home loan market would see most consumers favouring brokers.

“The more complicated and more competitive the market is, the better it is for brokers,” Flavell said.

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Brokers ‘screwed’ by majors must use non-banks: Driscoll Mortgage manager Mortgage Ezy has slashed rates on its product suite, with CEO Garry Driscoll claiming brokers feeling ‘screwed’ by major banks need to dole out more support for non-bank lenders.

The company has reduced rates up to 40 basis points on its low-doc standard variable product, offering a rate of 6.99%. It has also lowered rates on its variable full-doc uQUIT loan by 15 basis points to 6.74%. Driscoll claimed that the rate reduction on the company’s low-doc product was evidence that hunger for low-doc lending has returned.

“A sub-7% low-doc rate in 2011 is pretty conclusive evidence the market has an appetite for self-employed borrowers,” he said.

Driscoll admitted Mortgage Ezy would take a hit on margins in order to offer the rate cuts, but said the company’s move was designed to “show everyone that the mortgage manager sector is very competitive, and will remain very competitive and is an extremely attractive alternative to the majors”.

In light of the company’s rate reductions, Driscoll commented that brokers should begin taking advantage of low rates offered by non-banks, and lamented brokers sending deals to major banks.

“The arguments over competition impacts from 1 July are irrelevant if brokers continue to just send business to the banks.

There is no point complaining

about getting screwed by the majors and then continuing to support them,” Driscoll said.

Driscoll commented that he believes many brokers continue to write business through major banks because it is “habitforming” and easier to sell to clients. However, Driscoll believes NCCP regulation will help mortgage managers see increased volumes from brokers.

“With the NCCP regulations, [brokers] will have to justify the product they’re selling. We believe that will really assist our sector.

If a product from a smaller funder is better, they need to justify why they’re pushing the borrower into something else,” he said. Driscoll vowed that the discounts to the

Garry Driscoll

company’s rates are not a temporary promotional move, and said the product line would include a standard upfront commission to brokers.

Mortgage House sees win in appeals court loss The NSW Supreme Court of Appeal has ruled against Mortgage House in a long-running dispute, overturning a previous decision in favour of the company and owner Ken Sayer.

The dispute involves Sayer and former business partner Zoltan Tomanovic, and Sayer’s buy-out of Tomanovic’s interests in their shared business. In 2004, Sayer and Tomanovic commenced negotiations for the buy-out, with Sayer paying Tomanovic $1.3m in the form of a loan. In 2008, however, Sayer demanded repayment of the loan. On appeal, however, Sayer has been ordered

to buy out Tomanovic’s 45% in their shared Global Mortgage Equity Corporation, taking into account the amount Sayer previously paid to Tomanovic.

Sayer will also be ordered to pay costs. The parties will have a week to agree to the process of determining the amount to be paid to Tomanovic.

Sayer has stated he is pleased with the decision, and claimed the court’s orders are tantamount to the offer he previously made Tomanovic. He claimed Tomanovic rejected previous offers because he wanted to retain the Mortgage House trademark and demanded

Sayer pay his capital gains tax on the buy-out. Sayer said the court’s decision removes these “hurdles”.

“What they’ve asked me to do is precisely what I offered Zoltan three years ago, and Zoltan wouldn’t agree to it,” he commented. “I’m smiling because all the muddiness is gone. I didn’t want to force him out, I wanted to buy him out. One hundred per cent of our disagreement has just been about money.”

Sayer said he plans to propose to the Supreme Court that four top tier accounting firms submit tenders to value Tomanovic’s 45% share. He claimed this would

Ken Sayer

present an objective valuation.

“I don’t really care what the number is. At that point, it’s cleansed,” he said.

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‘Put us on the shopping April sees home list’: St.George loan drop-off St.George Bank representatives have urged key aggregation partners to utilise its renewed appetite for home loan business, and assured intermediaries that it is back in the market.

At a gathering in Sydney, St. George head of intermediary distribution Steven Heavey told aggregators that recent changes to its offering demonstrated that “we are here, we are back”.

While acknowledging “question marks” may have been placed over the bank’s commitment to the channel following the capital challenges it faced following the financial crisis, as well as a slowdown in new business following the Westpac merger, Heavey said the bank is “absolutely” back.

St.George is committed to making it easier for aggregators and brokers to deal with the bank, according to Heavey, who cited its newly-launched online accreditation and education system, available at no charge to brokers. Heavey also flagged a “raft of changes” to come.

NSW state managers Paul Mullens and Alan Hemmings told aggregators that while the bank had a 14% market share in this key state, it had not managed to achieve that level with all aggregators and was aiming to

Steven Heavey

increase its share of intermediary business.

Referring to commissions, Hemmings said the message had been lost that the bank was also paying more than half of its brokers 70 basis points upfront, or an average of 58 points upfront on deals, following its restructure of third party commissions.

St.George revealed it will expand its tier of ‘Gold’ brokers from 800 to 1,000 in the near future, and was potentially on the lookout for new ‘Flame’ brokers. It will also look to expand its overall total accredited numbers via its new online system, following previous cuts.

Hemmings urged aggregators to “spread the word” to their broker networks that the bank is back in business, while Mullens said the bank should be “on the shopping list”.

April has seen credit demand take a significant hit due to rising interest rates and cost of living pressures, coupled with falling property prices, according to AFG. Recent figures from the mortgage broker show home loan sales fell by nearly 10% in April this year compared to April 2010.

AFG processed $2.1bn in mortgages for April, compared with $2.3bn in April last year and $2.8bn in April 2009. Month-onmonth figures have shown a 15.6% decline, though the company put this down to the impact of the extended Easter and ANZAC Day public holidays. The month saw a rise in volume per day business to $117m from $111m in March, but the result remained lower than previous years.

AFG general manager of sales and operations Mark Hewitt said consumer confidence has taken a severe hit amid dwindling property prices, rising interest rates, cost of living pressures and fear surrounding a carbon tax.

“As people start to see their net worth eroding because of falling home and investment property values, they become even less likely to spend. The government needs to address this problem in its forthcoming budget, and provide a circuit breaker to restore confidence among consumers that

the underlying fundamentals of our economy are still strong,” Hewitt said.

In addition to the decline in volumes and values for home loans, average LVRs saw their sixth consecutive month of declines. The average LVR now sits at 49%, down from 49.9% in March and 63.3% in April 2010.

AFG stated that fixed rate demand has remained steady, accounting for 6.4% of home loan products. Refinancing figures also remained unchanged at 36.7% of all new home loans.

 Volatile market: Total number of AFG home loans processed Month Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11

Loans 7,376 6,150 6,624 6,159 5,698 6,269 6,157 5,891 6,619 5,472 3,583 5,365 6,436 5,489

Advantedge to give insurance model choice Advantedge will give FAST, Choice and PLAN brokers three options for selling its ‘loan protect’ debt insurance product, initially launched at the end of last year.

Flagged first by Australian BrokerNews in October last year, the product – designed by reinsurer Swiss Re and providing cover up to $750,000 – can provide clients with lump sum benefits in the event of loss of life, terminal illness, trauma and total permanent disability.

Head of Advantedge Financial Solutions, Craig Saville, told Australian Broker that its referral model – where brokers refer insurance business to a purposebuilt call centre for insurance sales – was only one of three options brokers would eventually have available.

Saville said the alternative options would be a ‘partner planner’ model, where brokers refer business to an Advantedgelicensed but independent financial

planner, and share the commission, or employing a dedicated financial planner within their broking business.

Advantedge only launched its ‘partner planner’ model in WA in mid-May, with Saville saying the business will consider the roll-out a pilot in the short-term, and would only pursue a gradual ramp up as it ensured that it had the model right.

“This model gives confidence the planner won’t take the client away and leave the broker in the lurch – on the flipside, it gives brokers comfort that the planner is licensed through Advantedge, and understands brokers,” Saville said.

As an example, Saville said an Advantedge-licensed but independent financial planner would be connected to a “pod” of between five and 10 brokers, who could then refer any insurance business to that planner to provide a face-to-face option. “We would love to have half a dozen

[planners] by Christmas. We could go faster, but we want to get this done professionally,” he said.

Advantedge has not yet implemented the third model, but Saville said the option of employing a financial planner would suit very large broking firms, who want a dedicated resource and can afford the associated salary and overheads.

Advantedge has been marketing its ‘loan protect’ product to FAST, Choice and PLAN brokers since late last year, and now has 600 accredited brokers within the network. The business has so far

completed 40 sales, and is targeting 600 by year end.

Brokers can choose from one of two commission structures – 40% upfront and 12% ongoing trail, or an even 17.6% upfront and ongoing trail for level premiums (with 14.4% upfront and ongoing trail commission for stepped premiums).

Saville said the product gave brokers a way to diversify their income, build business value and build long-term client relationships. “Because of brokers’ close relationships with clients … they are in a pole position to offer insurance products.”

 The three diversification models »» ‘Referral’ – Accredited brokers refer clients to a dedicated ‘loan protect’ call centre »» ‘Partner planner’ – Advantedge-licensed financial planners provide a referral option for a specific ‘pod’ of brokers in one area, and commission is shared »» ‘Employed planner’ – Larger businesses employ specially trained financial planners

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Mortgage demand suffers first quarter decline

Applications for mortgages fell almost 16% in the January to March quarter when compared with the first quarter of 2010, as part of an overall ‘flat’ result for credit demand so far in 2011.

Figures from Veda Advantage show mortgage applications fell 15.7% when compared with the first quarter of 2010, or a 6.5% decline when measured against the final quarter of 2010.

Queensland recorded the most severe decline in mortgage applications year-on-year, which Veda measured at 26.4%. The Northern Territory followed with a drop of 22.5%, while Western Australian mortgage demand declined by 18.4%, Tasmania by 14%, South Australia by 13.7%, Victoria by 13.8% and NSW by 9.5%. The smallest decrease year-on-year was 7.7% in the ACT.

Mortgages fared worse than credit card applications, which only decreased 1.9% in the January to March quarter when compared with a year ago, putting them 1% up on the last quarter of 2010.

Meanwhile, personal loan applications increased by 3% year-on-year, which represented a 4.3% increase when compared with the last quarter of 2010.

Veda Advantage head of consumer risk Angus Luffman said that overall consumer credit demand growth remains flat at 0.4%, however, he said that results did vary considerably across the states and territories, and that Queensland in particular recorded a sharp decline in credit card demand of 13.2%.

“It is still too early to determine whether this decline in credit card demand was due to the floods experienced earlier in the year,” Luffman said.

“Credit demand has continued its stabilisation, remaining relatively flat in this quarter after declining for most of 2010,” he maintained.

“However mortgage enquiries have continued to decline after the very strong activity up until the March 2010 quarter.

“This is supported by findings in our most recent Australian Debt Study, where for the second consecutive survey, property purchases were the most common reason for consumers owing more than they did 12 months ago,” explained Luffman.

 Demand in the doldrums • Mortgage applications down 15.7% in first quarter 2010 • Credit card applications down 1.9% in first quarter 2010 • Meanwhile, personal loans increased by 3% year-on-year

NAB Broker beginning to hit stride: Flavell Broker contribution to NAB’s recent mortgage growth is a signal NAB Broker is starting to perform at its potential, general manager of distribution John Flavell has stated.

NAB’s recent first half results indicated 141% growth for NAB Broker since March 2010. Flavell has commented that while the result is pleasing, it is not unexpected.

“It’s really about us performing where our natural market share should be. One-in-four or one-infive of all loans written by a broker really should be on NAB paper,” he commented.

Flavell said improvements in the bank’s service platforms and lending policies are beginning to woo more brokers. He claimed

that brokers were also beginning to see the benefit of the bank’s ramped trail structure. Flavell also expressed satisfaction at the quality of loans being brought to the bank through the broker channel.

“Growth is one thing, but the other thing we’ve been able to bring on board is good quality business.

“The quality of the business is first rate,” he commented.

Flavell referred to recent half year results from rivals ANZ and Westpac which indicated a spike in mortgage arrears. He said while arrears are rising for the other majors, NAB has seen its delinquencies decline.

“Ours continue to go down.

That’s reflective of the quality of

the business we continue to put on the book. Run-off is also down, so the customer/NAB Broker relationship is extending all the while,” he said.

Flavell commented that while NAB and the other majors will continue to diversify their mortgage origination through both third party and proprietary channels, he believes brokers should be the main source of origination for the bank.

“I’m very one-eyed and focused on brokers. I want to get out there and make sure the broker channel is the biggest part of the pie,” Flavell commented. “When I can go into the broader NAB business and say, ‘Look at the potential this channel has to produce good volume and quality business,’ it

John Flavell

makes a really strong proposition to the NAB Group to continue to invest in the broker channel.”

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AFM ups offer by shaving margins Australian First Mortgage has cut interest rates on its Advantedge Complete Option products in a move director Iain Forbes said would force brokers to consider the group a serious non-bank competitor.

The 0.04% rate reduction, which brings the full-doc rate down to 7.05%, comes along with no application fee, valuation fee, legal or annual fees, and is applicable to loans not yet formally approved.

Speaking with Australian BrokerNews, Forbes said the marketplace would need to consider the offerings of nonbank lenders.

“Non-bank lenders, and particularly companies like AFM – which is a small family company – do not work on the basis of bottom-line profit in every instance,” Forbes said. “As a company, we have come through

the GFC, increased our volumes, and are increasing our profit growth every month, with new business settled far exceeding loans discharged.

“We’ve taken the view that if we reduce rates, we’ll get more volumes, and that profit trend will continue at slightly reduced margins. We want to be seen as a force in the marketplace,” he said.

Referring to AFM’s previous MPA accolade for ‘Best Non-Bank Lender of the Year’, Forbes said that AFM wants to be seen as the best non-bank lender in the country. “We don’t just say it, we mean it,” he said.

“We’ve now been in business for eight years, and we work on really low margins.

“While we are doing that, the cost of running the business has increased substantially in the last two years.” Forbes named NCCP

compliance and new work in regard to the abolition of DEFs as examples.

“Overall, expenses are quite high, and margins have reduced, but that’s OK. We continue to increase our profitability, look after our existing clients, and see a reduction in loans being discharged,” he said.

 AFM ‘wait and see’ on clawbacks Australian First Mortgage will announce its response to the government’s ban on exit fees by the end of May, though director Iain Forbes has indicated the introduction of clawbacks may be “inevitable”. Forbes said that the non-bank lender had adopted a no-clawback policy from day one, but that following the legislated ban, no company could afford to absorb the cost of early refinancing by a customer, or incidences of churn by brokers. “Because of our no-clawback policy, we have seen borrowers take out a loan, and sell their property within two months – then we have lost on that deal,” Forbes said. He also said that a loan needs to be on the non-bank’s books for four to five years “before anyone starts making any money”. However, he added that the creation of a new level playing field may provide non-banks with opportunities.

Banks report strong profits, warn of slowed lending growth The four majors have reported solid first half profits, while warning that the days of strong credit Michael growth may Smith be over.

Westpac has announced a cash profit of $3.17bn for the six months to March 2011, up 7% from analysts’ forecasts. While Westpac CEO Gail Kelly was optimistic about the economy, she warned that lending growth is set to remain sluggish for some time.

“Key indicators were generally positive during the half with the economy generating good growth,

low unemployment and moderate inflation. Despite this, both consumers and businesses remain relatively cautious and while confidence is expected to pick up, lending growth is likely to be moderate in the immediate future,” Kelly said.

CBA also saw a strong profit, reporting third quarter cash earnings of around $1.7bn. The result brings the bank’s cash earnings for the year to date to $5bn, and puts CBA on track to top last year’s cash earnings of $6.1bn.

Likewise, ANZ has reported a solid first half net profit, posting $2.66bn compared to last March’s $1.925bn. ANZ CEO Mike Smith, however, has warned that banks will have to get used to a lower

Iain Forbes

growth environment. Smith told investors that waning demand for housing credit could lead to falling prices, but commented that this was not necessarily a negative result.

“I think that some of the reduction in prices is probably not a bad thing. Certainly the affordability issue is something that has been of concern,” Smith commented.

NAB also beat analysts’ expectations in announcing a net profit of $2.428bn, up 15.9%.

Cash earnings also increased 21.7% to $2.668bn. NAB also continued to see traction from its home loan marketing campaign, with its housing loan market share growing to 13.8%, from 13.3% in September 2010.

While rivals ANZ, Westpac and CBA reported increases in mortgage arrears, NAB saw a slight decline in 90-day delinquencies.

In its release to investors, NAB showed more optimism regarding lending growth, predicting housing credit would see growth throughout 2011, while house price growth would remain soft.

The bank once again predicted two RBA rate hikes before the end of the year.

 How the majors fared Westpac: First half cash profit of $3.17bn, rise in mortgage arrears CBA: Third quarter cash earnings of $1.7bn, rise in mortgage arrears ANZ: First half net profit of $2.66bn, rise in mortgage arrears NAB: First half net profit of $2.428bn, decline in mortgage arrears

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WORLD Banks: Aussie banks not that bad In spite of widespread public criticism of the banking sector, Australians have ranked as the third most satisfied bank customers in the world in a global survey. The Capgemini World Retail Banking Report found Australia ranked just behind the US and Switzerland in customer satisfaction. The report indicated 70% of Australians were satisfied with their banks, while the global average of satisfaction came in at 59%.

The report found that banks worldwide are falling short of meeting customers’ needs in the area of banking channels. Globally, customers identified the branch and internet channels as the most popular, but fewer than 50% reported having positive experiences with either channel. The survey said that use of the branch channel will shrink in the years ahead, in favour of online loans.

 The world’s most satisfied customers 1 US 2 Switzerland 3 Australia Source: Capgemini World Retail Banking Report

Canada: brokers hold share A new Canadian Association of Accredited Mortgage Professionals poll suggests that brokers are maintaining their share of Canada’s mortgage business. Of the 2,000 Canadian consumers interviewed for the spring survey report, Stability in the Canadian Mortgage Market, 55% said they consulted a mortgage broker sometime in the 12 months prior to the April poll.

That figure is up on 2010, when the figure was 53%. However, when it came time to commit to a mortgage, only 27% did so through a broker, down from the 30% from a year earlier. In terms of renewals, refinances and transfers, this year’s survey suggests 35% of Canadian buyers consulted a mortgage broker, although only 19% would ultimately use them for the transaction. The story for banks was relatively unchanged, with the Big Five in Canada continuing to claim about 50% of new mortgages, although their share of refis and renewals grew from 56 to 60% over that period.

UK: FHBs back as criteria erodes More first-time buyers got onto the property ladder in April in the UK as a result of slowly loosening lending criteria, research has found.

According to a report in the UK’s Mortgage Solutions magazine, an e.surv survey found properties under £125,000 accounted for 27% of all mortgage approvals in April compared to only 20% in April 2010 and a 12-month average of 23.8%.

The survey said that last year, wealthier buyers represented a disproportionate share of the market.

However, last month 79% of all approvals were for homes under £250,000, or typically first-time buyer property, which was up from 71% in April 2010. The e.surv data showed lenders are beginning to loosen criteria, which has helped more first-time buyers qualify for high LTVs. It reported purchase volumes increased in the 85 to 90% LTV bracket at almost three times the pace of the rest of the market since last year.

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LJ Hooker planning ‘aggressive’ growth The finance arm of real estate business LJ Hooker is planning an ‘aggressive’ recruitment campaign, following the growing traction of its branded Classic Home Loan range offering over the past three months.

General manager of LJ Hooker Finance Peter Bromley said the business would embark on a recruitment drive over the next 6–12 months, which would target existing brokers in Queensland, NSW and the ACT. Bromley said this followed a period of growth for its Classic Home Loan product, which he said is being helped by its real

estate agent network “really buying into the finance proposition within LJ Hooker”.

Bromley said while starting from a low base, the Classic Home Loan had tripled in volume over the past three months, and was rated in March as second on its panel of lenders.

“We worked hard at this. We looked at what a customer wants and what a broker wants, and have been able to put that together with our product range,” he said.

Bromley said the product’s growth would help in conversations with brokers the business hadn’t approached yet,

 Rewind: LJ Hooker dumps DEFs Last issue, Australian Broker revealed that LJ Hooker Finance had dumped DEFs on its Classic Home Loan range ahead of a 1 July deadline, and that it had instituted a clawback policy as part of the new structure. The business also gave clawback exemptions for instances out of broker control. The business saw the move as an opportunity to differentiate itself from its competition, who have been slower to detail their clawback stance.

which will be the targets of the recruitment drive.

“We think there’s a good proposition for them now, not only in terms of leads, but also in terms of our licensing model, for credit reps.” Bromley added that the newly-announced clawback exemption policy following its DEF ban added appeal in comparison with other lenders.

“The industry has gone through so much change, I think a lot of brokers feel a bit threatened.

We try to give them back some support, so as they invest in their business, we are there to help them,” he said.

Bromley said that the group is already getting regular enquiries, and that he could realistically “fill 50 spots tomorrow”.

The Classic Home Loan product is funded by ING Direct and Advantedge, with Bromley flagging that the group expects to add a third funder to that list within the next three months.

Peter Bromley

The industry has gone through so much change, I think a lot of brokers feel a bit threatened

www.brokernews.com.au

13

No end in sight for housing downturn: SQM quarter, then we are likely to see considerable falls over and above our existing forecast,” Christopher claimed.

 Housing stock on the market 120%

Year-on-year change

104.5%

100% 80%

82.3% 72.6% 72.9%

73.4%

74.8%

68.7%

65.1%

60%

54%

40%

Source: SQM Research

National

Sydney

Perth

Melbourne

Hobart

Darwin

Canberra

20%

Brisbane

The housing market downturn is unlikely to end any time soon as unsold stock rises, a property research firm has claimed.

SQM Research has indicated stock on market for April has seen a 3.9% increase from March, and a 68.7% increase from April last year. The increase amounts to a rise of 151,000 properties on the market.

The firm pointed out that the significant year-on-year increase

ahead. “Melbourne is now experiencing a massive oversupply of real estate in the market. If this continues into the next

Adelaide

Louis Christopher

can be attributed to April 2010 being a low point in the stock cycle for the year.

Melbourne has seen the most substantial increase of unsold stock, with 5.2% more stock on the market in April than in March.

The city has also recorded a year-on-year increase of 104.6%.

While no capital cities showed decline, Darwin saw the smallest growth in unsold stock with an 0.6% increase since April and a 54% year-on-year increase.

SQM has claimed the increase in stock is “sufficient evidence the housing glut has officially set in”.

The company has predicted that house prices will continue to fall as stock on the market goes up, and is forecasting a 5–10% drop in prices nationwide over the next two years.

Managing director Louis Christopher said there is “no imminent end in sight” for the housing downturn. He claimed Melbourne can expect to see significant declines in the months

14 www.brokernews.com.au

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Westpac will not quit on brokers: Bough

Westpac has denied that it is consciously cutting its distribution through third party broker networks, arguing that the bank’s commitment to the channel “has never been stronger”.

Following the group’s profit announcement, a media report by Banking Day in May claimed Westpac had decided to “call it quits” on brokers, in favour of higher margin first party branch networks, which the article suggests provide more lucrative

cross-sell opportunities. In support, Banking Day cited a drop in third party mortgage origination by the banking institution, from 41% of loans written in the March half last year to 29% in the September half, which increased slightly to 31% in the most recent half year period.

Meanwhile, subsidiary St.George’s third party origination fell from 44% to 34% over the past year.

However, general manager of mortgage distribution at Westpac,

Huw Bough, told Australian Broker that just because first party channel percentage of mortgage loans grew, does not mean the bank is less committed to its broker network.

“The percentage varies every quarter with every lender; there are ebbs and flows, for example, currently our [third party] percentage is significantly higher than the last six months,” Bough said in early May. Bough said the bank remains “absolutely committed” to respecting customer choice, including their decision to source new loans through brokers.

“We rely heavily on broker distribution because our customers choose to deal with brokers,” he said.

Westpac also sought to quash suggestions that first party sourced customers were better cross-sell opportunities for the bank, supplying figures which show that at present, 76% of broker-introduced customers have four or more products with the

Huw Bough

institution. Westpac has a continued desire for brokersourced business, according to Bough.

“The facts are we have had some of our best market share results over the last few months and we continue to have a strong appetite for business,” he said.

Westpac announced a cash profit of $3.17bn for the six months to March 2011, up 7%.

www.brokernews.com.au

15

Small business in cash Resi targets flow crisis: Liberty franchise growth SMEs are facing increased cashflow pressures when compared with last year, threatening the ongoing health of their businesses, according to non-bank lender Liberty Financial.

Liberty documented a 100% increase in enquiry levels for debtor finance facilities in the six months from September 2010 to March 2011, when compared with the same period a year before.

Meanwhile, applications were up by over half of last year’s volumes, which Liberty Financial said comprised of a “significant” value of total facility limits.

Liberty general manager of business finance Winston Nesfield said the trend was reflective of banks tightening up credit for SMEs, leading to increased deal numbers as well as deal size.

Nesfield said many new customers had also reported a slowdown in repayment times by their debtors.

“This has had a dramatic impact on the health of their business,” he said. “This obviously places pressure on their business, as creditors nevertheless still expect to be paid on time. In many cases these customers have found it difficult to obtain finance from their banks. This combination of slower repayment by trade debtors and tighter credit availability is contributing to higher business failures.”

A recent Dun & Bradstreet survey showed trade payment terms reached a 10-year heigh in the March quarter, at an average

Winston Nesfield

of 56.6 days, leaving small businesses “particularly prone”.

Liberty Financial is hoping that debtor finance will make a significant contribution to its diversification strategy across mortgage, motor and SME lending, according to Nesfield.

“Traditional lenders have pulled back from SME finance and haven’t rushed back postGFC, and therefore we are targeting this as an area for growth,” he said.

At present, two-thirds of Liberty’s debtor finance business comes via third parties, including finance brokers and professional advisors. Liberty is currently involved in an outreach to finance and leasing brokers, as Nesfield said many of the balance sheet skills required are similar to leasing.

Resi Mortgage Corporation will attempt to boost its franchise numbers in new locations over the next two years by marketing its support model to interested brokers, CEO Lisa Montgomery has said.

Resi announced in a media statement that it had set its sights on opening new franchise offices in key metropolitan and regional locations within two years.

Speaking with Australian BrokerNews, Montgomery said Resi was currently concentrated on the Eastern Seaboard, and therefore would be looking to expand its footprint in Western Australia and Adelaide, as well as other locations.

“We have just opened a new branch in Mt Gravatt in Queensland, and more are set to follow,” she said. “We are adjusting our model to attract a greater volume of candidates looking for a variety of support mechanisms for their business, such as marketing, risk and compliance and lead generation. We have a very broad base of support for our current franchise base, so it is about varying that model slightly to attract those who may be disenfranchised with their current arrangement, or are looking for more support and a strong brand to grow their business.”

Montgomery went on to say that established internship program instituted by Resi gives interested brokers and broker businesses a model to ease into their relationship with

Lisa Montgomery

the franchise business.

The growth push is being overseen by national franchise manager and former broker Paul Liccione, who was recruited to head up the push to build relationships with new brokers.

 Rewind: Montgomery on turnarounds Following Resi’s decision to establish an in-house delegated underwriting authority with Advantedge, CEO Lisa Montgomery said in February this year that it had enabled the lender to hit a turnaround “sweet spot”.

Montgomery said that as Resi was no longer “at the mercy” of funder facilities and their turnaround priorities, it could create a boutique service proposition through approval control.

16 www.brokernews.com.au

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SPECIAL REPORT: SENATE COMMITTEE SLAMS DEF BAN

Senate inquiry vindicates MFAA push The MFAA has welcomed two key recommendations of the Senate Economics Committee inquiry into banking competition, with CEO Phil Naylor vowing to keep fighting to achieve its agenda for the industry until the “fat lady sings”.

Following the release of the Senate Committee’s report on competition in Australian banking, Naylor welcomed recommendations for the scrapping or scaling back of the legislated ban on exit fees, as well as the introduction of a Canadian-style securitisation model. Both recommendations

were key areas of focus for the peak industry association during the Senate inquiry into competition, which included providing a submission to the inquiry.

“We certainly welcome the recommendations,” Naylor told AB after their release. “They are pretty well identical to what we put to the Committee when we made our submission.”

Naylor said the association had made a strong argument for introducing a Canadian-style securitisation model.

“Although the Committee thought it was not appropriate to

The Canadian Mortgage and Housing Corporation was created in 1985, with the passing of the National Housing Act Mortgage-Backed Securities Programme. The CMHC essentially provides a government guarantee on securitised transactions – in a similar way to Fannie Mae and Freddie Mac in the US. The CMHC enabled issuances of $85bn in 2007, $145bn in 2008 and $134bn in 2009, during the period of the GFC. These provided around 25–30% of the funding for residential mortgage credit over that period. The system has also arguably assisted in maintaining a less concentrated environment, where banks own roughly 73% of the market.

establish this at the moment, they have asked Treasury to work on how one can be introduced – that is positive, and sows the seeds for its introduction some time in the future,” he said.

Explaining the focus on securitisation by the MFAA, Naylor said it was crucial to reviving competition.

“Our view is that the reason competition had fallen away is that non-bank lenders had been neutered by the GFC, because securitisation had died, and non-bank funding came from securitisation,” he explained.

“Our take was that the only real way of getting meaningful change, and a reversion to better competition, was for securitisation to be revived. It is clear this is not happening in any major way in the short term.”

Naylor said the MFAA had been looking closely at the Canadian model for years, particularly following the GFC. “The key was it worked right through the GFC, and continued to pump out

Genworth stands ground on LMI

Exit fee law change too early to call: Gadens

Genworth has responded to the Senate banking inquiry’s calls to make LMI transferable or pro rata refundable.

The Senate Economics committee has recommended that LMI policies be transferable between home loans, or that an automatic pro rata refund be issued in the case of early discharge. The committee’s report questioned whether the Australian LMI market was truly competitive.

Genworth has responded to the report in a statement provided to Australian BrokerNews, and has pointed to partial refunds currently available in the market.

“Genworth provides to lenders a partial refund for up to two years for borrowers who choose to switch or pay out their loan. Genworth offers partial refunds to all lenders; however, some lenders choose to offer all borrowers a community-based upfront discount to their LMI premium in lieu of the refund option that Genworth offers,” the company said.

While the insurance provider did not directly address the issue of portability, it stated it would be working with industry to improve consumer awareness of the nature of LMI policies. Genworth further

Gadens Lawyers has said it is too early to predict whether a change in the law will result from a recent Senate Economics Committee report, which recommended the scrapping of the government’s exit fee ban or limiting the ban to ADIs. Gadens Lawyers senior partner Jon Denovan said, in reaction to the release of the report, that he was pleased to see a recognition by the Senate Committee that the prohibition on exit fees will “reduce competition and consumers will be worse off”.

“In particular, the Committee recognises that smaller lenders can’t be placed in a position where borrowers can come and go for no cost,” Denovan said.

However, he said that it was uncertain how the government would proceed in light of the Senate findings. “It’s too early to tell whether there will be any change in the law,” he said. “The issue is a difficult one because ‘banning exit fees’ sounds like a great idea for consumers until you think it through and understand the consequences.”

Denovan has suggested the inquiry findings will create more confusion in the industry, as it

 What is the Canadian model?

stated that it has recommended to the Senate inquiry that LMI be included in the government’s proposed mortgage fact sheet.

Ellie Comerford Genworth also dismissed the Senate Economics Committee’s calls for LMI to be paid in monthly instalments rather than a lump sum. The company stated that this payment structure is currently only available in the US, and claimed the structure could have pricing consequences, as well as unintended impacts on regulation and housing affordability.

FBAA president Peter White praised the recommendations, saying the Senate committee had listened to lobbying efforts by the FBAA. However, he said action on LMI could be low priority for the government. “It’s up to the government to do something. It could be 12 months, 18 months, two years before the issue even gets looked at further. If there’s a change in government, though, I can guarantee the matter will be escalated in priority,” White said.

securitised funds for both bank and non-bank lenders and maintained competitive forces.”

Naylor praised Phil Naylor the Committee’s recommendation on the exit fees, saying that homebuyers will be the winners if the findings are adopted by government.

“The Committee heard the submissions and formed the view that banning exit fees would hurt small mortgage lenders. It was small and non-bank lenders who made mortgages so competitive in the decade to 2006.”

The MFAA has vowed to step up its lobbying efforts in light of the new report. “We’ll go back to the government – and the Coalition in particular – to enlist their support, and see what mechanisms are available to change the government decision or amend it,” Naylor said.

attempts to meet a 1 July deadline for removing DEFs. “The industry has faced a lot of change lately, and to have this important issue up in the air is just more disruption,” he said. “You can imagine that investors thinking of investing in the mortgage market must be thinking – ‘what next?’ ” Gadens has also continued to support the scaling back of the exit fee ban. “Better products and lower interest rates can only be provided by smaller lenders when there is a two-way bargain: ‘I’ll give you a special deal if you promise to use my services for a while’,” Denovan explained.

“Imagine if airlines were obliged to allow passengers to change their mind after they have boarded. This analogy is fair, as the airline has incurred costs that it needs to recoup,” he said.

www.brokernews.com.au

17

SPECIAL REPORT

Broking associations clash over funding future FBAA president Peter White has argued against the Canadian securitisation model touted by the MFAA. In the Senate banking inquiry into banking competition report, the Senate Economics Committee has recommended a Canadian-style securitisation market be adopted. The model has been heavily supported by MFAA CEO Phil Naylor.

However, White said this model is not ideal for helping the securitisation market.

“The Canadian model is basically Fannie Mae and Freddie Mac. History has shown any fully government-run securitisation model has screwed up in the past,” White commented.

Instead, White said the government should consider other measures to help securitisation in the non-ADI sector to get “back on its feet”. He has suggested, in line with the Senate inquiry’s recommendation, that barriers to foreign entry into the Australian banking market be removed.

“APRA and the government need to make

the entry of overseas banks not so cumbersome.

It’s stopping other countries coming here, which would make the Big Four more competitive,” he said. White believes that offshore banks will also provide a boost to the non-ADI sector through wholesale funding facilities.

White identified the cost of government deposit guarantees to second tier players as a cause of concern. “The second tier banks are paying around 40 basis points more than the majors. It should be an even playing field. Second tier banks are actually supporting the non-bank sector through mortgage managers,” he said.

However, White does not believe a government-backed securitisation market will bring long-term benefits. “The Canadian model is not the answer. If it was that brilliant, the whole bloody world would be using it,” he said.

 What did the Senate inquiry recommend?

DEFS

Scrap the exit fee ban, or exempt non-ADIs from the ban.

Securitisation

Develop a government-backed RMBS support program similar to the Canadian model.

Inquiry

Hold a full Wallis-style inquiry into the financial services sector.

LMI

Make LMI transferable or pro rata refundable. Alternatively, allow LMI to be paid in instalments rather than a lump sum.

Bank profits

Have the RBA publish regular information on banks’ interest margins and returns on equity, comparing the returns to other industries.

Government deposit guarantee

Remove differential pricing for the government deposit guarantee. Standardise the fee for all borrowers to a uniform rate of 70 basis points.

Former Wizards back Senate stance Two former Wizard Home Loans executives have come out in support of Senate Economics Committee recommendations that suggest ways of reviving competition in banking.

Yellow Brick Road’s executive chairman Mark Bouris and Intouch Home Loans CEO Paul Ryan argued that the government can stimulate competition via RMBS support. “The government has powerful reform opportunities available to it,” Bouris said. “For example, more policy thinking needs to be invested into ways to help vouchsafe the liquidity of Australia’s securitisation market. Securitisation as an alternative source of funding enables lenders to secure capital on broadly the same terms, irrespective of their size. In principle, this means that Yellow Brick Road could raise funding at the same cost as CBA, so long as the quality of our loans was no worse,” he said.

Specifically, YBR has recommended the government consider a more permanent

liquidity facility via the AOFM, which would make markets in RMBS “on commercial, arms-length terms”.

“We also believe that the government must urgently address the fact that the RMBS market remains completely unregulated,” Bouris said.

Ryan said if the government is able to guarantee RMBS markets in a similar way to the so far successful Canadian model, it would provide a boost to the competitiveness of non-banks.

Both former Wizard founders were highly critical of the current market dominance of the major banks.

“In November, banks increased their rates over and above the RBA’s move, citing cost of funds to do business,” Ryan said. “Where can any other business increase their retail prices and retail proposition to consumers, citing increased cost of funds and expenses, and in the same breath in the space of six months announce record profits?”

20 www.brokernews.com.au

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YBR on broker recruitment drive Yellow Brick Road has made known its plans for aggressive expansion in the wake of its impending deal with Nine Entertainment and its upcoming listing on the ASX. The company is seeking to recruit brokers into its ranks as it expands its franchise footprint.

YBR executive chairman Mark Bouris said the company is looking for experienced brokers it can train to cross-sell products such as superannuation and insurance.

“The most important thing is the ability to go to clients. If they’ve already got clients, even better. They have to take the view that everyone deserves good financial advice.

“We want brokers who look after clients for life, not ones who just get a client, move them into a mortgage and then move onto the next client,” Bouris said. While Bouris wouldn’t give details of the

remuneration structure YBR is offering brokers, he said it was “very generous” and “market leading”. Bouris commented that the task of NCCP compliance may provide added incentive for brokers to join ranks with established brands.

“There’s a lot of legislation out there which doesn’t make things easier, it makes them harder. We offer a business model that allows people to build a more sustainable future if they want to be an independent operator sitting under a brand,” he said. “More revenue streams mean they can keep clients for longer and not have to concern themselves with things like compliance administration.

We do that. We do all the billing and receivables and chasing up clients for fees. The mortgage broker just goes out there and originates, which is what they enjoy doing.”

YBR’s expansion strategy has seen the company triple its franchise presence in the last 12 months, and Bouris commented that the company would look to continue expanding at the rate of one new franchise per week. After signing a Heads of Agreement with Nine Entertainment, Bouris said YBR will also look to increase its brand awareness in the marketplace. He commented that the deal with Nine would focus heavily on securing advertising.

“That gives us a lot of money to spend on advertising. We spend very little on advertising at the moment, so we expect brand awareness to be far greater. That’s largely the reason we’re looking to do the deal,” he remarked.

Bouris also tipped further expansion into ADI products. In February, YBR began offering term deposits funded by Gateway Credit Union. Bouris said the

company would continue to develop ADI products for distribution.

“We have a number of people coming to us who are asking to use our platform to distribute their product to people who normally wouldn’t have access to it. Some of these institutions have very good products, but have no distribution. We’re really serving as distribution for the greater masses,” he said.

Senior partner at Gadens Lawyers Jon Denovan does not believe soft dollar benefits unfairly biased brokers. He said rewards for high volumes are the norm in sales industries, and believes such forms of remunerations have been handled responsibly by mortgage brokers.

“From my perspective, it’s a bit of a bloody non-issue. So what if there’s the occasional prize of a trip to Italy? That happens in every other industry,” Denovan said. “If there was a soft dollar commission that came with every deal, that’s a very different thing than additional commission for volumes. There’s always going to be some incentive coming from people you do business with.”

While Franchitto has agreed that volume-based rewards for salespeople are appropriate, he commented that the unique independent nature of mortgage broking could make such rewards indefensible in the eyes of clients.

“In-house managers like BDMs, by all means, reward them with what you like. All salespeople owned by a company are given incentives. However, brokers are dealing with the client and their advice is meant to be independent,” he added.

MFAA CEO Phil Naylor said the mortgage broking industry has seen no evidence that clients are dissatisfied with the idea of soft dollar benefits. Naylor pointed out that the MFAA Code of Practice was amended several years ago to

include disclosure requirements surrounding alternative forms of remuneration. He said the majority of brokers properly outline these benefits, and the upcoming NCCP regime will make such disclosures the law.

“It’s in our Code and will also be in the NCCP regulations, and that’s worked well for the last six or Jon Denovan seven years or so – so I don’t see any pressure to change. We’ve not seen any pressure from the regulator about that,” Naylor said.

Naylor commented that the MFAA amendment was introduced as a proactive step, when soft dollar benefits first came under scrutiny in the financial planning industry. He believes the MFAA disclosure requirements have alleviated any potential problems, and that, so long as they are properly informed, clients are not generally against the idea of brokers receiving remuneration for their efforts.

“As long as all clients are made aware, the proof of the pudding is in the eating, and if there was a problem over the last six or seven years, we would have heard about it by now,” he said.

Naylor said the MFAA guidelines surrounding this disclosure are strict, and penalties are severe for brokers who violate them. “If the MFAA received any evidence that a member was not

abiding by it, they would be liable to sanction under the Code,” Naylor said.

While Franchitto agrees that most brokers fully and properly disclose soft dollar benefits, he claimed it is difficult to make clients fully understand the nature of these benefits and the conflict of interest that could arise.

“I think good brokers make it obvious to their clients that they do get incentives, but soft dollar benefits have always been difficult to link back to a specific piece of advice. It’s hard to say to the client – ‘If you buy this mortgage product from me, I’m going to be given free tickets to the Grand Prix’,” he commented.

Denovan agreed that while clients may not understand this type of remuneration, full disclosure would only add to the confusion. He commented that he does not believe a more stringent disclosure regime is necessary.

“To disclose the full details of soft dollar commissions is just another thing the consumer ain’t

going to read. It’s going to stop them from focusing on the real issue, which is the product they’re considering purchasing. Let’s hope ASIC doesn’t try to put some rigour around it, because it won’t help the consumer,” he said.

Ultimately, Franchitto believes that soft dollar benefits, right Phil Naylor or wrong, will eventually become extinct in the mortgage broking industry anyway.

“I’m a strong believer that the mortgage broking industry is travelling along the same path as financial planning, except it’s probably close to a decade behind in other respects. They should learn from the heartaches and regulatory regime that have befallen financial planning,” Franchitto said.

“It’s history repeating itself, if only people would take heed,” he added.

Mark Bouris

 What constitutes a soft dollar benefit?

Hospitality and awards, including free or subsidised travel Higher commission shares or fee-sharing arrangements Free or subsidised office equipment Marketing support payments Conference sponsorship Source: ASIC

www.brokernews.com.au

21

Consumers, banks wary of impending rate hike A new survey has found that the majority of consumers are expecting a rate rise in the near future.

The Loan Market poll has indicated 67% of respondents expect the RBA to lift the official cash rate at least once before the year’s end. The response was even more overwhelming in the 18–25 age group, with 77% of those surveyed predicting a rate rise.

Loan Market chief operating officer Dean Rushton said younger buyers are more keenly aware of possible interest rate movements than other age groups, as a move on rates could present a barrier to entering the housing market.

“Our survey shows younger people are keeping a close eye on what the RBA is planning to do as this will have a significant impact on whether they purchase property,” he said. “We believe another rate rise will deter first homebuyers, who are eager to purchase their first homes.”

Rushton cautioned that a future rate rise could not only keep first homebuyers out of the market, but could have a severe detrimental impact on retailers as consumers become more conservative with their spending.

“The RBA still needs to be cautious when considering rates because the impact on the retail

 What will the RBA do with interest rates for the remainder of 2011?

Rates will go up

67%

No change

18%

Rates will come down

9%

No opinion

6%

Source: Loan Market

sector could be severe when many families are already cautious over their discretionary spending,” he commented.

Consumers aren’t the only ones expecting an impending rate rise.

In a recent business survey, NAB moved forwards its predictions for the next RBA rate rise. NAB now believes the Reserve Bank could move on rates in June, and again

in September. It has stood by its prediction of two 25 bps rises by the end of the year.

The NAB survey has also found business conditions softened in April following a rise in March.

NAB put the fall down to a sharp decline in trading conditions and profitability, and said the business conditions index is now sitting just below its long-term average.

22

www.brokernews.com.au

Analysis

Brokers, aggregators at odds over Skype

A brokerage targeting younger borrowers has rubbished policies restricting the use of Skype. Loan Studio broker Colin Sheppard believes Skype interviews work, and provide an opportunity for brokers, and that the industry should embrace this form of communication.

“Different people communicate differently these days – this just creates another medium,” he said.

Sheppard commented that Skype provides the opportunity to hold initial interviews with clients who may face accessibility obstacles. He pointed out that some clients may be on shift work, or live in remote areas, and would be better served through Skype interviews than traditional face-to-face meetings.

“It’s great for the client who doesn’t like just dealing over the phone and wants to put a face to a name. You can also read body language and visual cues, and that provides a better idea of who you’re dealing with,” he said.

Face-to-face and the law

As technologies such as Skype become commonplace, are lenders and aggregators behind the times in adapting to the changing landscape of broker communications?

Adam Smith reports

T

he internet has vastly transformed the way people communicate, and as a new generation where these new methods of communication are the norm for those entering the housing market, the demands and expectations of brokers’ client bases may be changing.

In particular, the traditional face-to-face meeting may no longer be the way many clients expect to communicate.

However, brokers and aggregators seem divided over the use of technologies such as Skype to perform client interviews, and their ability to take the place of traditional in-person meetings.

Scrap over Skype

In a May newsletter to its broking network, Vow Financial outlined that its current policy is that Skype interviews would not fulfil the requirements to meet clients face-to-face.

“Vow Financial has also adopted the policy of our brokers needing to conduct a face-to-face interview with a client, and our broker agreement now reflects this requirement,” its release stated. “If your broker agreement is with one of the Vow founding entities, it may not state this requirement specifically, however all brokers should be aware that this is Vow’s expectation.”

After extensive and varied feedback from the industry on the issue, Vow clarified its policy. In a communication sent to Vow brokers, compliance officer Kellie Hornsby indicated that Skype interviews would be allowed in exceptional circumstances, such as geographical restrictions. Hornsby wrote that the use of Skype would ultimately be dictated by lender policy, and lenders would have to seek approval before its use.

There is nothing precluding Skype interviews taking the place of in-person meetings, according to Jon Denovan of Gadens Lawyers. “[Meeting in person] is certainly not required by law, and with proper protection it’s not even required for prudent business practices. The person who’s going to make the call in the end is the consumer, whether they want internet communication or face-to-face,” he said.

Denovan commented that aggregators and lenders will need to adopt new technology and new ways of communication in order to stay relevant to the marketplace. “They’re going to have to or they’ll go out of business,” Denovan said.

Sheppard put the industry’s hesitancy to utilise new forms of communication down to fear and confusion over NCCP regulations.

“NCCP and ASIC have got aggregators running scared.

I don’t think any aggregator wants to stick their neck out and be the first to get rapped on the knuckles for heading into a grey area,” he said.

Aggregators may lead

Denovan believes larger aggregators and banks may actually be the ones to lead the charge in the adoption of new technologies.

“I think it will be driven by big banks who can be prepared to take that position because they can afford to.

The smaller lender has to make every deal a winner. It’s a high-risk strategy for smaller businesses,” he said.

This, Denovan said, is because of the possibility that Skype could be used to commit fraud. “If the broker has done stuff online and that turns out to be the reason for the identity fraud, they’ll get sued,” Denovan said.

However, Sheppard believes brokers, lenders and aggregators must take this risk in order to adapt to the demands of consumers. Ultimately, those who oppose will be left behind, Sheppard said.

“These are probably the same people who said text messages and Facebook and all these other mediums wouldn’t work.”

What you said: From the Australian BrokerNews Forum • UBank uses Skype for customer service. It’s good enough for them in that capacity and should be embraced.

– David • I have found that when FHOG buyers see us, they are confused and are really looking for genuine assistance.

They want to discuss many issues and want help with the FHOG application. Many have been on the net or used Skype and most are coming to a broker as they want to discuss their situation face-to-face. I can only agree with Vow. Or is it just country applicants? – Countrybroker • We need to interview clients who are often expats in Europe or Asia. We interview clients on Skype and disclose this in the application, and certified support docs are required usually by attending an Australian consulate in the respective country. In today’s day and age these seem like reasonable efforts to determine a client’s situation and identity.

– The happy broker • If Vow wishes to take a ‘conservative approach’ that is their decision, but if these decisions minimise my ability as a broker to compete against other brokers then I would have to reassess my partnership. – Ozboy Colin Sheppard

To have your say, go to www.brokernews.com.au/forum

www.brokernews.com.au

23

Review INDUSTRY NEWS IN BRIEF Brokers hit by branch growth Major bank branch growth is a mounting risk to brokers, ING Direct has claimed.

Executive director of distribution Lisa Claes has said she believes the third party channel is at risk from focus on first party branch networks.

“Channel risk has been mounting of late, particularly given the recent growth of branch networks throughout the country.

Branches provide these lenders with a wide geographical footprint from which to distribute without intervention of a third party,” Claes said. She also commented that the growth of branch networks and a focus on proprietary channels will come at the expense of the broker channel.

However, she said ING was committed to brokers, and that the bank’s branchless model “goes hand-in-hand” with use of third party originators. Claes said the bank would continue to originate the “vast majority” of its mortgages through brokers. “Going forward, third parties will continue to be front and centre to our strategic direction at ING Direct,” Claes said.

New venue for 10th AMAs The 10th annual Australian Mortgage Awards (AMAs) will be held at Sydney Town Hall. The iconic Town Hall, one of the grandest buildings in Australia, is an appropriate setting for the AMAs, which is celebrating 10 years in 2011. Key Media publishing director Justin Kennedy said the new venue was a step forward for the prestigious event. “The AMAs are celebrating a significant milestone this year and the decision to move the event to the Sydney Town Hall reflects the AMA’s reputation as the most prestigious awards in the industry,” Kennedy said.

“The AMA team is committed to making this year’s AMAs a highlight event for all attendees, finalists and winners.” Over 700 mortgage and finance professionals from across Australia attended the AMAs at Sydney’s Westin Hotel last year for a night of celebration and to recognise the achievements of the industry’s finest.

CBA vows to pass on rate rises Commonwealth Bank has confirmed it will pass any RBA rate rises onto borrowers. At its third quarter results meeting, in which the bank revealed a $1.7bn cash profit for the three months to March, CBA chief executive Ralph Norris said Commonwealth Bank is expecting two rate rises by the end of the year.

Norris conceded that these rate rises would be passed onto customers. The announcement follows CBA’s decision to raise rates by 0.45% in November last year, above the RBA’s cash rate hike of 0.25% to 4.75%. The admission comes as CBA joined Westpac and ANZ in reporting a rise in mortgage delinquencies, where arrears were up by 11%. Norris claimed, however, that delinquencies would have been down if there was no impact of natural disasters.

Adjust and succeed, says sales trainer A leading sales trainer has urged brokers to be ready to change their sales tactics rapidly depending on the type of client they are dealing with, rather than falling for a ‘one rule fits all’ formula. Tony Gattari of the Achievers Group said that applying one rule to all potential clients is bound to fail. During a former career at Harvey Norman, Gattari said he was able to far outstrip other arms of the business by adapting to clients of different personalities. Using the four-quadrant DISC behavioural model, developed by William Marston in the 1920s, Gattari said that clients essentially fall into four catagories, which he labelled ‘Eagles’, ‘Peacocks’, ‘Owls’ and ‘Doves’. Gattari cited the definition of insanity – doing the same thing again and again, while expecting a different result – a good reason to adapt their sales techniques to tune into these different client types.

Ongoing discount rates pip SVRs Ongoing discount rates have overtaken the standard variable rate as the most popular home loan, according to Mortgage Choice. Ongoing discount rate products hit a high of 29.76% in April, with standard variable rates falling from 30.41% of new loan approvals to 27.88%. The result marked a 5% increase in popularity for ongoing discount rates. Fixed rates, meanwhile, saw an improvement in demand following two months of declines, rising from 10% in March to 12.16% in April. Mortgage Choice spokesperson Kristy Sheppard said consumer conservatism has led to the rise in the popularity of ongoing discount rates, with homebuyers looking for discounts and bargains. She said the rise in fixed-rate demand could be the result of concerns an RBA rate rise is imminent. “The uptick in demand for fixed rates could very well reflect an awareness among new borrowers about the one to two cash rate rises, widely predicted to occur by the end of 2011,” Sheppard said.

Housing collapse unlikely: ANZ Despite a recent flat-lining of home values, ANZ has stated significant falls are unlikely.

In the bank’s Pan-Regional Housing Outlook, it stated a “wholesale downward shift” in house prices is unlikely to be on the horizon. ANZ pointed to lowunemployment figures, with a strong labour market and wage growth preventing many forced home sales.

Though the report has dismissed the possibility of sharp declines, it stated that house prices are also unlikely to rise in the near term. “Rising interest rates and deteriorating affordability will cap price gains, and we expect little movement in house prices over the year ahead,” the report said.

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Comment VIEWPOINT

The Senate Economics Committee’s outright rejection of the government’s exit fee policy was met with acclaim by industry. Here are a few of these reactions

Phil Naylor

Steve Sampson

Jon Denovan

MFAA

Provident Capital

Gadens Lawyers

Initial reaction?

We are really delighted with the Senate Committee’s recommendations.

We spent a lot of time and effort preparing submissions to go to the Senate Committee, and going before the Committee, and it’s great that they’ve accepted what we have put to them. They’ve accepted the strength of our argument that removing DEFs would decrease competition, not increase competition, as the government was suggesting.

Will this change the government’s course?

I’ve had discussions through our various membership committees with our members involved in the mortgage management and non-bank lending area – the ones most widely affected – and a lot of them are starting to make alternative plans. But they are interested to see whether the Senate’s recommendations can come off.

What other recommendations did you like? The recommendation to boost the RMBS market is encouraging. What is even more encouraging is a recommendation the committee made to get the Treasury to investigate more closely the Canadian mortgage bond model.

Initial reaction?

It’s good that there has finally been recognition of a situation that most of the industry has been talking about, and that is not banning the DEFs, and ensuring the housing market is kept as competitive as possible.

Will this change the government’s course? I’m not a mind reader but I must say [Treasurer] Swan did have information and advice before similar to what the Senate Committee is recommending. So, I’m not all that confident that he will relent. Let’s hope that the government does see some sense, and quickly let us know what the situation is and hopefully that will be not banning DEFs. What do you think about the RMBS recommendations? The Canadian government has backed its RMBS to around $400bn dollars, whereas we’ve boosted ours to a whole $20bn. So I think there is a lot more that can be done in that area.

On the DEF ban: It sounds great – the rhetoric’s excellent – you can change banks quickly, you can change lenders quickly, it won’t cost – but the fact is, it will cost. It will cost because it costs a lending institution dollars to bring a client to bear, and it takes some time before they’ll make a profit from that.

Will this change the course of the ban?

It’s not going to be a popular thing to go to the public and say, we are going to stop the government banning exit fees.

Is the DEF ban mad? I think this is the way to look at it; what if we had a law that banned retail shops having sales? What’s that got to do with this? Because when you go to a sale, it’s 30% off, 40% off, but there’s a term, the condition is that you can’t return the goods because it’s a clearance sale. Well, that’s what non-banks were doing. They were giving a lower interest rate, but you had to keep the goods for a while. I think [Treasurer] Swan’s on a bit of a roll here, he might ban cheap airfares and department store sales.

How should businesses approach this period of uncertainty? What you can do depends of course on who you are. If you are a big organisation, it is like turning the Queen Mary around, and it takes a long time to make a decision and implement it. Smaller businesses can react faster. In this case, the big ones have already removed exit fees more or less; the others should start thinking about things and there are other strategies available.  For full news coverage, see our Special Report on page 16

FORUM When the Senate Economics Committee released its report on banking competition – slamming government policy – the response from our readership was immediate.

At last ‘some sanity’. Now the next thing is to roll back NCCP to a practical level as it is totally destructive and unworkable.

Particularly for self-employed people. sidbroker on 06 May 2011 03:54 PM Looks like too little, too late. Either way, I think the banks have a lot of cheek to have exit fees and commission cuts in light of record net profits. Feels like being squeezed again.

Alan on 06 May 2011 04:16 PM What an absolute mess this government has created; are they capable of getting anything right? You can bet that these findings by the Senate inquiry will just be dismissed and these fools will just introduce all the wrong legislation, whilst claiming to have half a clue as to what they are doing. One would think that after they announced this and major banks’ shares soared, people would get a clue as to the damage this rabble is doing to this industry.

Damien on 06 May 2011 04:20 PM Thank God for some smart people in the Senate!

Damien 2 on 06 May 2011 05:54 PM

At last a voice of reason. Hopefully the government will reverse this kneejerk populist decision made by people who have no clue about how mortgages are funded and priced. positivebroker on 07 May 2011 09:33 AM Well Damien, the Australian people will have to wear the consequences, as they are idiotic enough to vote the current government in.... What is really needed, with government being a minority government (be thankful for small mercies), is to make sure the arguments are put to the independents and the Opposition to prevent any further detrimental changes. Nothing like the thought of losing the next election to have the government re-think its policy.

John C on 07 May 2011 10:50 AM

While clawbacks continued to be rolled out, we got this response from one broker, who sees the issue as a non-issue for the vast majority of the broking industry.

I honestly can’t see what the problem is for brokers, with the ban on DEFs. I have had a clawback provision in my broker contract for some years now. It states that if the bank/lending institution claw back from me, I claw back from the client. I have had not one client object, nor have I lost one sale over it. In

fact, the reverse is true. I explain to the client the whys and wherefores of clawbacks, and then get them to initial the specific clause in my contract relating to that. The clients are aware that if they close the loan within the clawback period, that I (the broker) have done my job, and should be paid for my professional services, one way or the other. It encourages the client to reflect and review that they have the correct loan for their purpose. It has flushed out the odd ‘hidden agenda’ or ‘likely eventuality’ that they have not mentioned to me til that time. Not only have I not lost a sale, the clients have thought my ‘clawback’ process to be most professional and proper. The DEF ban is a non-topic. iMac on 12 May 2011 02:56 PM

Poll: Are you less likely to recommend non-bank lenders?

Undecided 23% No 27%

Yes 48%

With the DEF ban in place, and clawbacks increasing among non-banks and mortgage managers, we asked brokers if they would now be less likely to recommend them.

Source: Australian BrokerNews Poll date: 03/05/11

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What a difference a year makes… or not. Australian Broker reflects on the punditry, breaking news and trends that made headlines in the magazine 12 months ago Issue: Australian Broker 7.10 Headline: Westpac pledges to match RBA moves for rest of the year (page 6) What we reported: What’s happened since: Last year, Westpac CEO Gail Kelly promised brokers that their clients would not have to endure out-of-cycle rate moves over and above the RBA for the rest of 2010.

Speaking at the presentation of the bank’s first half results, Kelly defended Westpac’s record profit which increased 32% to $2.9bn and pledged to ensure borrowers did not have to pay for the increased cost of funds.

“It’s not on our agenda to increase our mortgage prices over and above what the RBA may do,” Kelly claimed at the time.

Not only did Westpac increase rates over and above the RBA, they hiked their rate to the highest of any of the majors. Following the RBA’s November decision to move on rates, Commonwealth Bank caught much of the consumer flak for lifting its rates 45 basis points. Westpac, however, was not far behind, with a 35 basis point rise to bring its standard variable rate to 7.86%.

The bank has once again announced strong profits, posting a $3.7bn cash profit for the first half of 2011. In an interview this year with the ABC, Kelly vowed to pass any funding savings onto consumers in the form of lower interest rates. Time will tell if it’s a promise the bank will keep.

Headline: US cracks down on broker bonuses (page 6) What we reported:

What’s happened since:

In the wake of the mortgage crisis in the US, the US Senate last year voted to ban the practice of paying broker commissions based on how much they are able to charge their client. The practice was blamed for putting many borrowers into unsuitable loans, which resulted in the wave of defaults that preceded the global financial crisis and continues seemingly unabated in the country.

Prior to the legislation, brokers were able to charge their clients different rates for the same product from the same lender, and were rewarded by being paid a higher upfront commission for loans with higher interest rates.

Brokers in the US have seen even more commission crackdowns since 2010. New rules enacted as of 1 April dictate that brokers in the US can no longer be paid a commission by both the lender and borrower. The GFC and subsequent bad press generated by a wave of defaults and foreclosures have seen the broking industry in the US take a severe hit.

Prior to the GFC, American brokers were originating 31% of mortgages.

As of last year, their market share had slipped to 11%. Mike Anderson, chairman of America’s National Association of Mortgage Brokers, told the New York Times last year the new regulations in the industry would see massive layoffs of brokers.

Headline: Swan looks to boost competition (page 18) What we reported:

What’s happened since:

Last year’s Federal Budget saw Treasurer Wayne Swan move to open the way for more foreign-owned banks in the Australian banking sector by cutting the level of interest withholding tax that banks and other financial institutions pay on the interest they pay in offshore borrowings.

The move was announced along with the 2010 Budget and would see the tax, currently set at 5%, drop to 2.5% in 2013–14 and be completely eliminated by 2015. Swan indicated he wanted the policy to entice international financial institutions to the domestic banking sector and increase competition for mortgage lending outside the dominance of the four majors.

The debate over banking competition has defined the sector over 2010 and 2011. In December of last year, Swan announced his proposed shakeup of the banking industry, abolishing DEFs, injecting a further $4bn into the RMBS market and introducing covered bonds. Also on the table were feasibility studies into LMI and account number portability.

The reforms drew widespread criticism from the industry, especially from many non-bank lenders who argued the DEF ban would see their competitive edge disappear. A Senate inquiry into banking reform presented recommendations that broadly mirrored the changes for which non-banks and brokers had lobbied. Whether the government chooses to adopt the recommendations or stand steadfastly by its originally announced policy will be seen in the months ahead.

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Insight

The new rules of the game So as a single-person brokerage, how am I possibly able to compete with the massive advertising budgets of big companies? The answer is that I couldn’t, not effectively, and especially not outside a confined geographic location such as a few suburbs.

Ask yourself where or how you obtain the majority of your business and in particular the most profitable deals. Your answer will most likely be from referrals – from satisfied clients, from your network of friends and associates, and from specific referral relationships that you’ve put in place with the likes of real estate agents or accountants.

Research indicates that Australians mention a brand around 68 times a week and for those aged 18–29, this figure is approximately 80 times. A survey conducted by Neilsen reported that consumers place their highest level of trust in the recommendations of other consumers; in fact, 78% make purchases based upon recommendations whilst less than 14% trust advertising.

The new marketing model

Old modes of marketing are now out-dated, and mortgage brokers can capitalise on a new marketing model built on ‘social influence’.

Intellitrain’s Byron Gray explains

D

uring the past five years there’s been a paradigm shift in the way that businesses can market themselves and their products.

A new marketing model has emerged, which has had a profoundly positive effect on the ability of small companies, such as individual brokers, to compete head-to-head with large corporations and more often than not win.

A single person broking firm now has the ability to out-market and win significant new business from a large financial institution using a range of new and innovative tools and techniques that are either free or cost little more than an investment of time.

Best of all, this new marketing model can be implemented by a broker, and provide them with new leads, referrals and even closed deals the very next day.

The old marketing model

Traditionally, marketing was based upon a monologue or one-way communication through tactics such as advertising, product packaging and promotions.

These tactics, particularly advertising, used messages specifically designed to appeal to a particular market segment, business type or individual. These messages were typically based upon extensive market research to determine exactly how to appeal to the target audience.

These messages emerged through the TV, radio, on the back of taxis, buses, roadside billboards and signage – in fact, research indicates that as a consumer, we’re exposed to upwards of 3,000 advertising messages a day.

The new marketing model is based upon what is known as ‘social influence’, that is, the use of a range of tools and techniques that enable the establishment of a true dialogue or two-way interactive communication between you and your market.

This dialogue has been facilitated by the use of both mobile and internet technologies, which should come as no real surprise. In fact, according to the Neilsen Online Consumer Report (March 2011), 91% of Australians over the age of 16 access the internet and of these, 93% do so on a daily basis.

Additionally, 73% of Australians use the internet to connect with businesses, with other consumers discussing brands – especially to source others’ experiences and opinions.

In other words, more than 65% of your current and potential clients are on the internet today and may be talking about you or indeed your competitors.

So how does this impact you and what opportunities do you have to promote your business and positively engage with current and potential clients to win more business?

The emergence of social influence has been enabled by the significant uptake and participation of Australians in social networks, and the use of forums and search engines to ‘obtain’ and ‘share’ information about companies, products and services.

Even a single-broker firm can attract new clients through the use of these new marketing tools, which are either free or for minimal cost.

Three of the most effective tools are Facebook Business Pages, Google Places and forums: Facebook – Facebook has over 500 million users, 50% of which access it on a daily basis and have an average of

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27

MY WAY

Get Real Finance’s Kelly Cameron-Tull has a lot on her ‘to do list’, despite having already built two successful businesses. Australian Broker finds out what it is that sets her apart as a broker

Kelly Cameron-Tull

Byron Gray

130 friends. Users of Facebook share their opinions and experiences with their friends and then their friends ‘pass this message on’. Businesses can create a Facebook Business Page and post information, pictures, customer reviews and even video. Users of Facebook then simply ‘like’ the page which has two key effects; the first being that this simple ‘like’ then advertises this to all of the user’s friends (free advertising), and secondly keeps the user up-to-date when the business posts anything new to their page.

The true power of Facebook Business Pages comes when your ‘fans’ recommend your posts to all of their friends. For example, you post a comment on your page about a new loan which then gets ‘liked’ and better still ‘commented’ on by your fans – this may then cause your comment to be seen by several hundred people.

To create your Facebook Business Page, go to facebook.com/pages.

Google – More than 70% of all internet searches in Australia are carried out using Google. Google recently implemented a feature called ‘Places’, enabling companies to be easily found in their geographic location when a user searches for a term that includes it. For example, someone living in Ashgrove, Queensland may search for ‘mortgage broker ashgrove’. This will then return results including a map of the local area and mortgage brokers located in Ashgrove that have claimed their ‘Place’ with Google. The best part of this is that these are shown at the top of the page!

Google Places then links to a Places Page where you can include your company overview, pictures, customer testimonials and even special offers – almost a mini website that is entirely free! To claim your ‘Place’, simply go to google.com.au/places.

Forums – Forums are online meeting places where people share their ideas, information, experiences and opinions, plus seek out the opinions and experience of others in the forum. They are a very powerful way to position yourself as an expert in a particular field, such as lending, and offer advice to other members of the forum.

There are thousands of forums that you can participant in and generally at no cost. I’m aware of one broker in Queensland who obtains over 30% of their business from leads generated by participating in a single forum at no cost!

Summary

The true power of social influence and the three tools discussed above comes from their interactive nature. Existing – and more importantly, potential – clients can find and do business with you through the recommendation of a ‘Friend’ on Facebook (and a friend online may well be someone you’ve never met before), by reading a comment or testimonial on your Google Places page or in a forum where you’ve answered a question from a complete stranger.

The good news, of course, is that your ability to use these and other tools to attract more business is the same as a large financial institution or company. This means you can compete on a level playing field – but better yet, you’ve probably got the edge because you’ve most likely built your business over the years on referrals – the foundation of ‘social influence’ and the new model of marketing.

Byron Gray is general manager of MFAA-approved mortgage training providor Intellitrain

What is your greatest business achievement?

Selling my first business and ‘retiring’ on my 30th birthday – as per my plan at 22 when I started in this industry – and then creating a new business from scratch in a different state, and making that just as successful in a much shorter time. When I sold, I was adamant I had had enough of the industry, but I got bored… so I started another one.

What’s the key to getting business through the door?

Being honest, delivering on what you promise, and being extremely knowledgeable in your field, as well as being prepared to share that all the time, with anyone who wants to know. We are all highly skilled in our business, and the clients that are referred to us know that.

What goals have got you to where you are?

Too many to list. I am a big to-do lister, and I write goals out every day, and every year, and review them regularly. Everything that has been achieved is a direct result of being on a goal list at some time!

Who has helped you the most, and how?

My husband Brett, who works in our business, reminds me constantly if I am over-committing, and he enables everything that I do, and no person is a success on their own. He possesses every skill that I don’t!

We are grateful to have some of the best staff in the industry. We all share the same values, and client needs always come before our own.

We all bend over backwards to help as many of our clients as we can, and that has made us very successful.

What character trait do you most value in yourself?

A positive attitude, a willingness to help others, and a commitment to near enough is never good enough. I teach the staff to not accept no for an answer, and that often gives us results that others would not achieve.

How do you stand out from the crowd/competition?

Very few brokers even come close to offering the service that we provide, so it is very easy for a business like ours to have people beating down the door, even though we operate from a non-descript house with no signage… the clients seem to find us from word-ofmouth referral.

What do you tell yourself when the going gets tough?

You need to have the bad days to know and appreciate how good the good days actually are.

What is one thing you want to improve in your business?

We have just changed aggregators, so we are smoothing out our processes. This will lead to greater efficiency, so that with the same resources, we will be able to serve more clients.

What piece of advice would you give an ambitious broker?

Learn everything you can from everywhere you can. Go to the banks and other lenders and actually see how they process – meet them… you will always be treated better by making an effort to know who they are. Speak with any lead source, and educate them on what you do know, and be their point of contact for what they don’t know, and get them the answers. This will build trust, respect, and no amount of money that another brokerage is prepared to pay them for a lead will be good enough to replace what you can offer.

What’s your next greatest ambition?

Well, balancing motherhood and work is the next goal. I have only recently delivered my first baby. So, that will be different. We have also just bought a new office, so we need to move. I will be organising the renovation on that whilst on my six weeks ‘mat leave’. Looking at the bigger picture though, have another child after this one, and run a charity organisation by the time I reach 40.

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Market talk

Federal Budget 2011: Winners and losers The housing industry asked for bold measures in the 2011 Budget to provide a boost to the sagging sector. What it got was more of the same

P

rior to the release of the Federal Government’s 2011 Budget, the housing industry was abuzz with stern warnings to the government and budget wishlists.

After the Budget’s release in May, while the industry was spared any bad news in Treasury’s document, the Budget was also extremely short on good news.

After all the calls to address the issue of housing affordability, and suggestions to see the slumbering first homebuyer demographic inject new life into the market, the Budget seems to have left the industry in much the same place it started.

government, allow borrowing for property investment, but administration and interpretation is creating a brick wall,” Raiss commented.

Making property investment harder, Raiss stated, will have the knock-on effect of a tightening rental market.

“Banks are making it harder and harder to borrow.

And with lower demand for investment properties, there are going to be fewer and fewer available for renters, which means an increase in rents,” he said. “This is a significant missed opportunity that the government has let slip.”

Affordability negatively geared

Though changes to self managed super funds were not on the government’s agenda, many industry analysts feared Since the Budget’s announcement, housing industry overhauls of negative gearing and capital gains tax leaders have been quick to praise some of its measures arrangements. Fortunately, the Budget held no surprises to address skills-shortages. They can also breathe a sigh in this area. of relief over many of the tax measures it left untouched But while Real Estate Institute of Australia (REIA) and lambast glaring omissions. The industry may have president, David Airey, praised the Budget for not won some of its battles over negative gearing and capital changing negative gearing arrangements, he said it gains, but it may have lost the war on its calls for more included no measures to address housing affordability extreme measures to boost the housing market. constraints. “This is a market segment that desperately Ken Raiss, partner at Chan & Naylor Property, needs assistance to fund home purchases,” Airey said.

Business & Tax Accountants, feels the details of the “The REIA recommended, in its pre-Budget submission, Budget left much to be desired for homeowners and that the government conduct a review of the First Home property investors.

Owner Grant, and consider providing first homebuyers “The big winners are the banks. I think pretty much access to their superannuation for the purchase of a home.” everyone else is a loser,” Raiss said. “The budget deficit Stimulus to the housing construction industry was also and the growing debt will adversely impact on the absent from the Budget. While it included more economy. It will have an impact on interest rates, which investment in skills and training – to address shortages will affect consumer spending and families.” in the industry – builders have missed out on measures to One notable omission, Raiss said, was the removal bolster housing supply. The Housing Industry of obstacles to property investment by self managed Association’s senior economist Andrew Harvey has super funds. “Self managed super funds have not been bemoaned the exclusion of these stimulus measures, assisted in any way. The principles put in place by the calling it a “missed opportunity”.

“Unfortunately, the Budget fails to deliver any dedicated policies to alleviate Australia’s chronic  You can’t always get what you want: housing shortage which, at around 200,000 dwellings What the housing industry asked for – and what they got – and growing, continues to place pressure on the out of the Federal Budget household budgets of homebuyers and renters,” Harvey said.  Ongoing investment in skills and training He repeated the HIA’s calls to remove supply-side  Streamlining of SMSF property investment obstacles to new home construction, claiming Expedited delivery of the National Rental homebuyers will be “locked out of home ownership”  Affordability Scheme if the issues are not addressed.

Praise and problems

The big winners are the banks. I think pretty much everyone else is a loser

Protection of negative gearing



Appointment of housing supply minister



Removal of stamp duties



Increased assistance to first homebuyers



Expansion of skilled migration



Continuation of capital gains discount



Stimulus measures for housing construction



More of the status quo

Unfortunately, after the 2011 Budget, the housing industry was left in the same position. Industry bodies continue their appeals for the removal of stamp duties, boosts to the First Home Owner Grant, the ability for first-time buyers to dip into their super funds, and many other policies that will give the sagging sector a shot in the arm. But the question remains – does anyone hear them?

27.88%

29.67% Ongoing discount

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Standard variable

29

NUMBER CRUNCHING Housing finance for March 0

NSW

Vic

Qld

-10.20% -17.40% -14.90%

SA

WA

-3.40%

-0.50%

TAS

NT

ACT Nationwide

-13.50% -12.10% -23.40% -12.00%

Auction clearance rates: Week ending 8 May 2011 Sold

-5

Sydney Melbourne Brisbane Adelaide Perth Canberra Northern Territory Tasmania

-10 -15 -20 -25

208 306 10 14 8 8 1

Not Clearance sold rate 196 52.8% 230 57.1% 75 11.8% 31 31.1% 12 40% 10 44.4% 10 9.1%

2

9

Source: RP Data

Source: Australian Bureau of Statistics

Home loan popularity – April Fixed rate

Introductory 12.16% 22.13% rate 4.02% Line of 4.13% credit

Ongoing discount

18.2%

1 3

$1,100

NAB/Homeside: Home Plus Variable Rate $250K+ (LVR from 75–90%)

NAB/Homeside: Home Plus Variable Rate $250K+ (LVR up to 75%) Bankwest: Super Start Home Loan

Source: Stargate

Building approvals jump in March ABS data indicates a 9.1% rise in the total number of dwellings approved in March, which follows a 5.3% drop-off in February. While building approvals have increased, those approved remain 18.1% below March 2010 levels, however, building values rose to 20.8%.

Dwelling approvals increased in Victoria, NSW, Tasmania and WA, while dropping 22.5% in SA and 15% in Queensland. Urban Taskforce CEO Aaron Gadiel said it was Queensland’s worst March performance since 1986. HIA senior economist Andrew Harvey agreed, commenting that it was “disappointing” to see approvals decline in Queensland, describing it as “the weakest residential building market in Australia”.

Rents outpace property values Recent RP Data suggests rental growth is outperforming property-value growth in capital cities.

It also shows the average of capital city house values has grown 6.2% over the last five years, while unit values has grown 6.7%. However,

*

0

MARKET NEWS IN BRIEF rental rates have increased by 6.8% for houses and 7.5% for units.

Housing sales see March uptick The HIA-JELD-WEN New Home Sales Report shows a 4.3% increase for new home sales in March, and while detached home sales rose 5.8%, multi-unit sales fell 10%.

HIA chief economist Harley Dale put the figures down to the prolonged period of interest rate stability, and recovery from natural disasters, but said the housing market is far from improving.

“The increase is exaggerated by a weak starting point in the final quarter of 2010 and volumes remain below the long-term average,” Dale said.

New home sales were down 9% for the March quarter, similiar to the same period last year.

Australian property vulnerable to global shocks SQM Research managing director Louis Christopher warns that there is an “outside probability” of a downturn in China. A sudden

Standard variable

Source: Mortgage Choice

At a glance…

2 4

27.88%

29.67%

Top lender products by broker preference CBA: Rate Saver Home Loan Three-Year Special Variable

Basic variable

NSW

The median rent for a house in Woollahra, Australia’s bestperforming suburb for rental growth Vic

Qld

-10.20% -17.40% -14.90%

SA

WA

-3.40%

-0.50%

-5

rationing of housing credit from a second financial crisis could turn the 5–10% decline -10 into “something much greater”.

“Any sustained rationing of credit (through a reduction in maximum LVRs) or cutbacks in -15 resources, could mean incomes override our national housing market, preventing an effective stimulus response,” said Christopher.

-20 “However... we believe the most likely end-game is federal government and/or central bank intervention, -25as happened in 2008.”

Inundated Queensland property values plummet A new land valuation by the Queensland Valuer-General indicates 23,000 properties in flood-affected regions have dropped in value between 5 and 25%.

Queensland Valuer-General Neil Bray says the effect of flooding on property values is often temporary – pointing to the 1974 floods.

“The 1974 flood-related regions’ marketstigma dissipated in time, and values for former-flooded residential land close to the city had risen alongside non-flooded land,” he said.

TAS

-13.50% -

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Toolkit

Is your price right? petrol, education, marketing, dollars per hour spent, and opportunity costs?” Eldridge argues if you “do the maths” it would be somewhere between $1200 and $1500. Eldridge also suggests this may be greater, when you factor in the time spent with clients that a broker doesn’t actually manage to get across the line.

How can I price my service?

I

Charge on all deals

20%

n April this year, mortgage industry educator Intellitrain, provided a free webinar for mortgage brokers on the subject of fee-for-service. While the highest number of brokers the company had managed to attract to a webinar was previously 250 (on the subject of NCCP), the fee-for-service topic received a massive response from the market, with 600 attendees.

Why? Fee-for-service has become one of the hottest topics in the mortgage industry, primarily because of the reduced commissions brokers have received for deals since the onset of the financial crisis. With upfront income down 30%, and trail commission increasingly under threat via clawbacks, brokers are being forced to look seriously at a fee model of business.

According to Intellitrain chief operating officer Andrew Hetherington, this is just what they should be doing.

“Brokers might say, I’ve done it this way for the last 10 years and been successful, so why change now? The answer is: because the market has changed around you”.

As the webinar discovered, many brokers are already charging a fee. A snap poll of attendees showed 23% were already charging a fee, while a further 62% were considering introducing one. Only 15% were outright rejecting the notion of a fee. If extrapolated to represent the entire market, it places brokers squarely in the ‘early majority’ phase of a standard product diffusion curve (where 2.5% of people are classed as ‘innovaters’, the next 13.5% as ‘early adopters’, and the 34% category as the ‘early majority’). And according to Intellitrain, it is the earlier adopters of change, that end up making the money.

So how can you approach the issue – and practical application – of a fee-for-service?

After clawbacks

30%

What should you charge for?

On smaller deals

23%

On complex deals

58%

New clients only

18%

Fee-for-service is one of the hottest topics in the mortgage industry. So should you be considering charging a fee, and if so, how would you go about it?

What’s your position on fee-forservice?

Already charging a fee

23%

Considering charging a fee

62%

Will not charge a fee

15%

When do you charge a fee-forservice? (Note:

Respondents could answer more than once)

How much should you charge? $250 or less

10%

Up to $500

46%

Up to $1000

27%

Up to 1500

10%

Above $1500

7%

Source: Intellitrain fee-forservice webinar, survey of 600 respondents

While commissions compensate brokers for submitting a loan and seeing it through to settlement, there are many broker services not being compensated for by commission.

When Intellitrain asked broker attendees what they felt they are currently not being paid for, a long list of responses included loan structuring, discharging, covering lender snafus, cash-flow management, reviewing a client’s overall situation, establishing customer goals, and first homeowner’s grant follow-up, just to name a few. “The long and short of it”, according to Hetherington, “is that you are doing a lot of things, you are not remunerated for”.

CEO of Intellitrain Paul Eldridge said brokers are also often unaware of just what it costs them to obtain a client, through to loan application stage. “What does it cost you as an individual to obtain a client, in travel,

Forty six per cent of brokers who attended the webinar, suggested that a fee somewhere between $250 and $500 per transaction would be the ideal level of compensation.

However, Hetherington said it appeared that the majority of brokers were “undervaluing” themselves.

Intellitrain argued that clients think in “relative value” terms, rather than in absolute dollar terms. Like comparing two past holidays, and remembering which was the better experience.

Hetherington suggested that brokers should structure their fees on a tiered system to reflect different levels of service. He commented that presenting clients with a range of price options, Andrew Hetherington provides context for the value proposition of services brokers provide.

He gave the example of a potential A, B, and C menu of client options. Despite supporting the idea of fee-forservice, Hetherington said providing a no-fee option for a basic service as Option A, could help them compete against bank branches and brokers “down the road”.

Participants suggested Option B could include the likes of a strategy paper, client education, reports, home visits, budgeting and cash-flow services, and loan structuring. Option C, which could exist to provide context to B and A, would be a premium service.

He said brokers would first have to work out what they do, and what they could charge for.

Intellitrain has also suggested that brokers do not link the fee with the transaction outcome – for example, payment at settlement – and instead invoice clients separately.

How will you charge?

Though lawyers and accountants have been fond of the method, Hetherington argues that brokers should steer clear of charging for their services by the hour. In fact, Hetherington said “the strongest advice” he could give brokers, was that charging a dollar value by the hour, would be pursuing a business model that is “plain wrong”.

Hetherington believes that customers are paying for outcomes when they engage a professional – not the effort put into the process. “Customers are just looking for certainty in obtaining finance, or structuring cash flows – so forget dollar per hour, it doesn’t work”.

Hetherington also dismissed the possibility of charging a percentage of the loan size. In doing so, brokers would be going down the path of ‘potential bias’, where the larger the loan size they obtain for a client, the better it would be for a broker.

Instead, Hetherington advocated either a ‘dollar per job’ approach or a ‘subscription/retainer model’, where clients would be charged a fee for their different levels of service.

Is fee-for-service right for you?

Intellitrain argues that charging a fee-for-service is a business decision all brokers need to make for themselves. However, as Hetherington declared, fee-forservice is here, and brokers should be compensated for their service. “You are not a charity, folks.”

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People

Homeloans drafts Webcke for branch openings

Shane Webcke

F

ar North Queensland’s cities of Mackay and Townsville have brand new mortgage lending shopfronts as of May, after the opening of two new Homeloans branches.

Managed by Danny McLoughlin in Townsville, and Cameron Shaxson in Mackay, the two new locations are being marketed as

a new alternative to the four major banks.

“We’ve opened a Homeloans office in Townsville as we saw a need to offer the local community a real alternative to the Big Four banks,” McLoughlin says.

Likewise, Shaxson believes his business will drive new competition. “The wide variety of Homeloans products and services will make a real difference in terms of consumer choice.”

To celebrate the new office openings, Homeloans drafted former Brisbane Broncos star Shane Webcke, who attended both of the events.

Both McLoughlin and Shaxson are upbeat about the prospects for the housing market in the region, despite an Australia-wide slowdown in lending growth.

“We’ve noticed some very positive signs, with first homebuyers now coming back into the Townsville market having saved good deposits – and this is

naturally having a flow-on effect with second and third homebuyers, who are upgrading their properties,” McLoughlin says.

“Additionally, with low residential rental vacancies in the region, the investment market is certainly steady,” he says.

Shaxson says Mackay and the surrounding areas have always been driven by owner-occupiers

and investors, with one of the lowest rental vacancy rates in Australia, and the real estate opportunities in Mackay at the moment were “enormous.”

“We are proud to offer our local expertise with the backing of one of the most reputable lenders in the market, especially at this time of increasing economic confidence,” he says.

 Smartline named top franchise Smartline has taken out a top franchise award for the third year in a row. The broker has been ranked number one in the Topfranchise survey rating Australia’s best franchisors.

The Topfranchise survey, launched three years ago by research company 10 Thousand Feet, has seen Smartline take top ranking each year. Smartline CEO Chris Acret said the ranking was particularly important as it reflected the Chris Acret sentiments of Smartline’s franchisees. “It is a huge honour for us to win Topfranchise for a third year, especially because it is voted for by our own people,” he says. “For us, there is no better accolade. The positive team culture that we have at Smartline is something we continue to work on. It is a testament to both our franchisees and group office team and it makes doing business more rewarding for everyone.” Mortgage Choice was also ranked highly by its franchisees, coming in at number three on the survey.

OFF THE CUFF David Ewens

War II survivors of the ‘great escape’ would have a story or two to tell. Their camaraderie, endurance, and inventiveness under those circumstances are truly inspirational.

National sales operations manager, Bankwest

What was the first job you ever had?

Stacking shelves at IGA whilst I was at school. It wasn’t something I enjoyed but it allowed me to save money to backpack through Europe.

What do you do to unwind?

Love to spend time with my two daughters Ashleigh and Hannah. I know all dads will agree, but it doesn’t matter what sort of day or week you’ve had, spending quality time with your children quickly puts things into perspective. Also when time permits, I like to get into the kitchen and cook up a storm (and a mess), all done with a nice glass of wine.

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

The mortgage tends to limit the extravagance. However, I do like watches so my Raymond Weil was a recent small gift to myself.

What CD is currently playing in your car stereo?

Save Me San Francisco – by Train

What was the last book you read?

Temple by Matthew Reilly. True fiction but great to let the mind go.

If you did not live in Australia, where would you live and why?

The Greek Islands. Love the food, water and sand. Not to mention their custom for a couple of hours of shut eye in the afternoon.

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

Anyone, as I’ve always liked a good lunch! Seriously, I think the World

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

Persistence beats resistance! If you believe in something and are willing to commit to it, you can generally overcome barriers to make it happen.

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

A professional golfer. Not a bad way to earn a living and see the world.

Where was the last place you went on holiday?

I’ve just come back from a couple of weeks in LA and San Diego taking the family to Disneyland and Sea World.

www.brokernews.com.au

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Caught on camera Ten years after launching its first office in Sydney’s Parramatta, Iden gathered its loyal brokers for a birthday bash at Bicentennial Park’s WatervieW. The evening was about remembering, saying thank you – and getting prepared for an even bigger future Photography by Cameron Gaubert

2

1

3

4

5

6

7 Image 1

Brokers gather at WatervieW

Image 2

Graham Ingelton and Greg Barrett (Iden) with Steve Myhill (Finance Connections)

Image 3

Brian Rowe (Iden), Rob Morrison (ABL) and Garry King (Merchant Mortgages)

Image 4

Steve Myhill (Finance Connections) and Katrina Zordan (Iden)

Image 5

Norm McCoy and Carleen McCoy (General Finance and Leasing) with Darryl Benn (TMPG)

Image 6

Louie and Maria Bolos (EG Bolos and Co)

Image 7

Reshmi Kumar and Victor Kumar (V Trade), with Dianne Elmer (Iden) and Stefania Riotto (Advantedge)

Image 8

Barrie Gaubert (Iden), Rob Morrison (ABL), Garry King (Merchant Mortgages)

Image 9

Sanja Majstorovic, Katrina Zordan and Bob Burden (Iden)

8

9

Image 10 Steven Lucas and Russell Cunliffe (Iden) Image 11 Robyn and George Nori, Kiran Saldanha and Mary Kowalski Katrina Zordan and Bob Burden (Iden)

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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

Treasurer Wayne Swan making a cursory mention of the report before distracting the industry with something new to scorn him for. Insider certainly hopes the Committee’s report becomes a priority issue for the Senate, but at the moment it appears they may as well have turned in crude stick figure drawings on a cocktail napkin for all the attention the government’s given it.

Prosper… from property plunge?

Plenty more to go around…

Head in the sand

I

nsider just loves guessing games. One of his particular favourites is ‘Celebrity Heads’ – there’s nothing quite like being someone else (whose famous, mind you), not knowing who it is, and piece by piece, tracking down your own identity. Hmm. So, Insider has his own little ‘Celebrity Heads’-style quiz for the broking community. Are we ready? Which head of which national mortgage lender’s mortgage distribution arm (this could be bank, second tier, regional, or non-bank, just to make it that much more difficult)

Much ado about nothing Following the government’s announcement of, and subsequent ridicule, for its banking reform package, Insider watched with great interest as the Senate inquiry into banking competition commenced. With great pomp and circumstance, industry heads were paraded before the Senate Economics Committee to testify to the potential havoc the reforms could wreak on the non-bank and mortgage broking sector. Eight

didn’t know brokers were licensed?

Say what? Are you saying, that after ALL that press in the lead up and post-NCCP, there was a person – in quite a senior position, too – who wasn’t aware of this fact? Yes, Insider can confirm, that’s right. One would guess said individual does not read the Australian BrokerNews newsletter!

So, any guesses? Yes, the person does in fact live in Australia, not on another planet. Say again? Nope, not right. [Censored] No. [Censored] Yes. [Censored] Yes, getting close!

Got it yet? [Censored] Spot on!

So, now you know exactly who we are talking about. Of course, we are sure that said individual may have since come to grips with the licensing regime. Well, let’s hope so! Insider will certainly add them to the Australian BrokerNews newsletter distribution list! high-profile public meetings were held, 137 submissions were accepted and nearly five months of work went into crafting an exhaustive report on the true nature of the finance sector in Australia. After months of waiting, the report was finally released on 6 May … and promptly forgotten within the week. The Senate Economics Committee should learn these things are all about timing.

The report came out one day before the Federal Budget, with

The Baby Boomers must be absolutely fuming. Just at a time when they were counting on all those aspirational first homebuyers to flood into the market and prop up their gluttonous hoard of the nation’s property assets (as well as fund

Raise your glasses, property is now toast!

lengthy, comfortable retirement years on fat-cushioned derrières) those youngsters just aren’t cooperating. Along has come the likes of Proper Australia, which is urging debt-free first timers to stay debt free, and boycott a market which threatens to pull them under if they overextend themselves. The pledge reads: “It is economically irresponsible to expect young adults to commit to thirty years of heavy debt merely to get on to the first rung of home ownership.

“The current price of land is grossly overvalued compared to take-home earnings.

“Compounding this, Australia is in the grip of a housing Ponzi scheme similar to that which

brought the northern hemisphere to its knees.

“I undertake not to bid at auction or negotiate by private treaty to buy real estate until prices moderate, just as they have in all the countries we compare ourselves to.

“I will use this time to save a larger deposit to free myself earlier from mortgage finance and gain my economic independence.”

Economically irresponsible? A blow for young aspirant savers against greedy boomers and property speculators? A triumph of conservative wisdom over rampant debt-fuelled materialism? Insider believes the above yields any number of economic, sociological and spiritual questions, none of which are likely to be dealt with by the property industry.

Kiwi ingenuity

Ah, New Zealand’s Kapiti Coast: Home of beautiful beaches, quaint farm guesthouses, rolling hills and multi-million dollar mortgage fraud. A former Kapiti mortgage broker is accused of swindling clients out of $1.8m. Now, if the US has taught us anything, it’s that dodgy brokers swindling clients is nothing new. The interesting twist in this Kiwi caper is that the broker secured her ill-gotten gain by asking her clients for a loan.

Isn’t that sort of the opposite of how the broker-client relationship is supposed to work? She must have been pretty persuasive to talk people out of that kind of cash, and Insider wonders if some brokers here could learn a thing or two from her sales technique (maybe without the fraud part).

As one would imagine, the broker is now under police investigation.

In an email to one of her rorted clients, she said she has started a new business to pay back her debts. A new business to pay back $1.8m? Insider sincerely hopes her new business involves buying lottery tickets in bulk, or it’s doubtful those ripped-off customers are going to see their money any time soon.

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Services

Receive breaking news updates direct to your inbox. Sign-up for the FREE e-newsletter at www.brokernews.com.au AGGREGATOR/WHOLESALE BROKER Mortgage House 133 144 www.mortgagehouse.com.au save@mortgagehouse.com.au Pages 18 & 19 PLAN Australia 1300 78 78 14 www.planaustralia.com.au Page 17 BUSINESS STRATEGIST CONSULTANCY Choice Aggregation 1300 135 389 www.choiceaggregationservices.com.au Page 5 COMMERCIAL Banksia Financial Group 1800 333 114 www.banksiagroup.com.au Page 7 FINANCIAL PLANNING SOLUTIONS Wealth Today Pty Ltd 08 9207 1433 www.wealthtoday.com.au Page 9 LENDER Eurofinance Group 02 9252 8311 www.eurofinance.com.au Page 11

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SHORT TERM LENDER Interim Finance 02 9982 2222 www.interimfinance.com.au Page 34

Homeloans 1300 787 866 www.homeloans.com.au Page 23 Liberty Financial 13 23 88 www.liberty.com.au Page 3

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

MKM Capital 1300 762 151 www.mkmcapital.com.au Page 2

NCF Financial Services Pty Ltd 1300 550 707 www.ncf1.com.au Page 8

Pepper Homeloans 1800 737 737 www.pepperonline.com.au Page 12 & 13

Quantum Credit 08 9325 6255 www.quantumcredit.com.au Page 14

Provident Capital 1800 668 008 www.providentcapital.com.au Page 4

Rapid Capital 07 5562 2485 www.rapidcapital.com.au Page 10

Westpac www.westpacbrokerbase.com.au Page 36 MORTGAGE MANAGER/NONBANK National Finance Club 1300 327 600 www.nationalfinanceclub.com.au Page 15 Premium Capital Finance 1800 25 11 11 www.pcapfinance.com.au Page 21

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

OTHER SERVICES Residex 1300 139 775 www.residex.com.au Page 35 Trailerhomes 0417 392 132 Page 29

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