Australian Broker magazine Issue 9.03

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ISSUE 9.03 February 2012

Shorten on brokers: Not right to be rigid

Bill Shorten

 The Assistant

Treasurer has called on mortgage and finance brokers to adopt a more flexible approach to NCCP Assistant Treasurer Bill Shorten has told brokers they do not need to be “rigid” in applying NCCP responsible lending obligations.

In a letter obtained exclusively

by Australian Broker, Shorten has answered concerns put forward by James Tsolakis of Sydney-based consultants Business Innovators. Tsolakis argued that NCCP rules were being interpreted in a restrictive fashion by lenders, and that brokers had been “scared away” from the industry by prequalifying questionnaires.

In a reply to Tsolakis, Shorten urged brokers across the whole

industry to be more flexible in their application of the NCCP. “[There are] important protections for consumers in the Credit Act, but [these] are intended to apply flexibly enough to allow consumers to continue to access credit in line with their personal circumstances and lifestyle needs,” Shorten wrote.

“Brokers should be aware that the requirements are intended to apply flexibly, and there is no need to adopt a rigid approach to assessing credit applications.”

Shorten said ASIC had become aware that some lenders were adopting an “overly restrictive approach” in their interpretation of the NCCP, and had updated RG 209 accordingly, particularly to keep older borrowers from being locked out of credit.

“ASIC has taken steps to advise holders of an Australian Credit Licence that to meet responsible lending obligations under the Credit Act, it is not necessary to establish that the borrower is expected to be earning a salary for the life of the loan,” Shorten said.

The Assistant Treasurer assured brokers that locking out borrowers was not the “legal effect” of NCCP legislation. He also flagged possible changes to be seen in Phase II of the credit reforms. Tsolakis raised concerns that small businesses were also being locked out of credit, and Shorten tipped that the next wave of NCCP legislation could address the issue.

Bloodbath bonanza Bank job cutting spree a boost for brokers Page 2

Truer colours Homeside rebrand brings brokers closer to NAB Page 4

A low-doc Spring Non-conforming ‘wait-and-see’ to end Page 6

Inside this issue Coalface 14 Property, the Wright way Analysis 20 I still call NAB Homeside Viewpoint 22 Keeping MFAA competitive Insight 24 Tapping 2012 opportunity Toolkit 25 Getting into the media Market talk 26 Sunnier outlook for housing People 28 Have a heart, and a loan

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News Bank job cuts a boost for brokers Bank plans to slash thousands of financial services jobs could end up benefitting brokers and consumers, according to Australian Finance Group managing director Mark Hewitt.

Banks are expected to follow through with reductions in Australia-based headcount this year, with a UBS report suggesting total reductions could number 7,000 over the next two years.

The slated jobs bloodbath comes amid cost pressures brought on by the GFC, and the bottom line benefits to banks of offshoring their workforce to lower cost jurisdictions.

However, Hewitt said the job cuts could end up benefiting the mortgage broking industry.

“What we have seen in the past during these sorts of periods is that customer service in the banks suffers,” he said.

Hewitt said staff leaving the big institutions could also find their

way into mortgage broking. “It’s positive for the industry, because for those people looking at their career options, finance is what they know, and they sometimes decide to work for themselves as a broker,” he said.

“We will see some opportunities if banks continue to push through to reduce numbers, as some people will find themselves in the broking industry.”

This is likewise positive for consumers, Hewitt said, due to the boost in competition this would provide through the addition of new skilled brokers to the market.

AFG is targeting growth in broker numbers of 250 this year, after adding 250 ‘productive’ brokers last year. The group’s total headcount currently sits at 1,850, following a reduction to a low of 1,700 during the transition to an NCCP-regulated environment.

Hewitt said the business had managed to increase headcount last year in terms of both large, established broking businesses,

as well as smaller individual operations.

He said the ‘aggressive’ recruitment intake was a result of the cut-through of its value proposition in regard to comprehensive NCCP support and its FLEX technology platform.

“For the first half of last year it was about the compliance part, because others weren’t providing it and at the time it was at the front of everyone’s mind,” Hewitt explained. “As people got more used to it [compliance] and aggregators began providing the tools they should have to members, it was back to business as usual, and then because the market was slowing, it was more about maintaining and leveraging your existing database properly.”

“This hold decision is a missed opportunity which the RBA will live to regret if the situation in Europe continues to deteriorate, while consumer confidence here remains as weak as we have seen in recent months,” Kolenda said.

REIQ chief executive Anton Kardash argued that small businesses would be the most severely impacted by the decision.

“Many small businesses have been hamstrung by higher loan rates since the start of the GFC, which is stymieing their potential to grow. Small businesses are often overshadowed by the flashier, more lucrative sectors, but they actually provide half this country’s private sector jobs and deserve rate relief as much as anyone else,” Kardash said.

Loan Market spokesperson Paul

COPY & FEATURES NEWS EDITOR Adam Smith PRODUCTION EDITORS Sushil Suresh, Moira Daniels, Carolin Wun ART & PRODUCTION DESIGN PRODUCTION MANAGER Angie Gillies DESIGNER Ginni Leonard

SALES & MARKETING SALES MANAGER Simon Kerslake ACCOUNT MANAGER Rajan Khatak SENIOR MARKETING EXECUTIVE Kerry Corben MARKETING EXECUTIVE Anna Keane COMMUNICATIONS EXECUTIVE Lisa Narroway TRAFFIC MANAGER Abby Cayanan CORPORATE DIRECTORS Mike Shipley, Claire Preen CHIEF OPERATING OFFICER George Walmsley PUBLISHING DIRECTOR Justin Kennedy CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil

Editorial enquiries Ben Abbott tel: +61 2 8437 4716 ben.abbott@keymedia.com.au Advertising sales Simon Kerslake tel: +61 2 8437 4786 simon.kerslake@keymedia.com.au

No hold on broker backlash after RBA surprise The Reserve Bank rendered moot much of the discussion surrounding bank funding costs this month when it chose to hold the cash rate steady.

Citing a slight increase in credit demand, close to trend growth and inflation that remained on target, the RBA defied economists’ predictions when it left the cash rate untouched at 4.25% at its February meeting. Most analysts had been tipping a 25 basis point cut, and the decision was met with a flurry of industry criticism.

1300 Home Loans founder John Kolenda said the RBA was “courting disaster” by leaving rates on hold. Kolenda said economic risks remained weighted to the downside, and that a series of deep cuts was needed to shield the economy.

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EDITOR Ben Abbott

Smith struck a more conciliatory tone, but argued that a rate cut could have eased some of the wariness still felt by consumers.

“We thought the RBA could have applied a 50bp cut this month but they have taken a more cautious approach and still have plenty of room to move. While the fundamentals of the Australian economy remain quite strong and consumer sentiment has been improving, sections of the economy can only benefit from the stimulus provided by lower interest rates,” Smith said.

The decision to hold on rates did momentarily pour cold water on the debate swirling around banks’ independence from the RBA, and the potential that they may choose not to pass on any future rate cuts.

Rajan Khatak tel: +61 2 8437 4772 rajan.khatak@keymedia.com.au Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media keymedia.com.au Key Media Pty Ltd, Regional head office, Level 10, 1 Chandos St, St Leonards, NSW 2065, Australia tel: +61 2 8437 4700 fax: +61 2 9439 4599 Offices in Singapore, Hong Kong, Toronto brokernews.com.au Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor.

Contributions are invited, but copies of work should be kept, as Australian Broker magazine can accept no responsibility for loss

Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia in December 2008.

The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA. Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the subject of telephone interviews.

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News

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Segmentation not in the stars for NAB NAB has revealed it has no plans to move back to a segmentation strategy after abolishing its ‘outdated’ broker star rating program in November.

The bank last year extended the perks given to its four star brokers across its broker network, drawing praise from aggregators for removing what Connective principal Mark Haron at the time called a “negative segmentation process”. NAB Broker general manager of distribution John Flavell has now said it is unlikely a new segmentation program will take its place.

“We got a lot of feedback, and we talked specifically to brokers on the VIP programs of some of our competitor lenders. What they said is, ‘A lot of the wining and dining is kind of by the by, and they’re not offering us anything from a service perspective that you aren’t’,” he said.

NAB Broker moved to change

its star rating system because Flavell said changes in the market such as education requirements had rendered the program “outdated”. When announcing the changes, Flavell initially said NAB Broker would go back to the market to identify new opportunities to reward volumes.

However, with an aim to provide equal levels of service across its broker network, Flavell has now said the idea of segmentation itself could be irrelevant.

“Realistically, I’d like to offer that level of service to all our brokers, which is what we’re doing.

If you can do that, there’s not really a whole lot of need to turn around and create a branded whatever it is. We’ll continue to review that, but that’s the strong feedback we’ve gotten and that’s from the brokers themselves,” Flavell said.

NAB Broker’s announcement in November saw its broker network given access to online valuations

and LVRs above 90%, as well as 65bps upfront commission.

Flavell said there are early indications the John Flavell move has driven more volumes for the bank.

“To actually use the [valuation] tool, you need to do a training piece with us. We’ve had something in excess of 2,000-odd brokers who have signed up to use that tool. That to me is a good precursor of brokers doing business with us,” he said.

“It’s early days, but certainly the feedback we’ve gotten from the aggregator CEOs and the brokers has been very positive. We’ve created a favourable environment to go out there and continue to grow,” he added.  For analysis on recent changes at NAB Broker, see page 20.

Homeside rebrand more than ‘sticker and pretty colours’ NAB has announced new efforts to bring Homeside closer to the major bank brand, by creating a “stronger visual link” through a re-branding campaign. New branding for its Homeside business will include the familiar black, red and white colour palette associated with the bank, as well as its red star logo. The brand and a new Homeside.com. au website are designed to serve as a “visual cue” to consumers to aid brokers explaining the Homeside proposition. “The newly branded Homeside provides brokers with a greater opportunity to leverage the power of the NAB brand, and provides consumer assurance in what they will get from Homeside,” he said.

‘Red carpet’ brings better business: Macquarie Macquarie will continue to employ a “red carpet” approach to draw broker business, and has no plans to employ a segmentation strategy.

Doug Lee

Macquarie head of mortgage sales Doug Lee has said the bank has no plans to push forward a segmentation strategy, and will maintain the same service levels for all brokers.

“We have a red carpet offering for all. It’s what I’d call a fair and equitable service offering for all,” Lee said.

Segmentation strategies have come under scrutiny of late. While NAB Broker has wound back its star-ratings strategy in favour of opening the program’s benefits to its entire broker network, Citibank has tipped a new broker segmentation program to be revealed in the months ahead; and while Homeloans Ltd recently rolled out an elite broker offering, St.George has touted its own levelling of the playing field,

with Flame Broker BDM access to be made available across its entire network.

With the benefit of segmentation strategies under the microscope, Lee said Macquarie continued to believe in a “wider approach”.

“Segmentation may work for some lenders and that’s a strategy some do employ, but for us that doesn’t work. The key for us is that we’re available to all in terms of the markets, but inevitably what ends up happening is we do a lot of work in determining if the broker and ourselves are a good fit, and therefore that ensures a good partnership between the BDM and the broker’s business,” he said.

Determining if a broker is a good fit does not equate to shutting brokers out, Lee said. He argued that this was a natural

process, and naturally produced stronger volumes.

“It’s probably not a matter of being choosy. It’s really a joint decision. We’re not being selective, that’s just where the partnership piece comes in. Our experience around volumes is that we get a greater share of business from those particular brokers because they have a very good knowledge of what we’re looking for,” Lee said.

Instead of rewarding brokers for volume, Lee touted rewards as a driver of volume. He said a consistently high level of engagement would naturally lead to more business for lenders.

“Through this approach we have a deeper relationship, and thereby through the deeper relationship you’d expect to get a greater share of that broker’s business,” Lee said.

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‘We won’t forget Diploma deadline,’ MFAA warns The MFAA has vowed to follow up with brokers who have yet to fulfil their Diploma requirements as the 30 June deadline nears.

In a communication sent to members, the MFAA said it will soon be contacting brokers who have not yet supplied evidence of their completed Diploma. The organisation has set down a 30 June deadline for its members to provide evidence of completing a Diploma “meeting MFAA criteria”.

In spite of the warning issued to brokers, MFAA chief executive Phil Naylor said most members are operating on schedule.

“Indications from members are that the bulk of them will have completed the Diploma by the end of April, many having taken the opportunity of the Christmas break to enrol and get started,” Naylor said. He claimed anecdotal evidence suggested more than 6,000 of the association’s 11,000-plus brokers had enrolled in Diploma programs slated to be completed by April, while many more had already attained their Diploma.

This comes after training organisations last year urged brokers to enrol prior to mooted changes on 24 November. The

24 November not a big deal after all Prior to 24 November changes to Diploma upgrade requirements, training providers urged brokers to enrol in Diploma programs to ensure they didn’t get caught out. Now that the deadline has come and gone, MFAA CEO Phil Naylor has claimed the changes were not as onerous as anticipated.

Naylor said the timing of the deadline was ultimately left up to individual training providers, and that most had restructured their courses so as to cause minimal impact on brokers who missed the November cut-off.

changes to government education standards for Cert IV and Diploma courses required brokers who enrolled after 24 November to complete more coursework for their Diploma upgrade, with the level of additional coursework varying by training provider.

Naylor claimed that brokers who missed the 24 November deadline had not been significantly disadvantaged, and that the new upgrade requirements were minimal.

Should brokers miss the deadline for completing their Diploma, they could risk losing their MFAA accreditation.

“The board will consider the position at that time but the underlying principle will be that in order to maintain membership you must be accredited either as an MFAA Credit Adviser or MFAA Associate Credit Adviser to maintain membership. These require the attainment of the

Phil Naylor

MFAA education standards as advised,” Naylor said.

During the lead-up to the MFAA’s introduction of Cert IV requirements, the association shed 1,500 members, only to regain 750 of those who later completed their Cert IV. But Naylor said he does not expect a similar drop-off in membership numbers following the upcoming Diploma deadline.

Non-conforming ‘Spring’ as wait-and-see ends Non-conforming lenders have promised to do more to explain the viability of their products under NCCP legislation, as they seek an increased share of broker business this year.

With ongoing reluctance from many brokers to touch lending in the once popular low-doc segment, non-conforming lenders are increasingly confident of a resurgence this year.

MKM Capital head of operations Michael Watson said brokers can expect to see non-conforming lenders “spring back into action”

following the legislative challenges of 2011. “I expect to see competition in our particular segment heat up after a period of ‘wait-and-see’ last year,” Watson told AB. Likewise, Provident Capital managing director Michael O’Sullivan: “Towards the end of last year we saw a noticeable increase in applications and settlement for non-conforming loans.” However, Watson said that these lenders face the ongoing challenge of reassuring brokers non-conforming low-doc loans can be written in an NCCP

compliant way.

“The biggest challenge arising from the introduction of the NCCP has been to communicate to brokers that low-doc, coded loans can still be written with confidence,” he said.

O’Sullivan said a lot of brokers still think they are prohibited from writing of these loans.

“There is still work to be done in getting brokers and the industry to understand where these products sit, but as people start to work their way through the new requirements it will become clearer there is still a

place for non-conforming loans.”

He said it gets back to the basis on which brokers recommend them to borrowers.

“Is there clear evidence of their capacity to repay? It may not be available from traditional sources, but can be attributed to others – such as cash flow, or accountant’s letters – it gets back to knowing the client’s position and the benefits to them of entering the transaction.”

At the end of last year, Provident Capital launched a non-conforming product for code-regulated residential investment lending.

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News Heritage goes national with broker distribution February 2009

Heritage cuts ties, but still committed After cutting ties with many of its aggregator partners, Heritage said it remained committed to the broker channel. The company had decided to “streamline” its broker distribution to balance its distribution between third party and direct origination while “maintaining good relationships” with key broker partners.

Newly-badged Heritage Bank is set to expand its broker distribution nationwide, in what chief executive John Minz has called an “evolution” of the company’s strategy.

The mutual bank has announced it will now distribute through brokers in Tasmania, the Northern Territory and WA, adding to its East Coast network.

Minz said the move will bring additional scale as Heritage tries to expand its footprint.

“We first started distribution through the broker channel 15 years ago, and we’ve had

August 2010

Heritage makes a channel comeback After pulling away from the channel, Heritage CEO John Minz said the mutual would ramp up broker distribution to 50% of all originations. He flagged the possibility of expanding the number of broker groups Heritage worked with.

distribution across the Eastern seaboard for all 15 of those years.

This is a purposeful move to expand the broker channel, and for us it’s another evolution,” he said.

Heritage pulled away from the broker distribution during the GFC, cutting ties with all but a handful of aggregators. But Minz said the mutual now sits on the panel of eight of the top 10 broker groups, and that the groups it cut off were not producing volumes.

“The organisations that we no longer could do business with are those that weren’t giving us any volume anyhow. We came back to

September 2011

‘Heritage Bank’ means more broker business Heritage Building Society flagged its name change to Heritage Bank, and said the move would mean more distribution through brokers. CEO John Minz said the change would make it easier for brokers outside Queensland to explain the lender’s home loan proposition to clients.

10 and we’ve added two new broker groups to that,” he said.

And Minz poured cold water on the idea that ramping up Heritage’s broker distribution signalled a major change of direction, arguing that the bank had remained committed to the broker channel in spite of cutting off some distribution during the GFC. Minz also tipped that Heritage may become even more active in the broker channel in the future.

“It’s not a radical change of strategy. It’s an evolutionary change to add those areas to the

Eastern seaboard. We’ve already been at the point where we have heavier distribution through brokers,” Minz said.

“We can adjust that number over time with our expanded geographic exposure. There’s no firm decision on what the magic number is. It’s about relationships for us, and providing meaningful relationships for those groups who provide business to Heritage,” he said. “It’s very important as Australia’s newest bank that we’re seen to be Australia-wide and open for business through the broker channel,” Minz said.

Kolenda claims ‘critical Aussie bankers fear mass’ as 1300 pushes brand government meddling Industry heavyweight John Kolenda has said his new company, 1300 Home Loan, has hit a “critical mass” of brokers.

Kolenda, who also launched new aggregator Finsure, said the 1300 Home Loan brand has hit its initial goal of broker recruitment, and will launch a multi-million dollar advertising campaign.

“With our website and call centre infrastructure in place we are ready to start generating warm leads for our partners to boost their business,” he said.

The company claimed it had recruited more than 200 brokers thus far, and has set an “eventual” target of 400 members. Having reached its initial goal, however, Kolenda said the brand would now be “heavily promoted” via

television and web advertising with a $4m media blitz targeting affluent consumers.

Recently, Kolenda also issued a consumer-focused release warning the RBA that a failure to make multiple rate cuts over the course of 2012 would be “a disaster”.

The release marked the company’s maiden foray into marketing directly to consumers and building brand recognition.

In ramping up its market presence, 1300 Home Loan last year hired consultant Adir Shiffman as its head of digital strategy. Shiffman was responsible for founding HelpMeChoose.com.au, was later snatched up by Mortgage Choice, and is also chairman of marketing business Alia group.

Australian banks have a more pessimistic outlook than their overseas peers, new research has suggested.

A report from the Centre for the Study of Financial Innovation and PwC has found Australian banks are anxious about the global economy and incoming regulation.

The study found Australian bankers ranked “political interference” as their secondgreatest fear, compared to their global peers who ranked it fifth.

“To some extent this no doubt reflects the increasing gloom that bankers, no matter which country they work in, regard the immediate future. On a deeper level, it reflects uncertainties in the economic environment and the long journey the Australian banks

still have to navigate through ongoing regulatory reforms that are taking shape,” the report said.

PwC banking and capital markets leader Stuart Scoular said Australian banks felt they were “unjustly penalised” by a regulatory framework imposed to stop practices that were never common in Australia.

“Regulation is near the forefront of respondents’ minds in Australia because much of it has been driven from overseas to cure problems that were, and essentially remain, overseas problems.

“As far as the local industry is concerned there is never a good time for new regulations but much of this does appear to be happening at a particularly bad time,” Scoular said.

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Glimmer of old normal NAB vows to win rate war in January sales NAB is Mortgage sales in January could mark a return to normal, with figures high above last year.

AFG has released its Mortgage Index for January, and the data shows a 40% increase on last year’s numbers. The company called the results a “return to more normal trading levels”.

First homebuyer participation remained steady for the month, but WA overtook NSW as the most active first homebuyer market at 19.1%. NSW saw a rush of first homebuyers through the second half of last year as borrowers endeavoured to beat the state’s deadline for stamp duty changes.

First homebuyers also proved the most likely borrowers to shy away from the majors in favour of a second-tier or non-bank. Nonmajors accounted for 27.4% of

AFG’s January sales 3.8% 59.4% 18.6% 7.5% 10.7% Standard

Line of credit

Introductory

Basic

Fixed

Source: AFG

loans to first homebuyers, versus the 21% average for all mortgages.

Mark Hewitt NSW did lead the way in investor activity.

Investors accounted for 40% of loans in NSW, compared to around 36% nationwide.

The AFG figures also continued to show strong uptake for fixed rate loans. More than 18% of borrowers chose to lock in a rate, close to the company’s all-time high of 20%. Mortgage Choice, meanwhile, saw the opposite trend, with its data showing borrowers shying away from fixing their mortgages for the first time in eight months.

Mortgage Choice’s approval numbers showed that fixed rate demand fell in January following successive RBA rate cuts. After tracking towards making up a quarter of the mortgage market, fixed rates eased off to 21% of the company’s approvals. Inverted yield curves last year had seen fixed rates fall well below variable rates, sparking a frenzy of fixed rate uptake. But the trend may not last with the cash rate expected to drop even further.

Ongoing discount loans kept their position as the most popular mortgage product for Mortgage Choice, hitting an all-time high of 46%. Previously popular standard variable rate loans continued to languish, falling from 15.57% of approvals in December to just over 15%.

NAB has vowed to beat its fellow majors on rates for the remainder of 2012, regardless of moves by the Reserve Bank.

The promise came as banks have increasingly flagged that their funding costs are no longer correlated to the official cash rate.

As banks vowed to make decisions independent of the Reserve, NAB Group executive of personal banking Lisa Gray said the bank would commit to maintaining the lowest standard variable rate.

“For 2012, NAB is committed to having the lowest standard variable home loan rate of the major banks,” Gray said. “This commitment is available to all existing and new home loan customers on NAB’s standard variable rate products.”

With NAB committing to the lowest SVR of the majors and ANZ announcing it will make rate decisions on the second Friday of each month, banks have continued to position themselves farther from the Reserve Bank.

Australian Bankers’ Association chief executive Steve Munchenberg said consumers must understand that bank funding is no longer tied to RBA moves.

“For over 10 years banks moved in step with the RBA and that created the reasonable expectation that the RBA cash rate was the only factor determining bank funding costs and the interest rates banks charged.

Unfortunately, the global financial crisis has shown that this is not the case,” Munchenberg said.

Munchenberg reiterated the argument of the majors that funding costs were tied more

committed to having the lowest standard variable rate…

closely to the Eurozone than the official cash rate, and said the cash rate was “no longer an Lisa Gray accurate indicator of bank funding costs”.

This doesn’t mean that banks are set to cavalierly jack up rates, Munchenberg said.

“The RBA still influences some bank funding costs and can cut or raise the cash rate to drive responses from banks. If the banks do not follow a change in the cash rate, the RBA can change the cash rate again until commercial interest rates are where the RBA wants them,” he said.

Should any RBA moves fail to prompt bank action, MFAA CEO Phil Naylor said brokers may find themselves inundated with disaffected borrowers looking to jump ship for better deals.

“2012 will see a more challenging economic environment and, coupled with a change in lenders’ behaviour, the onus will be on borrowers to seek out a better deal for themselves through an MFAA-approved broker,” Naylor said.

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Mortgage execs adrift in ‘volatile’ job market The prospects for top executives “cleaned out” of the industry through the GFC and mortgage market consolidation do not look bright, according to a top industry recruiter.

Paula Taylor of Vanilla Consulting said the jobs market in the mortgage sector remained “exceptionally volatile” across the board, with no sign of a return to pre-GFC buoyancy.

“Executive recruitment has been very difficult, very low level, and continues to be so,” Taylor said.

“There was a clean out of middle management, and we have not seen a return to recruiting.”

Taylor said a number of more senior and prominent names in the industry have found it difficult to secure new permanent roles, and were instead doing consulting or contractual work.

Taylor said in this way these candidates continued to keep their “finger in the pie” and maintain their current industry knowledge, while they sought more permanence and stability in a full-time role.

“From my networks, there are still a number of people looking for job opportunities, but there are none available at present,” she said. “On the whole,

there are more looking than have found jobs.”

Taylor said the last three quarters have seen a return to some level of consistency in mortgage market recruitment, but that this has largely been in more operational and sales roles.

She argues that the European situation would continue to plague the market with flow-on effects, injecting renewed hesitancy into the recruitment market.

“We are still seeing those impacts in 2012 – we are not seeing new players coming into the market. With further M&A and consolidation, it would indicate continued lower levels of recruitment.”

Vanilla Consulting itself was forced to close its Melbourne office and reduce staff in Sydney “just to survive” the financial crisis, Taylor said, and is now running a much smaller operation.

Provident Capital, currently interviewing for a replacement for previous head of third party distribution Steve Sampson, said there is “certainly great candidates out there”.

“In the main it’s fair to say they are coming from the larger non-bank groups that have either

not survived the GFC or have been absorbed or purchased by the banks,” managing director Michael O’Sullivan said.

“In that process, there has been a shake-up and there are some highly qualified, well-credentialled people looking for opportunities.

We are seeing some good candidates out there, but people are not on bulk recruiting,” he said.

According to a quarterly report on banking & finance jobs from recruitment agency Hays, credit analysts are at the forefront of lower level recruitment demand despite much-publicised lay-offs across the banking sector. The

Hays report said banks running competitive lending campaigns are experiencing higher volumes than anticipated, leading to a rise in loan refinancing, variations and discharge requests.

“Experienced mortgage credit analysts with DLA are sought,” Hays said. “We have seen a lift in demand for residential credit analysts since competition between domestic banks is very high.”

The agency said credit analysts with a strong knowledge of Australian regulatory guidelines are also in demand due to preparation for incoming Basel III requirements.

Need a job? Vanilla’s top five vacancies Credit analyst/team leader

Strong business acumen with sales empathy and a hands-on approach to troubleshooting

Mortgage broker/ BDM role

Residential lending background with strong interpersonal and relationship skills

Sales management

Retail and introducer sales channel experience with reputation and contacts

Loan processing/ documentation

Experienced loans processors with excellent product knowledge

Product development

Experience in developing and implementing cutting edge lending products

Source: Vanilla Consulting

IMF urges more capital for Aussie banks The IMF has urged Australian banks to increase their capital in a move that riled the majors.

A working paper released by the International Monetary Fund praised Australian banks for their progress toward meeting Basel III requirements. While the IMF said Aussie banks were equipped to withstand “sizable shocks” in the mortgage market, the paper said a potential global downturn could necessitate more capital.

“Combining residential mortgage shocks with corporate losses

expected at the peak of the global financial crisis would put more pressure on Australian banks’ capital. Therefore, it would be useful to consider the merits of higher capital requirements for systemically important domestic banks,” the paper said.

Combining these two factors, the IMF said the majors’ probability of default would increase from 2% to 11%, and the estimated losses would be larger than the banks’ total provisions. “While continued strong bank supervision plays a

significant role in maintaining financial stability, the merits of higher capital requirements need to be considered for systemically important domestic banks, taking into account the currently evolving international standards.

“The large market share of the four banks in the domestic market implies that they could be perceived as too big to fail and pose a potential fiscal risk,” the IMF said.

The opinion is likely to draw the ire of the banking industry. APRA has already set benchmarks for

Australian banks to meet Basel III liquidity standards ahead of the global deadline, and is considered one of the world’s tougher prudential regulators. ANZ boss Mike Smith has previously criticised the Basel III requirements, saying they could cause a global shortage of capital, while ABA’s chief executive Steve Munchenberg has warned APRA against disadvantaging Australian banks by forcing them to take on the more stringent Basel requirements earlier than their global peers.

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News THE COALFACE Paul Wright, IPS Home Loans, Wollongong

Paul Wright

IPS Home Loans’ Paul Wright sees his nascent property investment advisory business overtaking his financing arm within 3-5 years, due to demand in the NSW Illawarra.

Having started the business 18 months ago as an office of national property investment group NPA Property Group, Wright said it had already added ‘six figures’ to his bottom line.

“It’s been very successful. The demand is there, and it’s been coming purely off the back of our own client base. When we expand to the open market, the sky is the limit,” he said.

Wright’s decision to launch the investment service came after a realisation that his clients often lacked the knowledge required to build and manage their wealth effectively.

“I had seen that my clients that are in the best financial position were not necessarily those that earn the most, but those that have had the most assets in property.”

What followed was 18 months researching the field, and gaining a property investment advisor qualification. Wright himself is an experienced investor with 20 years’ experience.

Wright said property services are a ‘complementary’ fit for finance brokers, provided they

have the requisite personal investment experience to effectively advise their clients.

However, he said the decision means ‘a lot of work’ for the owner, and is not simple process.

“It’s not just an add-on, we do run it as a separate business, and it trades under a different brand.”

IPS originally went down the road of referring to someone external to provide property advice, an option which “didn’t work” as it meant losing control of the client. While clients see the finance and property arms as two separate entities, in reality, the vast majority of clients do end up using IPS Home Loans for their finance, though this is not a requirement.

• Property investment service adds ‘six figures’ • To become main business within 3-5 years • Paul Wright to work on business, not in it Wright said the IPS business also works under the same roof as a financial planning business with a similar name and brand, allowing him to put a ring fence around his clients.

Wright said his next challenge is stepping back from the finance side to concentrate on property investment. “I’m planning to focus more on the business than working in it,” he said.

With four staff currently, including one other loan writer, Wright said this process will involve training up his staff to handle more of his work load, as well as hiring new staff.

“I’m hoping to add another loan writer from the middle to end of this year, and possibly step back a bit and focus more on the property investment business.”

Hardship complaints show no sign of slowing Financial hardship continues to yield a flood of complaints to COSL, and the Ombudsman has said the trend shows no sign of slowing.

The Credit Ombudsman Service has released its annual report for 2011, noting a whopping 72% increase in complaints from 2010. The uptick in total complaints was ascribed to greater consumer awareness of COSL’s services. Along with its increased membership following the advent of NCCP legislation, financial hardship remained the most common complaint. A major factor in this, Ombudsman Raj Venga said, is financial hardship and lenders’ unwillingness to vary payment terms.

“Regrettably, 34% of all complaints we receive relate in some way to financial hardship, specifically the failure of a lender to agree to a payment variation on grounds of financial hardship.

This level of financial hardship complaints is similar to previous years and we do not anticipate a reduction in the foreseeable future,” Venga said.

Venga pointed out that 72% of hardship cases occurred where a borrower had already been served a default notice. He again took aim at some lenders for issuing defaults too quickly.

“We achieved a satisfactory outcome for the consumer in 46% of the financial hardship cases we closed.

This suggests that not all lenders are, before issuing default notices or commencing enforcement action, properly considering the possibility that the borrower may be in financial hardship and whether a change in the borrower’s payment obligations may be appropriate in the circumstances,” Venga said.

Venga said borrowers are suffering hardship for a variety of

reasons.

“The underlying causes of the financial hardship complaints we see are unemployment Raj Venga or reduced income, cost of living, including other debt, followed closely by illness of the borrower or their family member, business failure, interest rate increases, relationship breakdown and natural disasters,” he said.

COSL said about 50% of financial hardship cases ended with borrowers being able to keep their home. Where this was not possible, the Ombudsman sought an agreement with the lender to allow borrowers additional time to sell their homes.

Advantedge was listed among COSL members as having received the highest number of complaints during the 2010–2011 reporting period, though the total received was only 74. Of these complaints, COSL said that 10 had been resolved in favour of the complainant.

Advantedge general manager of broker platforms Steve Weston said the official complaint numbers confirmed the business provided the highest levels of customer service.

“Advantedge has approximately 1.2 million borrowers within the wider business,” Weston said.

“Given the nature of the business there will always be a small number of complaints, and to only have 10 resolved in favour of the complainant given the scale of the business is a very good result. We always strive to provide the highest levels of customer service and the complaint numbers confirm that is the case,” he said.

Fitch places Aussie majors on notice Fitch has placed the Australian majors on notice over their ratings amid funding concerns.

The ratings agency has placed Commonwealth Bank, Westpac, ANZ and NAB on ratings watch negative, but said any rating moves should happen quickly.

Fitch praised the strength of Australian banks, while saying their ratings were “under some pressure at their current levels”.

The Fitch review compared the Australian and Canadian banking systems. Both countries have strict regulatory frameworks which the ratings agency said helped reduce risk. Likewise, both banking systems avoided the lending excesses leading up to the GFC and the subsequent fallout, and have maintained consistently high levels of profitability. Both countries had sound economies,

which was labelled both a “cause and effect” of the strong banking system.

“Less positively, both countries have high levels of household leverage, have seen sharp increases in real estate valuations since the 1990s and inevitably are not immune to adverse global developments such as the Eurozone debt crisis,” the report stated.

The comparisons diverged when

it came to the ratings assigned to the countries’ major banks. While the six major Canadian banks kept their rating, Fitch said Australia’s majors broke with their Canadian peers when it came to their reliance on offshore funding.

“Although on an improving trend, the funding profile of Australian banks compares unfavourably to Canadian and some other peers,” Fitch said.

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15

INDUSTRY NEWS IN BRIEF Bank RBA break to drive broking A wave of borrowers could be seeking out brokers should the banks continue to move outside of the RBA. MFAA chief executive Phil Naylor has predicted unilateral action by the banks could see “the gauntlet thrown down” to borrowers, and may motivate them to ditch their lenders in favour of a better deal. The year “2012 will see a more challenging economic environment and coupled with a change in lenders’ behaviour, the onus will be on borrowers to seek out a better deal for themselves through an MFAA approved broker,” he said. Naylor pointed to statements from Australia’s banks that they will not move “in lock step” with the RBA, and said this could see more borrowers doing it tough.

Genworth shrugs off US downgrade Ratings agency Standard & Poor’s has affirmed Genworth Australia’s operations as ‘solid’, after the downgrade of a related Genworth mortgage insurance business in the US. S&P downgraded US entity Genworth Mortgage Insurance Corp (GMICO) to ‘B’, a drop of two notches in its rating system explained by ongoing losses within the business, as well as less strategic importance being given to it by Genworth management. However, Genworth Australia was praised.

“Genworth Australia’s operational performance continues to be solid in our view, with loss ratios being relatively stable.” S&P considered the Australian mortgage insurance business to be bolstered against financial deterioration at the Genworth group level by APRA supervision and its independent board members.

Think integration, not diversification Brokers may be more successful in diversifying into products other than mortgages if they stop thinking of it as diversification. Connective’s Mark Haron told lenders at a recent briefing in Sydney that the term ‘integration’ is one that the aggregator will be using in preference to diversification. “Rather than saying ‘diversify’, say integrate,” said Haron.

“How do you plug the various insurance lines, leasing and commercial into your business?”

While Haron admitted that the change is purely semantic, he said it can make a significant difference to the way brokers think about incorporating other products into their business models.

Vegas lure adds to Intellitrain spike Intellitrain has seen a 60% increase in enrolments since October last year, and part of the increase in numbers is being put down to its recent Vegas promotion.

Intellitrain has been running courses in each major city around Australia up to two times a week. General manager projects and marketing, Byron Gray, said the increase was due to a confluence of factors including the MFAA Diploma

deadline and a once-off Vegas promotion.

“Clearly the looming MFAA deadline has impacted things, but more importantly feedback from brokers who undertook their Diploma early last year and the increases they’ve seen in their business – particularly in such a tough market – have spurred others on. Our Vegas promotion has definitely driven an increase in enrolments, the chance to win a trip to Vegas worth $5,000 doesn’t come along every day,” he said.

Trainer: boost SMSF referrals The SMSF Academy’s Aaron Dunn said some finance brokers are “carving out a niche” in the SMSF market, enabling them to boost referrals from accountants and planners. “They have tried to partner with people who know this area well, and what we are seeing is that even those brokers are now offering special solutions to other mortgage brokers,” Dunn said.

Dunn said that the key is for brokers to understand the product and pitch themselves as experts to these referrers.

“They can get an understanding of it, understand where the opportunities are, and go back to their referrers and explain the applications for commercial or resi, and add value back that way.”

Bendigo flags independent moves Majors aren’t the only ones set to make a break from the RBA, with a second-tier planning to move independently as well.

Bendigo chief executive Mike Hirst has told the Australian Financial Review the bank was looking to provide customers with “better transparency” around its mortgage pricing, but that it would work independently of RBA moves. “You have seen [ANZ CEO] Mike Smith setting away from the official cash rate change, and we have indicated that we will be doing that as well,” Hirst said. Hirst said the bank had not “worked through the mechanics yet” of how and when it would explain any rate moves – or the lack thereof – to its customers, but said consumers should know that bank funding costs had drifted from the official cash rate.

Surveillance for ‘untouchable’ banks The government has been called on to introduce a surveillance regime to scrutinise banks that don’t follow the RBA. Ken Raiss, director of national accounting firm Chan & Naylor, has argued that the Federal Government should introduce a surveillance regime to ensure that the majors pass on any RBA cuts in full. “The Big Four’s previous rate cut irreverence has potentially muted monetary policy and challenged the authority of the RBA. A surveillance regime needs to be established to prevent a further decoupling of interest and lending rates.” Raiss argued the majors had managed to build infrastructure around themselves “that is now deemed untouchable”, and said government oversight would be rendered powerless.

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News

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

Westpac rubbishes Fairfax over misleading report Westpac has dismissed a Fairfax report insinuating that the bank was holding out on borrowers following last year’s rate cuts.

Fairfax reported in early February that the bank had lagged in adjusting customers’ repayments following rate cuts in November and December, and that many customers would not see their repayments altered until March. But Westpac spokesperson

Supreet Gosal told Australian Broker that the Fairfax report was misleading in regard to Westpac and the banking market.

“It implied that we don’t pass on interest rate reductions, which is not true. We’re very clear about that and advertise the effective date through our press releases and through our social media channels,” she said.

The delay in adjusting

repayments, Gosal said, was not uncommon in the mortgage market.

“This isn’t just Westpac. This is standard practice across banking.

In fact, we adjust more frequently depending on how many changes there are to interest rates.

Westpac adjusts four times a year,” she said.

The delay in adjustments can also prove a boon to borrowers, she claimed.

“There’s the same period between the effective date and the notification when interest rates go up, and when interest rates go down the period means people are paying off their mortgage a bit faster. We’re very open and transparent on this,” she said.

Gosal also reiterated that the delay before the change in

repayments would not disadvantage borrowers, or allow the bank to raise funds from higher repayments.

“If borrowers are in a scenario where they want to bring the repayment down they simply need to contact the bank over the phone or through online banking. Some customers may not elect to bring their repayments down so they have that buffer and pay off a little bit more,” she said.

Ultimately, Gosal said Fairfax was mistaken in implying the period between rate changes and changes to repayments amounted to any kind of cash grab by the bank.

“This is standard practice, and it is of no benefit to Westpac.

Moreover, it works both ways, whether rates go up or down,” she said.

Price data skewed by top-end buyers, broker claims Sydney has appeared as the lone bright spot in a weak month for median house prices, but a Sydney broker has claimed the results may be deceptive.

RP Data figures show Sydney

saw 0.4% growth in median house prices for December, while capital cities on average fell 1.2%.

However, James Tsolakis of MortgageMax in Sydney said the numbers were likely inflated by

Skewed results?

Mortgage Mix’s James Tsolakis has questioned RP Data figures showing a monthly gain in house prices for Sydney

1.0%

0.7%

Month

0.4%

Quarter

-0.1% -0.5%

-0.3%

-0.6%

-0.1%

Source: RP Data

Hobart

Canberra

Darwin

Perth

Adelaide

Brisbane

Melbourne

Sydney

-1.1% -1.2% -1.3% -1.4% -1.3% -1.6% -2.1% -2.7%

sales at the top end of the market.

“If one drills into the numbers, it’s more the high-end property that’s sold, which is skewing the results. We don’t get very specific property data in this country, so you can’t tell at a glance the average sale price. You might find quite a few sales in the Eastern Suburbs that have been discounted, but they’re above the average sales price anyway,” Tsolakis said.

A market Tsolakis characterised as overpriced could be forcing out all but cashed-up buyers, he claimed.

“The numbers don’t really stack up. The only things propping up the Sydney market are high end sales and sales to foreigners.

Aussies are sitting back and saying, ‘Why would I pay $750,000 for a flat?’” he said.

RP Data, meanwhile, claimed that the coming months could see

a revival in the housing market.

With December posting the year’s smallest quarterly decline, Rismark’s Ben Skillbeck said recent rate cuts could buoy the market.

“We expect that the RBA’s interest rate cuts in the final two months of 2011 will lend further momentum to housing activity as transaction volumes pick up over February and March after the seasonally slow months of December and January,” Skillbeck said.

But Tsolakis rubbished the idea that interest rates would ramp up volumes, saying rate cuts generally yielded higher prices from vendors, further exacerbating affordability problems. Figures from the Australian Bureau of Statistics may support Tsolakis’ claim. ABS data showed broadly flat new home sales for December, with a fall in building approvals.

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19

SMSFs luring brokers, but education urged NMB has witnessed a spike in SMSF lending interest, though managing director Gerald Foley said brokers need to understand these products.

Last year, National Mortgage Brokers held a professional development day on SMSF lending that attracted “the highest number of attendees all year”, according to the group.

Foley said the appetite from brokers continued to be strong. “We received great support and enthusiasm from our brokers around the SMSF opportunities. This is certainly a growing market and it would be remiss of brokers to not try to tap into it,” he said.

However, NMB warned members to ensure they are abreast of SMSF structuring.

“Any loan that is not properly structured at the outset can cause a lender or broker issues down the track. SMSF is no different in this regard,” Foley said.

Foley said the level of independent advice that needs to be obtained from tax and legal advisor is well covered by the processes of panel lenders. “The loan itself is relatively simple, the complexity occurs around the whole structure and purpose of the borrowing entity.”

Brokers are being urged to train up to ensure the nature and complexity of the product is properly understood – and to help identify ways to seek opportunities to market Gerald Foley the product.

Foley said SMSF lending provides great opportunities for brokers to work with a team of specialist advisors – each focusing on their part of the overall transaction.

While a number of lenders have SMSF products available, not all publish their policy documentation on their website, which assists with processing the loan.

The SMSF Academy’s Aaron Dunn, who recently conducted training for NMB, said that some brokers had “really managed to carve out a niche in the market”.

“They have tried to partner with people who know this area well, and what we are seeing is that even those brokers are offering special solutions to other mortgage brokers,” he said.

Dunn said brokers needed to beware the amount of legal oversight that comes with the SMSF product and structure, in addition to the regular requirements of standard banking products.

Bank of Melbourne taps ING Direct for state manager Bank of Melbourne has nabbed a former ING Direct state manager to oversee its team of BDMs. The bank has appointed Paul Filippone Paul Filippone as Victoria state manager. Filippone previously served as Victorian state manager with ING Direct, and was Victorian vice president and treasurer for the MFAA from 2007–2011. Following the announcement, Bank of Melbourne head of broker Clive Kirkpatrick touted Filippone’s experience working with BDMs and brokers.

“We’re really pleased to have Paul on board. His extensive experience in the broking industry, exceptional local knowledge and his previous position with the MFAA in Victoria makes him an exciting addition to the team,” Kirkpatrick said.

Filippone will lead the bank’s team of six BDMs. The appointment comes after the bank late last year expanded BDM access to its entire broker network, a move

which a Bank of Melbourne spokesperson told Australian Broker has seen positive response from brokers.

“With six BDMs on the road now – including Mary Van Hoorn who is specific to the Asian market – as well as adding a dedicated loan processing team, we’re seeing encouraging results,” the spokesperson said.

The announcement came as the bank said it was set to open its 50th branch on February 27. In July 2011, Westpac rebadged its St.George branches under the Bank of Melbourne brand, and CEO Scott Tanner said the bank had opened 15 new branches since the change.

“We’re on track to meet our five-year goal of 100 branches across Victoria. We’ve hired 238 new employees, almost doubling our workforce,” Tanner said.

Tanner said the bank had increased sales across its product range, more than doubled the number of new customers it gained per month and had achieved “strong” mortgage growth.

“Perhaps most pleasingly, new customers are purchasing multiple products with us, including their main transaction accounts and superannuation, demonstrating their confidence in building long-term relationships with us,” Tanner said.

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brokernews.com.au

Comment OPINION

Brand convergence shows Homeside’s true colours With Homeside branding moving ever closer to NAB, the brand itself may soon become redundant, writes Adam Smith

to offer some products to clients which would be available through a NAB branch.

Flavell disagreed, though. He defended the idea of a separate proposition for brokers, and said NAB Broker recently announced a it allowed the third party channel rebranding campaign that general to deliver products not readily manager of distribution John Flavell available through a bank branch. said would bring Homeside and Flavell claimed that without NAB closer together in the minds of Homeside, brokers would not have consumers. access to price-for-risk discounts.

The rebrand is evident in new And the problems caused by any marketing materials including separation were minute, Flavell brochures and a consumer website. said, with the “subtle differences” The materials feature NAB’s familiar between Red Star and Homeside red star logo, black, red and white products only accounting for colour scheme, and explain that around “1% of the market”. He Homeside is a range of NAB argued that feedback from brokers products available exclusively had indicated that the majority of through mortgage brokers. Flavell them felt this separation was “the said the move created a “strong right approach” for the bank into visual link” between the mortgage the future. broker arm and the parent bank.

Right approach or not, the gulf But does it signal a move towards a between Homeside and NAB is more united NAB for brokers? narrowing, at least from an aesthetic The separation between NABperspective. Some of the “subtle branded loans and Homeside has differences” between the two are long been a source of contention now gone. As these differences in the broker market. When NAB fade, will it be necessary to maintain Broker last year unveiled a move a separate brand? to provide its entire network with NAB Broker contends that the perks previously only available to Homeside rebrand is symbolic four-star brokers, the feedback from of improvements made to the aggregators was overwhelmingly Homeside proposition. Flavell positive, due to the removal of what pointed to leaps in service and they labelled ‘disparities’. consistency, saying the bank had However, Connective principal clocked a 93% broker satisfaction Mark Haron said at the same time rate for December. He contended in November that NAB was still that NAB Broker’s addition of a “lagging” its market competitors large broker-facing support team – in maintaining a separation the most of any bank – as well as between its bank-branded new products and the extension loans and Homeside products. of its four-star benefits called for a He said brokers were at times new look for Homeside. disadvantaged in not being able But as the lines blur between NAB and Homeside from a branding perspective, is it possible that the gulf will begin to narrow from a product perspective? A few months ago, Flavell called the separation between the two “the right approach”. Now that separation is a bit less distinct. Could NAB Broker’s next announcement be that Homeside has Homeside’s new branding makes the visual connection to finally come home NAB, and directs consumers to contact their broker to roost?

The thoughts of Chairman Now Predicting the future could be a lot easier if people just stopped to look at the numbers, argues Kym Dalton The older I get the more I suspect that the Jetsons were a stab in the dark.

Maybe they were only a cartoon and the animators weren’t really serious futurists, however there are lots of other more recent examples in popular culture where folks just got it so wrong.

Have a look at Blade Runner again. A great flick made in 1982; but LA in 2019 (ie, ‘only’ a mere 37 years in the future), had acid rain, flying cars and a dominant Japanese culture. Hilarious, in hindsight.

Being a so-called futurist is a treacherous vocation – you can get totally blindsided by such things as the internet, for instance.

I had the opportunity of meeting Tim Berners-Lee, the ‘inventor’ of the World Wide Web, in 1996. I remember thinking “I wonder if this racket will really catch on” (not one of my better calls I have to admit).

Returning again to popular culture, maybe futurists should be more like the Patrick Jane character in the TV show The Mentalist.

A former sideshow clairvoyant, he admits it was all a sham and uses his skills in ‘cold reading’ and hyper-observation to help catch the bad guys.

Herein lies a clue. Maybe ‘true futurists’ are, or should be, more like ‘Nowists’. Maybe the trick is to look at observable data that exists now and draw meaningful conclusions for the immediate future. Maybe the true skill is to observe things that are happening right now that many haven’t noticed yet (or refuse to notice?).

Statistics should help ‘Nowists’ too. Stats come in for a bad rap – you know lies, damn lies and statistics. Not entirely fair.

It’s most often not the statistics that are ‘wrong’; it’s the use to which they’re put, and the observations made and the conclusions drawn from them that give them their bad press.

There are things that are observable and statistics available now that a future-Nowist can’t ignore.

Carbon-based fuels will become more expensive. The baby boom will turn into a baby whimper. Gen X and Gen Y will be running things

real soon (Obama is a cusp X’er!).

Collaborative consumption and ‘unplanned obsolescence’ are on the rise.

As for Australian house prices continuing to double each 7–10 years? A look at the stats and a bit of bush maths indicates that for this to happen, average household income will need to be around $230,000 by say, 2020 to qualify for a loan for ‘the average dwelling’ at reasonable LVRs. Phooey.

A word of caution – future Nowists should be wary of the temptation to peer into the recent past in order to draw firm conclusions as to the near future.

With the pace of change in just about everything, because something happened under a set of stimuli before, it doesn’t necessarily mean that it’ll happen that way again.

For instance, if banks start rationalising branches again (as they did in the early 1990s) I think it’s too early to call that this will ‘automatically’ be a boon for brokers.

We’ll need more observable data on this point, to my mind.

So, maybe futurists should be a thing of the past, and to thrive in a world of ceaseless change we need to be ‘Nowists’ like the mentalist, and a lot less like George Jetson.

A robot maid would have been nice, however.

Remember: The future isn’t what it used to be.

Kym Dalton kym.d@futurology.com.au

Kym Dalton

brokernews.com.au

21

Review 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 Australian Broker Issue 8.3 Headline: Franchises mull ‘no go fee’ first step (Cover) What we reported: With many in the industry regarding

fee-for-service a veritable inevitability, franchises last year said they could pave the way with a “no go fee”. Both Mortgage Choice and Smartline said they were examining the feasibility of the fees, which would reimburse brokers if borrowers qualified for a loan but chose not to go ahead with the broker. Mortgage Choice chief executive Michael Russell said fee-for-service seemed “commercially inevitable” for the broking industry, but cautioned against a hasty introduction of the model.

What’s happened since: Following extensive market research,

Russell has labelled a no go fee unviable at the moment. Russell said Mortgage Choice undertook consumer polling which showed 61% of respondents would be unwilling to pay any kind of fee to use a broker.

While Russell said the company would no longer push ahead with its no go fee idea, he didn’t discount an eventual move in the direction.

Instead, he said the industry was not yet “sufficiently mature” to introduce fees, but that increased professionalism and consumer education could see this change.

Headline: Connective hits all-time settlement record (page 7) What we reported: In December 2010, Connective touted a

banner month of $966m in settlements. The aggregator had been tracking at $750m–800m for several months, and principal Mark Haron put the record December down to a seasonal surge of activity along with the growth of the company’s broker network. He predicted that without the added distraction of a licensing deadline, Connective brokers could crack the $1bn mark.

What’s happened since: In May of last year, Connective finally

hit its billion-dollar mark. Then it hit the mark again in June, and in July. Haron expressed satisfaction that the aggregator, after skirting around the $1bn mark for so long, had managed to break through for three straight months. He predicted that the result was not merely a seasonal spike, and said he was confident Connective would be able to consistently hit the $1bn mark moving forwards.

Headline: Industry applauds RBA rate freeze (page 10) What we reported: With pretty much everyone expecting the

worst when the RBA met in February of last year, there was a pleasant surprise when the Central Bank didn’t pull the trigger on rates. Analysts had been predicting as much as another 100bps of hikes following the RBA’s November 2010 rate rise, and the market seemed to be bracing for the pain when the Bank’s board held its first meeting of 2011. After the RBA left rates alone, MFAA Phil Naylor praised the actions, and said the Reserve seemed to be signalling that rates might remain on hold for some time. Then-Mortgage Choice spokesperson Kristy Sheppard wasn’t so sure, and predicted a couple of preemptive rate rises within the coming months.

What’s happened since: Oh, how the market has changed. This

February’s RBA board meeting yielded exactly the same result as last February’s, but with a markedly different reaction. Economists had almost unanimously tipped the Reserve to cut rates this year, and the industry had focused most of its attention on preemptively chastising the banks should they not pass on the cut. When the RBA decided to stay put, it prompted a flurry of incredulous complaints. 1300 Home Loans founder John Kolenda went so far as to say the Bank was flirting with a Eurozone disaster by leaving rates on hold, and the HIA predicted the hold would rattle consumer confidence, and send the housing market plunging towards GFC lows.

Headline: Fixed rate hunger eases in new year (page 12) What we reported: Fixed rates tracked upwards for the final

four months of 2010, before easing off in the new year. Fixing had been growing in popularity amid widespread speculation that the Reserve was not done tightening rates following the November 2010 hike. But as economists began to push rate hike predictions towards the middle of the year, borrowers cooled on fixed rates. Demand for the loans remained around 15%.

What’s happened since: 2011 was definitely the year of fixed rate frenzy. A bizarre inverted yield curve saw fixed rates fall far below the standard variable rate, and lenders practically tripped over one another in a race to make cuts to the products. After tracking towards a quarter of all home loan approvals, the products’ popularity finally began to ease off in January after successive RBA rate cuts. That, along with the expectation that rates would continue to head down in 2012, rekindled interest in variable rate loans.

22

brokernews.com.au

Comment VIEWPOINT

Mark Haron, Connective

Are you on top of compliance, and what are the risks if you are not? Is the MFAA providing you value for money? Our pundits cover the touch issues

Steve Patterson, SAKS Consulting

A ‘not unsuitable’ rocky road Are you ready for the rocky road?

Following the publicity around a slated bank class action focusing on loans to borrowers in the wake of the global financial crisis, compliance has been propelled back to front of mind.

The reason: If banks are already in consumers’ sights, are brokers next in the firing line?

According to Steve Patterson of SAKS Consulting, the whole debate revolves around the definition of a ‘not unsuitable’ loan – and to date, that definition is still very elusive.

“I think unfortunately there is some lack of clarity; as entities like the Credit Ombudsman Service and ASIC have not perhaps been as clear as they could in specifying what constitutes a loan that is not unsuitable,” Patterson told Australian BrokerNews TV. “I think that has to be watched very carefully. It will evolve. But in evolution, there could be a rocky road for some brokers and lenders – but only time will tell,” he said.

So how can brokers ensure their businesses are above-board on compliance?

According to MFAA CEO Phil Naylor, the answer is clear – that is, if you are a member of the MFAA. “All I can say is if brokers follow the law under NCCP – follow the guidance that MFAA

Steve Kane

Phil Naylor, MFAA

provides – they shouldn’t have any issues.”

But is it that simple?

Connective principal Mark Haron thinks brokers can go above and beyond the letter of the law – and that they should ‘bail out’ of any suspect transactions.

“I’ve seen too many brokers caught out in these actions by customers where the customers haven’t always been honest and truthful,” Haron told Australian BrokerNews TV. “If you feel concerned that the information the client has given you is not 100% correct, or they perhaps are not being 100% truthful, clarify that, keep good file notes on it, and whenever necessary stop doing the transaction, and advise the lender you are dealing with as well straight away.” Haron said that going above and beyond existing NCCP law will ensure brokers don’t find themselves ‘in trouble’ with the regulators and courts. He suggested keeping more thorough file notes as well as ensuring regular communication with customers, to ensure that all details are documented and any issues are dealt with as they arise.

James Green, Oxygen Home Loans

Ian Jordan, The Selector Group

Raymond Xue, ACA Mortgage Solution

The MFAA has labelled the ACCC’s review of third line forcing notifications as routine – however,

brokers seem to be viewing it as a chance to give their feedback on the MFAA. In an exclusive Australian BrokerNewsTV report, leading brokers have called on the MFAA to provide members with more value for their fees, and joined the chorus of voices urging the ACCC to abolish arrangements making membership a mandatory requirement.

James Green from Oxygen Home Loans said the MFAA – like other organisations – must be subject to competitive pressures to ensure value for broker members.

“They shouldn’t be able to be passive and have that membership base being compulsory because it stops them from being innovative and market leading,” he said. “I think [mandatory memberships] are dangerous because organisations need to be competitive on their own.”

The Selector Group’s Ian Jordan agreed membership of the MFAA should be a voluntary commitment. “The MFAA, I think, is a good organisation and people should be paying to belong to it, however, I also feel that the MFAA needs to stand on its own two feet,” he said.

Raymond Xue of ACA Mortgage Solution was likewise inclined. “I think they should give a choice for brokers, and also for brokers, we should have an organisation to voice our opinion

on behalf of the brokers, not on behalf of the lender.”

Brokers went on to question the value they were gaining out of MFAA membership fees.

“I truly believe that brokers feel there is not the value there to be a member and so they are being forced to be a member by the MFAA,” Green said. “I think ultimately, the MFAA has to add value to those smaller players, to make them want to be a part of that association, and make feel that they represent their interests in the best possible way.”

Jordan said most brokers would question whether the MFAA represents brokers, or the banks. “[They would question] whether the larger groups such as Aussie or Mortgage Choice have so many members and therefore influence outcomes through those channels.

Your stand-alone single brokers are probably more likely to be moving away from the MFAA unless there are ways to demonstrate the value it has to those individual brokers.”

It’s all about value for money, brokers said. “I think the biggest concern for brokers is that they don’t get fair value for their membership fees for MFAA,” Jordan said. “If they don’t feel like they are getting the value from it, they will feel like they are taking on an expense and an additional cost, and I think that’s what they really don’t like,” Green added.

On MFAA value for money: A member engagement survey carried out late last year found that only 22% of members are dissatisfied with what MFAA does to represent them. 51% were either completely satisfied or somewhat satisfied while 25% were neutral.

On mandatory MFAA arrangements: Membership is not mandatory. While we are aware two broker groups make this requirement under ACCC authorisation (currently being reviewed by ACCC), many other

broking groups and aggregators and lenders simply require membership of a professional industry body. MFAA’s total focus is on providing value to members so they want to join.

On representing brokers, not banks: While we accept membership from other stakeholders – eg, lenders, mortgage insurers, lawyers and valuers – MFAA does not represent them. They have their own associations. However, it is useful to have them as members

so that common industry issues can be discussed.

The governance structure of the MFAA is such that none of these stakeholders can dictate MFAA policy or actions. MFAA State Councils must consist of at least 70% brokers or mortgage managers. On the MFAA Board of 12 persons, (our decision making body) brokers, mortgage managers and aggregators comprise nine people. The rest include one lender, one lawyer and one independent director.

MFAA must stand on ‘own two feet’

brokernews.com.au

23

FORUM

‘Expensive fortune telling’ the fault of the banks Brokers say they are outperforming the ‘expensive fortune telling’ provided by financial planners, but blame the government and big banks for the problem, not the planners.

Following the release by ASIC of shadow shop results that showed only 3% of plans delivered by financial advisors could be considered ‘good’, brokers weighed in.

WhistleBlower (25 Jan 2012) said ASIC was ignoring the ‘mammoths in the room’, the banks. “It was the government 17 years ago that led to re-painting the veneer of that industry, and don’t forget, we are discussing the banks here, who own the vast majority of financial planning infrastructure, brands, pipeline, compliance and maintenance,” he said.

Likewise, Terry (25 Jan 2012) took aim at the banks after his experience as an employee. “I worked for one of those banks, and the focus is purely on sell, sell, sell. not on the quality of the advice or the clients’ needs. It’s profit before customer. I couldn’t work under that ethos.”

Financial planner John (25 Jan 2012 12:45 PM) lamented the outlook on the financial planning industry. “This is very disheartening. I have been in this industry for over 25 years as a financial planner (but

Heritage’s announcement that it would expand broker distribution nationally was not without its critics after the GFC (Heritage goes national with broker distribution, 1/2/12).

“It’s amusing when lenders say they cut brokers because they ‘weren’t giving us any volume’. It’s a common excuse for not being able to attract the business, for whatever reason from established brokers with solid client bases.

Good BDMs from good lenders go and get that business; they don’t make excuses for why it isn’t ‘given’ to them. This latest announcement is hardly a commitment to the broking industry as a whole, and the millions of clients, current and potential, that brokers represent.”

SMc on 01 Feb 2012 10:14 AM

never as an insurance salesman) and I work long hours for my clients running my own business. My income at best is modest. I do not charge excessive fees but I spend many hours understanding the needs and wants of my clients.”

Meanwhile, Dr Phods (25 Jan 2012 01:48 PM), a financial planner, said he worked tirelessly for his clients, and ASIC was not really helping. “Phooey ASIC, the one thing I dislike the most about my industry is trying to comply with the floury rules set down in legislation (in very broad terms)and ‘policed’ by ASIC. The vast majority of planners in my experience are doing their best. Sure there are some bad apples, but I would suggest there are more accountants and mortgage brokers in jail than financial planners.”

Peter (25 Jan 2012 10:16AM) said ASIC was tarring individual planners with a brush that their licensees should be painted by.

“They [ASIC] know full well that the content, layout, design and what must and what must not be addressed in a Statement of Advice is fully governed by the licensee and their legal departments. I hate getting tarred with this brush when it is out of my control! And ASIC are aware of this! Thanks for nothing!”

Meanwhile, brokers appreciated broker Emma Lockwood’s approach to clients and social media (Systematic approach yields social media success, 27/12/2012) “I totally agree, I have been embracing social media for the last few months to keep top of mind with my clients and referrers. There are brokers that start to use social media then don’t maintain the momentum. Social media has evolved immensely in the last few years and we all need to move with the times.”

Qld Broker on 27 Jan 2012 10:17 AM So true Emma, couldn’t agree more.

Amber Linzner, Mortgage Fair on 27 Jan 2012 11:00 AM  To vote in our latest online poll or get involved in our forum, visit our home page at brokernews.com.au

Are you using, or do you plan to use social media in your business this year?

Social media may be a favourite industry conference topic, but are mortgage brokers planning to use it? Here’s what our online readers said about new media in 2012:

yes 48%

no 31%

Source: Australian BrokerNews Poll date: 29/1 – 7/2/2012

still

20% deciding

24

brokernews.com.au

Insight MOTIVATION

Five ways to tap into this year’s opportunity How can you make the most of this year’s potential?

National Mortgage Brokers’ Sal Cinque provides you with five ideas to keep in mind

Congratulations on making 2012. As different as this statement may sound, I make it with the words of Woody Allen in mind, “Eighty per cent of success is showing up.” The fact you are reading this means that you are a starter in 2012 and you have an 80% chance of succeeding at whatever you apply yourself in.

Most celebrate the New Year in hope of a better future.

Others look to capitalise on untapped opportunities and there is no greater opportunity than improving yourself.

It is said that if you are not continually improving, you are gradually forgetting what you once learned and will fall behind your competitors.

Greek philosopher Archimedes once said: “Give me a lever long enough, and a place to stand and I will move the world.” Although Archimedes did not invent the lever, he understood its power in moving great mass with less than equal effort.

This principle also applies to personal development and business success. In order achieve to your objectives in 2012, consider leverage as the means to do so. Here are the Top 5 ways leverage will help you achieve more than you could on your own.

1. To be successful, associate with successful people

Seek out your successful peers and imitate the activities and disciplines that have contributed towards their success. There are many opportunities where you can meet other brokers and industry players. Leverage from their experience and equally share your own.

Sal Cinque is the director of sales and marketing at aggregator National Mortgage Brokers

2. Be inspired by those who have achieved greatness

You can dramatically improve your performance by studying the lives of great people. Although it may be unlikely to have a sit-down with the likes of Bill Gates, Richard Branson or Gordon Gekko, you can still find

inspiration by reading their stories. Leverage from the wisdom gained from their many challenges and failures before achieving their ultimate success.

3. Leverage from your networks and their networks

Networking is about building solid relationships and if you give more than you receive, eventually the scales will tip in your favour. The famous motivator and salesman Zig Ziggler once said: “If you go out looking for friends – you’ll find they are very scarce. If you go out looking to be a friend – you’ll find them everywhere”.

So get involved with your local community or sporting groups, offer referrals to other businesses in your area and donate your time, by presenting at seminars and schools. One degree of separation may be all it takes to gain a new customer. Each person you know, knows other people that may require a loan. They, in turn, know other people that may open doors you never thought possible.

4. Imitation is the best form of flattery

Leverage from the marketing and promotional ideas that have worked for others. Search for successful campaigns across a wide variety of industries for ideas that may work for you. There are countless ideas that work and you only need one to make a significant difference to your results.

5. Leverage additional funding to expand

At some stage most businesses hit a ceiling and growth remains flat. Resources are fully stretched and additional capital is required to grow. Growth could be realised by two methods: organic; or acquisition. Both have their attractions and risks and both require capital. This may be sourced by taking on debt or foregoing equity, by selling shares of the business. If easily serviced, debt is always an attractive option, as it provides the means to expand without compromising your complete control.

Staying true to your business vision Those New Year’s resolutions may already seem hazy, but Michael Hall from WildWorks refocuses the lens on your goals and commitments

Michael Hall

Of course, this year will be different. Or maybe not.

We’ve all been there. It might have been: • the holiday where you really relaxed and then promised to be more calm when you got home • the time you joined the gym with the real intention of training more often • the pile of books, stacked all neatly, that you were determined to read • that small house repair that you’ve always been meaning to do • the old friend who you promised to catch up with more often ... “we must do this again”.

Or it might have been… that moment in business when you were genuinely committed to do something really different. You agree to this, despite your already busy work load.

It’s a very common pattern. Deciding to do something different but then being swept back into your regular “rhythm of life.”

So, what are the options? In our personal lives, we can turn to friends or family to help us keep on course. In business, we can look to our leaders and colleagues to help us stay focused.

The reality is, it’s really up to us and most of us know it. If you think about the most worthwhile achievements in life, they have been the result of us, as individuals, deciding to act. When you do this in business, authentically, you have the potential to:

• inspire others • be a role model • live what you believe • open yourself to other possibilities • learn • grow • be a leader

Hidden treasure

Remember that: • people are more likely to help you with your cause because they see you are serious and committed to making a difference • it makes it easier for you to be there for others because you know best where to encourage, offer guidance or just help out

Helpful hints

To help maintain focus on your vision: • regularly set yourself time to check-in around what you are trying to achieve and why • ensure your activity supports both your day-to-day work and your longer-term ambitions • be disciplined around stopping what you don’t really need to be doing • engage others around why you are trying to do things differently • help others who are embarking on a similar journey

brokernews.com.au

25

Toolkit

Receive breaking news updates direct to your inbox. Sign-up for the FREE e-newsletter at brokernews.com.au

Getting your face in the media Want to see your face in the media – and get the added benefits of the business leads that go with it? Matt Paterson explains the essentials

R

unning in alignment with an advertising campaign or in isolation, a PR program should be integrated into every brokerage’s marketing plan in order to generate interest among the firm’s target audiences.

Importantly, an effective campaign doesn’t always necessitate the need for big budgets, with the key ingredients required being time, effort and know-how.

Like the mortgage broking industry, the media is evolving at a rapid pace. The internet is playing an increasingly important role in the delivery of news and you would have undoubtedly heard terms such as 24-hour news cycle, digital media, social media and the like bandied around. While it’s true the media is quite different to days gone by, the fundamentals involved when approaching the media remain largely the same. So don’t be deterred by the jargon.

Following are some general tips to guide you in getting your face in the media.

Be proactive: It can be a lonely exercise waiting for a journalist to cold call to speak about your business or ask for comment on an industry issue. You need to be proactive and engaged in the process. Generally speaking, it’s only dubious operators or the proactive who make headlines.

Be available and responsive: The media is a deadlinedriven industry, so if a journalist makes a request for comment or information then you need to act promptly.

Ask the journalist what the timeframe for the response is and make sure you meet it. If you can’t assist them, let them know immediately so they can try elsewhere.

Deliver what you promise: You don’t want a journalist to form the view that you’re unreliable. There are plenty of people vying for media exposure and journalists favour those who assist them to do their job. They have long memories.

Understand deadlines: Deadlines, deadlines, deadlines – make sure you understand them. Don’t call a daily newspaper journalist at five o’clock to pitch a story or for a discussion about a development in your business.

They will be busy putting their stories to bed and you could, quite possibly, be met by the sound of a dial tone.

Similarly, if it’s a weekly column or monthly magazine,

make an effort to understand the editorial cycle and make your approach a timely one.

Target your approach: Target the media outlet(s) where your news or story concept will best sit. Is it an industry-focused issue, or does it have broader appeal? Also, target the right journalist. Do some research and find out which journalists have covered a related angle in the past, or simply call the publication or media outlet and ask them who the most appropriate person is to contact.

Mode of approach: Does your news angle warrant a press release? Sometimes a targeted email highlighting the key points is the best way forwards – it subtly implies exclusivity whereas a press release can suggest that you’ve ‘shopped’ it all over town.

Once you have determined a topic or issue that warrants media coverage, consider how best to communicate with the media targets you have identified.

It’s editorial – not advertising: Just because something is of interest to you or your company, it doesn’t necessarily mean it will be of interest to those outside it. Try to expand the media appeal of your development by linking it in with broader industry trends or issues.

Remember, it’s the role of advertising, not editorial, to flog your wares so you need to be subtle.

Figures, statistics and research: The media loves them as they qualify views and opinions. Pick up today’s newspaper and count how many stories are based on research findings, figures or stats. Poll your customers or quantify your statements where you can.

Images and vision: If you plan to be active in the media, then it’s worth having professional shots taken.

Bear in mind, however, mainstream media generally don’t accept supplied images. If you are targeting TV, then think about how a story will translate visually – ‘no visual, no story’ is the saying.

Cultivate relationships: This doesn’t mean you have to embark on a circuit of boozy lunches with journalists.

Relationships are largely formed on trust and this comes through supplying them with accurate, trustworthy and timely information.

Matt Paterson is a partner at Six Degrees, a PR firm specialising in the mortgage broking industry

26

brokernews.com.au

Market talk

A ray of sun in the midst of gloom Australians have proven to be incredibly dour on the economy at large, but their confidence in housing is coming back

The NAB Index showed a move back into positive territory

F

or a country that has yet to see any drastic impacts from the GFC, Australia is remarkably gloomy. There is no shortage of doomsayers predicting imminent economic collapse as a result of Europe imploding, and this kind of talk has weighed heavily on consumers. But while Australians are still weeping and gnashing their teeth about the future of the economy at large, their outlook for the housing market has gotten a bit sunnier.

Allianz and Newspoll recently released their ironically titled Optimism Index, which showed that Australians’ faith in the future of the economy remains at an all-time low. Reserve Bank rate cuts last year did very little to cheer up dour Aussie consumers, with the Index trumping the previous historical low it set in May 2011.

Allianz Australia managing director Terry Towell said economic confidence had remained in the doldrums since midway through last year, and had yet to significantly recover.

“Australians’ optimism about the future of the economy hit a 2011 low in May, with the Optimism Index falling from 14 to 9, reaching a level less than half the Index level of 20 achieved when the survey commenced in November 2010. This may have reflected the aftermath of the summer of natural disasters, exacerbated by global economic uncertainties. After bumping around at relatively low levels over the second half of 2011, Australians’ optimism about the economy has started 2012 on a low, with the Optimism Index falling back to only 8,” Towell said.

Yet the outlook for the property market hasn’t quite plumbed the depths of pessimism seen in the economy at large. In fact, NAB’s latest Residential Property Index showed a move back into positive territory after having turned sharply negative in the previous two quarters.

Arguably, there were some pretty significant regional variations. Not all areas of the country had a sunny

Allianz Optimism Index State

Nov 10

Jan 11

Mar 11

May 11

Jun 11

Sept 11

Nov 11

Jan 12

NSW

23

18

14

6

14

6

11

7

Vic

18

15

23

9

18

10

11

3

Qld

16

9

6

3

3

7

10

4

SA

22

0

17

13

10

14

6

4

WA

32

16

16

20

10

27

15

27

Source: Allianz

Economic optimism, as pegged by the Allianz Index, has been trending down.

NAB Residential Property Index Vic

NSW

Queensland

SA/NT

WA

National

Mar-11

23

39

-5

-8

12

16

Jun-11

-16

18

-27

-6

5

-5

Sep-11

-35

21

-10

-36

11

-14

Dec-11

-22

31

-18

-17

18

1

Source: NAB

Property confidence has ticked back into positive figures, indicating there are more property optimists than pessimists.

outlook for the housing market. Victoria (-22) and Queensland (-18) proved to be the two states with the most pessimistic outlooks, while NSW (+31) and WA (+18) were the two states where confidence in the property industry was at its highest. Nevertheless, a trip back into positive territory for the Index seems to indicate that some of the gloom surrounding the housing market is starting to dissipate.

Interestingly, the positive result came at a time when national house prices are still falling. Capital city values were down 1.2% in December, ending the year with a 3.9% drop on 2010. But NAB said there was more to the numbers than the raw value declines. It was the pace of the decline that inspired confidence. NAB said survey respondents believed national house prices could decline another 0.4% over the next year, but predicted 2013 will end with a 1.2% gain. Even this outlook, NAB said, could be too conservative.

“NAB believes these expectations may be a touch pessimistic. A structural shortage of housing remains, commencements are still weak, interest rates are falling and the unemployment rate is still comparatively low.

These factors should continue to maintain a floor under house price growth, which we see resuming at below 4% in 2012 after drifting down in 2011,” the bank said.

Rental growth is adding to the general feeling that things could finally be turning around. Rents last quarter improved in all states except NSW, and are expected to head upward another 3.2% over the next year. With rental yields becoming a bit more attractive to investors and rental prices becoming a bit less attractive to potential owner-occupiers, there are signs the market could pick up over the year.

First homebuyers are also stirring, wooed by falling prices and interest rates. It’s little surprise that December saw a rush of first homebuyers considering the mooted changes to NSW stamp duty concessions. What is surprising, however, is that first homebuyers were actually most active in Victoria, South Australia and the Northern Territory. This could indicate an actual trend rather than figures unnaturally inflated by government stimulus.

Australians may have little confidence in the future of the economy, and this lack of confidence has echoed through most sectors in 2011. But there are indications that, in spite of the general attitude of gloom and doom, most Aussies still see the housing market as a pretty safe bet.

brokernews.com.au

27

NUMBER CRUNCHING Capital city values decline from peak -0.3% -3.6%

-4.1% -6.1%

-5.4%

-5.6% -6.8%

-7.5%

Capitals

Sydney

Canberra

Darwin

Perth

Adelaide

Hobart

Melbourne

Brisbane

-8.7%

Source: RP Data – Rismark

How CEOs around the world expect the economy to perform in 2012

Improve 15% Don't know 4% Decline 48%

Stay the same 34%

Source: PwC

Australia’s fastest growing urban areas Inner Perth (WA) Wyndham (Vic) Melton (Vic) SerpentineJarrahdale (WA) Cardinia (Vic) Wanneroo (WA)

The Melbourne rental market is looking “ominous” for landlords with vacancy rates set to climb.

New data from SQM Research has indicated a significant rise in vacancies across capital cities for December, but SQM has put the result predominantly down to a normal seasonal increase.

The Melbourne market, however, has continued to trend upward in a fashion the research firm said indicated an oversupply issue.

“Over the course of 2011, a steady increase in vacancy rates has been recorded for Melbourne, peaking in December with 16,007 vacancies, an amount that goes beyond merely seasonal factors,” SQM said.

The company’s managing director, Louis Christopher, predicted that January will see vacancies once again tighten across most capital cities, but that Melbourne seems set to experience a glut of rental properties.

“Melbourne is looking ominous and we are expecting rental declines for this capital city for 2012. Melbourne has definitely become a renter’s market, and landlords can no longer be expected to extract higher rents in Melbourne,” Christopher said.

A housing overhang continues in the city as well. Unsold stock on

At a glance…

Whittlesea (Vic)

Compound annual growth rate 2007-2010

Kwinana (WA) Armadale (WA) Ipswich City (Qld)

‘Ominous’ Melbourne market sees stock, rental overhang

0

2

4

6

Source: ANZ 8

the market has gone up nearly 41% from January 2011 to January 2012, a number Christopher called “excessively high” in comparison to the national change of 13.5%.

Stock figures nationally did track down somewhat in January, falling 4.3% from the year before. Christopher said any trends indicated by the numbers will become clearer from the February data.

“Once again there is seasonality in these numbers, though I do note the falls in January have been far greater than recorded this time last year. We expect a bounce in listings in February as the season opens again. However, if the bounce is marginal or there is no bounce at all, then it will be clear to us that something else is going on in the market, such as listings being absorbed by an increase in buyer activity,” he said.

16,007

*

*The number of vacant Melbourne rental properties as of December Source: SQM Research

28

brokernews.com.au

People

Lending with heart While corporate social responsibility might be an empty marketing ploy for some, mortgage manager Loan Ave is taking community responsibilities to heart. Ben Abbott reports

Even before birth, doctors knew little Lewis Harrison was a battler.

At 20 weeks gestation, the growing Adelaide baby was diagnosed with a severe congenital heart defect called “Tetralogy of Fallot”, and had a total of four distinct problems with his heart.

Within 20 days of being born three years ago, young Lewis had already had two open heart surgeries, and just before his first birthday, he had his third.

The story is not unique – according to charity HeartKids SA, six children per day in Australia are diagnosed with heart problems, or about one in every hundred babies born.

However, it was Lewis Harrison’s story that inspired Paul and Michelle Collins of Loan Ave in South Australia to put the weight of the mortgage manager behind the cause.

The HeartKids home loan

In February, Loan Ave launched a loan that would see it donate a portion of income to supporting children with heart disease, via HeartKids SA. The mortgage manager announced that for customers who take a Heartkids Home Loan, it would donate some of its profits to Heartkids SA. On an average loan balance

of $350,000, Loan Ave has said that it would be donating $100 upfront and $350 per year for every home or investment loan, which equates to about $1,850 over five years for the charity.

Paul and Michelle, founders of Loan Ave, said they were spurred on to support HeartKids by Lewis Harrison’s story.

“HeartKids provides such value. They are a network of support to those families impacted by congenital heart defects and its ongoing consequences,” Paul said.

“Lewis’s story and so many others we have heard about and met have touched our lives personally and we wish to provide support that helps, grows and enriches our community.”

Harrison forward

Lewis has so far survived his ordeal, but is troubled by a weakened immune system that has hampered his enjoyment of regular social occasions as a young child. He has been nicknamed ‘Braveheart Lewis’ for his ability to bounce back after each arduous operation.

However, his challenges are not over yet. While the only outward sign of his difference from the average toddler is a large chest scar following his operations, he will have to face the operating table again during his early school years as his heart grows.

Lewis’ family say that without the support of HeartKids SA, they could not have travelled from their home in Adelaide to Melbourne to be by his side during his hospitalisation and recovery.

“Lewis’ journey has been an emotional roller coaster ride,” says Prisca, Lewis’ mother. “But his smile and cheeky ways have given us and so many others inspiration to turn his experience into a positive.”

Loan Ave’s new loan is one of these positives. “This is such a great way to know your helping HeartKidsSA by taking out a loan through Loan Ave, at absolutely no extra cost to you,” Prisca said.

Everyday responsibility

Mortgage manager Loan Ave has launched its charity HeartKids Home Loan, to support HeartKids SA’s work with donations

HeartKids SA is a registered health charity, and is the only organisation solely focused on all aspects of children’s heart disease

At the time of launch, Loan Ave said that corporate social responsibility was a global phenomenon, due to people now wanting to know not just about the service that your business provides but about how it is committed to their community.

“This is not a trend or a marketing exercise,” Paul said.

“The HeartKids Home Loan was born from a desire to provide support to the HeartKids wider family and be a part of changing lives. Why can’t we help change lives doing what we do every day?” he said.

Loan Ave has called on its introducers to support the charity focused home loan, arguing that together with brokers and their customers it would be able to make a difference.

Sam White stars in CEO charity cookoff Loan Market executive chairman Sam White is not known for his cooking – even among his family.

“My children aren’t huge fans of my cooking,” he said.

However, White Sam White recently got a few pertinent tips from some of Australia’s culinary greats that may help him build a much better reputation for food at home.

In early February, White joined other corporate leaders and 30 of Australia’s top celebrity chefs to provide a meal for a thousand people in need in the CEO Cookoff.

Held in St Mary’s Cathedral Square, the event aimed to create awareness about food security and homelessness while raising much-needed funds for OzHarvest and Mission Australia.

White said the cookoff was for a fantastic cause, and that he hoped his involvement in the event had helped secure the charities the sponsorship dollars they desperately needed.

“As a company we have a responsibility to the broader community and it’s great to be able to help the disadvantaged in any way,” White said.

The 200 participating CEOs were asked to gain sponsorship in the lead-up to the event to raise funds for the cause, with all monies shared between OzHarvest and Mission Australia. The CEOs included Qantas chief executive Alan Joyce and National Rugby League boss David Gallop, who all swapped suits for aprons to prepare and serve meals for the homeless.

White said he had enjoyed being guided by celebrity chefs, who on the day included the likes of Maggie Beer and Neil Perry.

“However, the event was not about my food. It was about helping the homeless and together raising hundreds of thousands of dollars,” White said.

brokernews.com.au

AFM snares another PLAN state manager Australian First Mortgage has added two new business managers, bringing to six its total business manager appointments over the past six-month period.

In a trajectory AFM has said continues a ‘rapid internal growth’ strategy, AFM has recruited Craig Kitchen for its South Australian business, and Ian Cornwall in Victoria.

This follows the recruitment in September last year of Wayne Robertson as business manager for NSW, and Courtney Isard as a business manager in WA. Kitchen joins from PLAN where he was state manager for South Australia. He follows in the footsteps of national head of sales Clint Hawthorne, who joined from PLAN’s NSW team last year.

Hawthorne said the appointments added to the depth and competitiveness of its national sales team.

“We are now well positioned to capitalise on our recent internal growth with a much larger sales footprint across Australia,” he said.

“With access to five funding lines, very competitive pricing and a competitive suite of products with a number of niches we believe AFM offers brokers and customers an alternative to the majors.”

AFM has also added two credit staff in the past six months.

Hawthorne said its credit managers are experienced and have in-house lending delegations, helping with conditionals within 24 hours.

Clint Hawthorne

29

Sintex appoints Resimac-sourced D’Cunha Commercial lender Sintex has created a new operations manager position to spearhead business growth, including through the mortgage broking channel.

The new position has been filled

by Greg D’Cunha, who previously worked at non-bank lender Resimac as an associate director of variations and retention.

In his new role, D’Cunha has been charged with looking after the day-to-day running of the business, building new revenue streams, retention, and diversification of the business.

D’Cunha will also be responsible for maintaining relationships with existing business partners.

Sintex general manager Cathy Dimarchos said the appointment of D’Cunha, in addition to new credit manager Phil Bannerman, would position the business for long-term growth.

Up until late last year, all of Sintex’s business had been

conducted through mortgage managers, under a white label product. However, Dimarchos has set her sights on “exponential” growth through the third party broking channel.

“Brokers only just began to be accredited with Sintex towards the end of last year,” she said.

“Given that we have not previously allowed brokers to have direct accreditation the percentage of loans from brokers is very small so far. However, I would like to see 25 per cent of our business coming from the broker network,” she said.

Sintex late last year said it would open funding lines to the broker channel. Dimarchos said over the next 12 months it would seek to further build these relationships.

“We are keen to keep our business partners on their development journey and extend our partnerships with experienced and willing parties,” she said.

Future bright for Broker Academy seven National mortgage broker Loan Market has brought seven new brokers into the fold, following their graduation from its Broker Academy for new industry entrants.

After 24 months of ‘rigorous’ training and mentoring by New South Wales and Queenslandbased training managers, the seven brokers are to start in February in locations in both Eastern states.

Victoria gets sales management injection Julie Saliba has been appointed sales manager for Loan Market’s northern region in Victoria. New national director of sales for the business, Mark De Martino, said Saliba, who has been sourced from non-bank lender Homeloans where she worked for nine years, would bring ‘vast industry knowledge’ and ‘unique perspective’ to the group.

Loan Market has been proud of growth in Victoria, where it overtook Mortgage Choice in recent years.

They follow 60 fully-fledged Broker Academy graduates, who have already joined Loan Market’s ranks.

Loan Market national sales manager Mark De Martino said the newly enfranchised brokers were ready for their careers.

“The trainees are now fully accredited mortgage brokers with a Certificate IV and affiliations with financial service and industry associations and are shortly to embark on their Diploma in Financial Services,” he said.

“They have been well prepared for their careers. The academy program has covered all aspects of the home finance industry and up-to-date training about the recent changes under the National Consumer Credit Protection (NCCP) legislation.”

De Martino said their training included negotiating with lenders, lead generation, cross selling and building relationships with referral partners.

The program aims to provide new brokers with fundamental skills allowing them to marry together customer needs with the solutions they require.

“With so many mixed signals in the market on where prices and rates are heading, we need to ensure our brokers are offering a service that address the issues a 2012 consumer faces,” De Martino said.

Loan Market said borrowers today are skeptical of financial institutions and services following the GFC, and a ‘duty of care’ needs to be applied to ensure broker professionalism.

“A mortgage broker’s job is to make the task of purchasing a property and obtaining finance as stress-free as possible,” De Martino said. “The advantage of a graduate program is that trainees learn these skill in an environment solely dedicated to their development,” he said.

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Insider

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Them there is fightin’ words

“Damn that metaphor stings…”

I

nsider is never loathe to employ a metaphor here or there, if it serves to elucidate and drive home the point he is trying to make. However, he was recently left aghast (and somewhat spellbound) with the licence taken by accounting firm Chan & Naylor in its use of metaphor, which managed to push the very bounds of cerebrally permissible language and meaning. No doubt wanting to stand out from the ever-growing crowd looking to berate the RBA for being impotent in the face of a lack of bank rate moves, the firm put its wordsmiths to work on a master stroke of language – one that no doubt it hoped might be remembered (like its namesake) for all time. The result, a headline for the ages. “A ‘one-armed Mohammed Ali’ will not scare big banks into passing on rate cuts.” Yes, the one-armed Mohammed Ali in question was in fact our favourite RBA. “If the Government does not act fast then they will be left with all the power of a one-armed Mohammed Ali fighting an opponent with a much bigger credit control stick,” the firm wrote. Whoa! Who’s got their hands on that credit control stick? The big banks of course.

The problem, according to Chan & Naylor’s director Ken Raiss, is that banks “have been allowed to build an infrastructure around

themselves that is now deemed untouchable”. He may have something there, but Insider will never know, as he is still stuck on the metaphor itself. Suddenly, his mind was conjuring up what some earlier drafts of the release may have contained, before Ali was picked as the winner. A lazy-eyed Evander Holyfield? A wheelchair-bound Lennox Lewis?

A cleft-palated Leon Spinks? Or perhaps an explosively incontinent Rocky Marciano? Now those are some images Insider thinks could be left at home when it comes to characterising the RBA. Perhaps Chan & Naylor should think about doing the same next time.

there had been an explosion in a nearby store. No, that wasn’t an explosion. It was just the sound of the world’s largest metaphor.

Insider sure hopes this doesn’t portend future calamity for the Australian banking system.

He would rather see the banks’ buildings crumble than their asset quality and liquidity.

Signs and portents

With all the dour economic news out there, it’s easy to see why some Australians fear the sky is falling.

Remarkably, that’s what passersby in Melbourne last month probably quite literally thought when a chunk of concrete fell off the Suncorp building and exploded on the sidewalk below. The metre by metre-and-a-half chunk of concrete fell several floors, landing in a courtyard in front of a cafe, with shards of concrete ricocheting through a nearby shop window.

Fortunately, no one was injured, but an eyewitness described the incident as sounding like a bomb going off, and said he presumed

“I think I can see some daisies”

Bin that crystal ball

Is your crystal ball giving you headaches? Are those tea leaves just too damn bitter? Or are you thinking of joining an animal rights group, instead of casting those animal bones again? Not a problem. Insider has found another way of predicting property prices and international markets this year. Let’s call it feng shui finance – an adaptation of that ancient Chinese art of universal

harmony. In amongst all the gloom on Europe, Insider was one day taking a break from gazing searchingly at his palm when he came across an article quoting Sherman Tai, a notable feng shui master and fortune teller.

While markets gyrated and the cacophony of alarm reverberated through the financial press, Tai calmly used his feng shui skill to come up with the conclusion: “Europe’s economy is actually not bad”. That’s right – and that’s from a master. According to Tai, “where there are changes that lead to improvement, particularly for Germany, England and France will perform better”. But Tai – and feng shui itself – is not an art form that shies away from specifics.

In fact, Tai can tell you exactly what’s in store. “Real estate, particularly in England, will have very apparent increases in value, whereas Netherlands, Belgium and Germany will have less of an increase,” he said. Tai says while the Euro will stand, it will be weaker – in the US$1.3 – 1.4 range. And, perhaps in the mood for a stockmarket flutter, Tai says the British Stock Exchange and Frankfurt Stock exchange will yield the greatest fluctuations – but will average a 6–8% increase.

Tarot move over – this feng shui caper is a sure bet. If only Tai could cast his eye at the Aussie market!

Live long and prosper

Splitting up property assets as a result of divorce can get messy, especially if there have been significant improvements made to a property. However, as Insider recently found, added value is sometimes in the eye of the beholder. He recently came across the story of a couple in England who are currently wading through such a dispute.

Fifty-eight-year-old Tony Alleyne has spent the past 10 years turning the couple’s flat into the deck of the Starship Enterprise.

His ex-wife now wants to sell the property, but said she wants to turn it into a more “traditional” offering. Since she’s been paying the mortgage since the couple separated, it looks like she’s going to have the last word on this one.

Insider does have to feel a certain level of sympathy for Tony, who has invested a lot of effort in making sure he will never bring a girl back to the flat. Still, his ex-wife has a point about giving the property a bit broader appeal.

Most of the prospective buyers who would be interested in a Star Trek-themed property probably already have a stable residence in their parents’ basement.

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PLAN Australia 1300 787 814 www.planaustralia.com.au Page 15

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FINANCIAL PLANNING CLS Investment Services 02 4227 4618 www.clsinvestmentservices.com.au Page 12

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