SEPTEMBER 2014 ISSUE 11.16
$4.95 POST APPROVED PP255003/06906
+INSIDE + NEWS ROUNDUP A look at what’s been making headlines P6
+ ANALYSIS POWER TO THE PEOPLE
The MFAA changes how it elects its board P12
+ SPECIAL REPORT COMMERCIAL SPOTLIGHT
Why you shouldn’t put commercial in the ‘too hard’ basket P14
+ MARKET TALK A SUPER IDEA?
Should FHBs be able to raid their super for housing? P20
+ COALFACE COMMERCIAL MAESTRO
Sam White:
A FRANCHISE WITH A DIFFERENCE Loan Market chairman Sam White says the company’s move to a franchise model was about empowering brokers, not restricting them
A
fter establishing itself in the market as a branded brokerage, Loan Market recently made the move to a full franchise model. While the company’s branding had always been a key part of its overall strategy, the decision to jump fully into the franchise model wasn’t taken lightly, according to executive chairman Sam White. And now that the move has been made, White has said the company wants to be an atypical franchise. FULL STORY PAGE 18
Phil Ginis has learned commercial lending from the ground up P23
+ SPOTLIGHT TRAINING THE TRAINERS
New mentors learn how to pass on their knowledge P26
+ CAUGHT ON CAMERA Westpac’s JP Morgan global team P29
NEWS 2
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NUMBER CRUNCHING DID YOU KNOW?
HOW AUSTRALIANS ARE MANAGING THEIR MORTGAGES
AHEAD
ON TRACK STRUGGLING
14.9%*
46%
34%
*New forecasts from Master Builders predict growth in the housing alterations and additions market of 14.9% ($96.4bn) in value per annum on average over the forecast period to 2016/17 Source: Master Builders
AUSSIES’ PROPERTY OUTLOOK Perceptions of property pricing and affordability AGREE
I’m worried I’ll never afford my own home
31% 48% I’m worried about foreign investment making property unaffordable
65% 14% I think property prices will increase in the next three years
49%
FAST FACT
15.9%* STRUGGLING
3% Source: QBE
*Rise in the sale of new multi-units in June
DISAGREE
20% Future generations will find it harder to purchase their first home
81% 7%
Source: HIA
Source: QBE
WHAT THEY SAID...
PETER KELL
“Brokers who arrange home loans on behalf of the public must act with honesty, integrity and in the customer’s best interest at all times” P6
TIM BROWN
“[MFAA] members have a lot to say, and we believe if they have a lot to say they should put their hand up and get involved” P12
MICHAEL RUSSELL
“First homebuyers should be allowed to invest part of their super in their own bricks and mortar” P20
JOHN KOLENDA
“If first time buyers are allowed to access their super for a home loan deposit you might actually see people contributing more money into their fund” P20
NEWS 6
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WOOLIES AND COLES STILL CIRCLING MORTGAGE MARKET ■ The supermarket financial services
war is on, as Woolworths has telegraphed its next move into the sector, which could include mortgages. According to a Fairfax report, Woolworths has trademarked the brand Woolworths Money. The trademark covers a range of financial goods the retailing giant could offer, including insurance, savings and investment accounts, personal loans and home loans. The brand also covers any eventual foray into financial advice, with a category of the trademark covering insurance administration, consultancy and information services, and pension and retirement super funds, Fairfax reported. Woolworths has already had a misstep in its foray into financial services, with Fairfax reporting the supermarket had been probed by APRA for the use of the word “banking” in the online marketing for its financial services. Coles has also made moves into the finance sector, recently announcing a joint venture with GE Capital to offer financial products, though finance director Robb Scott would not be drawn on the specific products the supermarket plans on offering.
BROKERS SOUND OFF Brokers don’t seem overly concerned with supermarkets’ move into financial services
INCOGNITO “I can feel a loss-leading-headline-rate coming to a Colesworths near you.”
PETER RITCHIE “Do you want fries with your offset account?”
OLD BROKER “Wasn’t the NCCP supposed to end all of this and bring in a more personal and deeper relationship with the consumer or have I just missed the point of this altogether? Why don’t they just sell stocks at the selfservice machine with a nice photo of Charles Ponzi as the rep?”
Swelling specialist demand drives recruitment ■ Increased demand
for specialist lending has seen one lender more than double its sales team in the last six months. Bluestone has announced it has added to its BDM teams in Victoria, NSW and Queensland in response to Peter Wood sustained loan volume growth. COO Peter Wood said an increased demand for specialist loans has fuelled the growth. “Since Bluestone re-entered the specialist loan market in 2013, our average month-on-month application and settlement volumes growth has averaged around 50%. June 2014 has been our strongest month yet with month-on-month growth of 54%,” Wood said. Wood said the company has grown its BDM team, and has introduced a 24-hour service level agreement for conditional approvals. “Following feedback from our broker network, we have also introduced new product features to meet customer needs,” Wood said. The lender will now ignore all defaults older than 24 months and defaults less than $1,000. Applications where a borrower has defaulted in the last six months will also be considered. “Bluestone has been working to ensure borrowers have access to a range of competitive products, enabling brokers to diversify their offering and ensuring that they don’t have to turn away customers just because they don’t meet traditional lending criteria,” Wood said.
$4.1bn* FAST FACT *Value of home loans processed by AFG in July Source: AFG
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NEWS
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Melbourne broker cops ASIC ban
WORLD NEWS
■ ASIC has issued a four-year
UNITED STATES OF AMERICA HOME OWNERSHIP AT 19-YEAR LOW
Home ownership in the United States hit a 19-year low in the second quarter, according to Commerce Department data. The seasonally adjusted home ownership rate was 64.8% in the second quarter. That’s the lowest level since the second quarter of 1995, according to the Commerce Department. And economists say home ownership could fall even further as wage growth stagnates and banks keep lending credit tight, Reuters reported. “We are becoming more of a rental society,” HIS Global Insight economist Patrick Newport told Reuters. “It’s becoming harder to own a home. People who lost their homes to foreclosure are now renting, and credit standards have tightened significantly.” Rental vacancies fell to 7.5% in the second quarter, Reuters reported. That’s the lowest level in 19 years.
CANADA
DID YOU KNOW?
74.3%* A Mortgage Choice survey has found 74.3% of first-time property investors would cut back on general day-today expenses to purchase property Source: Mortgage Choice
ban to a Melbourne broker over falsified documents. The regulator has banned Shilpa Karandikar, a Melbourne-based mortgage broker, from engaging in credit activities for four years after an ASIC investigation found she submitted false documents to secure a home loan worth $243,000. “ASIC has alleged Karandikar submitted a $243,000 home loan application on behalf of a client in July 2012 that contained false payslips, false employment documents and a false bank Peter Kell statement. The home loan application also contained false information to make the financial position of her client look more favourable than it actually was. “Brokers who arrange home loans on behalf of the public must act with honesty, integrity and in the customer’s best interest at all times. Those who do not act in this way will be removed from the industry,” ASIC deputy chairman Peter Kell said.
Urgent reform needed to ease housing pain ■ As many Australians face the fact that they may FEWER CANADIANS PAYING AHEAD ON MORTGAGES
Record-low rates have contributed to a decrease in Canadians choosing to accelerate their mortgage payments, according to a CIBC poll released Monday, though the bank suggests taking the opportunity to take advantage and pay them down sooner. According to the poll – which surveyed 1,509 randomly selected participants – 55% of Canadians who currently have a mortgage are taking actions to repay them faster, down from 68% in a similar poll from 2013. Twenty-three per cent accelerated their payment frequency (down from 42%); 28% increased the payment amount (down from 30%); 18% made lump sum payments (down from 15%). The average age Canadians expect to be mortgagefree ticked up one year to 58 in this year’s poll.
never own their own home, due to the harsh reality of housing affordability, the government is being urged to boost the supply of housing to ease the pain. Master Builders Australia has told the Senate Inquiry into affordable housing that urgent reform is needed to increase housing supply. “Reducing the massive shortfall in new housing is the major challenge the nation faces in maintaining home ownership as a realistic aspiration rather than an unaffordable dream,” Master Builders CEO Wilhelm Harnisch said. This comes after data from the Australian Bureau of Statistics revealed new residential building approvals declined by 5% in June, prompting a residential building industry association to question whether it is likely the property market has seen its peak in new home approvals. Master Builders Australia submitted an “eight point Affordability Agenda” to the Inquiry which calls on all levels of government to commit to a national housing affordability agenda.
NEWS
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10
Official cash rate could skyrocket ■ After a sustained period of holding the
cash rate at a record low of 2.5%, experts are predicting the RBA will increase the cash rate by 150 basis points to 4% in 2015, according to the latest finder.com.au Reserve Bank survey. The survey consists of 20 leading finance experts, of which 17 expect the cash rate to rise next year – with the majority of them saying we should expect the increase in the first half of 2015. Money expert at finder.com.au, Michelle Hutchison, said borrowers need to be cautious about the forecast. “Most of our experts believe the cash rate won’t reach the historical average of about 5%, but rather reach around 4%, which is 150 basis points above the current cash rate of 2.50%. “And with 17 out of the 20 respondents betting on rates to start their way up from next year, borrowers need to ensure they can afford the extra cost.”
Ellie Comerford
Buoyant housing market drives LMI profits
Aussie households bad at saving
■ Leading mortgage insurer Genworth has put its
strong half yearly result down to the robust Australian housing market. Due to the strength in the housing market, Genworth has experienced a lower volume of loan arrears converting to claim, coupled with a lower average claim amount. The loss ratio for the first half of 2014 decreased by 23 percentage points when compared with the loss ratio for the first half of 2013. The company reported a net profit of $133m for the six months to June 2014 – representing a whopping 41% increase on the half yearly result to June 2013. “I am very pleased with the performance of the business in the first half of 2014 and our first result as an ASX listed company. The performance is marginally ahead of our expectations and positions us well for the remainder of the 2014 financial year,” said Ellie Comerford, managing director and chief executive officer of Genworth. Based on these positive half yearly results, Genworth now expects to achieve a full year net profit position of between $231m and $250m. The full year loss ratio is expected to be between 25% and 30%.
■ Australian households have a lack of cash savings, according to the
AT A GLANCE
12%* *Twelve per cent of Australian households say they’re overspending each month, while 42% say they’re breaking even and 46% say they manage to save Source: ME Bank
latest ME Bank Household Financial Comfort Report. Only 46% of households reported the ability to save each month, according to the June 2014 survey. This is the lowest level since ME Bank began the survey in October 2011. Of the rest, 42% were breaking even and 12% were overspending by drawing on savings, loans or home equity. For the households that are able to save each month, the amount they are saving has decreased by 12%, whereas the households that are overspending have increased their spending by 13%. These bad savings habits have revealed that about one third of households have less than $1,000 in cash-on-hand and 24% of households don’t think they could raise $3,000 for an emergency. Financial expectations for the next year don’t show any signs of improvement, either. The survey reported that household expectations of financial comfort for the next 12 months has fallen by 10% since the last survey to December 2013. These concerns have a strong link to the 2014-15 Federal Budget, with 67% of households expecting their situation to worsen due to the budget cut-backs.
ANALYSIS
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MFAA changes to engage members The MFAA has proposed some radical changes to its leadership structure, and it could hand greater control to brokers
W
hen the MFAA rolled out a proposal to institute sweeping changes to its board structure, it was done with the intent of re-engaging the group’s membership. MFAA president Tim Brown has said the proposal to change both the size of its board and the way its board is elected will put more control of the organisation in the hands of brokers. “The size of our board, while already efficient, probably wasn’t as efficient as it could be. This brings it into line with what is the traditional proper size for an organisation’s board. The other motivation was to re-engage the membership. The objective of the board from the start of the year has been to lift member engagement. For us, we thought this was an important step,” he said. This important step breaks down to
OUR MEMBERS HAVE A LOT TO SAY, AND WE BELIEVE IF THEY HAVE A LOT TO SAY THEY SHOULD PUT THEIR HAND UP AND GET INVOLVED - T IM BROWN
changes to the MFAA’s constitution. The upshot of the changes will be that the board will be comprised of five directors, directly elected by the MFAA’s membership. There will also be a requirement that at least four of these board directors are brokers, or the representatives of broking or mortgage management businesses. The board will also be able to appoint other directors as it sees fit, provided brokers (or broker or mortgage manager representatives) are always in the majority. The proposed changes would also ensure that there can never be more than two directors from any one state. The proposed system will replace the current one, whereby directors are named to the board automatically as a result of them being either a state president or the chair of a national committee. “Basically, previously board members came from one of the committees, whether that be a state committee or a sub-committee such as the aggregation committee, the lender committee or the commercial committee. That’s no longer a
requirement. The committees will continue to exist and will continue to work with the board, but the changes mean that just because someone is on a committee it doesn’t enable them to go directly to the board,” Brown said. Full details of the constitutional changes required for the proposal are to be provided to members in early September, and the proposal is to be put to MFAA members at an Extraordinary General Meeting on 25 September. Brown said if the proposal goes ahead, the MFAA board will rotate an average of three members each year. “The first year we’ll rotate only two, simply for consistency. I’ll stay on for the first 12 months of the transition, and after that they’ll elect a chair from the seven board members, who predominantly will be brokers. Four out of five of the board directors have to be members in the industry. The fifth one could potentially come from a supplier, but we believe all five will likely come from members,” he said. One of the motives behind the change was the maturing of the industry, Brown said. “We think the industry has evolved, and we think it’s time we took it to a space where the members have more say in how it operates,” he said. This evolution has been driven by a growth in professionalism, Brown suggested. “In the sense of professionalism, we’ve come a long way from where we were 20-odd years ago. The key component of that has been the educational changes driven by the MFAA. They’ve succeeded in giving us a higher quality of members,” he said. Brown said the new structure was also reflective of other industries in the financial services sector. “We’ve seen it in the FPA and CPA where they’re now run by members. We’re not breaking new ground. It’s the evolution of the industry, and it’s timely. Our members have a lot to say, and we believe if they have a lot to say they should put their hand up and get involved,” he said. And while Brown said the proposed changes had the potential to greatly boost member engagement, he said better engaging members is a goal toward which the association has already made significant headway. “I think we’ve come a long way in terms of communicating better, but I think we can always do better in that space.” Meanwhile, with long-time MFAA chief executive Phil Naylor set to depart the organisation in December, Brown said the board is close to naming a candidate for his replacement. “We’re out in the market talking to a number of people, and hopefully we’ll have a recommendation for the role come the 25th of September,” he said.
SPECIAL REPORT
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Commercial lending: The next big opportunity? While the residential market has been red hot of late, commercial has been tipped as the next big opportunity for brokers
B 12.1%* FAST FACT:
*Seasonally adjusted rise in the value of commercial finance for June 2014 Source: ABS
rokers could be forgiven for focusing solely on the residential market over the past couple of years. The Australian property market has recovered strongly from the GFC, and residential demand in many capital cities has been red hot over the past six months. But as house price growth begins to level off and residential demand returns to calmer levels, commercial demand appears set to take its place as the growth area for brokers.
COMMERCIAL COMING BACK
While consumers have been shaken by the Federal Budget, leading to dismal confidence and more hesitance to purchase property, business sentiment has remained relatively robust. The Colliers International Office Demand Index has demonstrated this, with businesses enquiring for a record amount of office space in the June quarter. Australian First Mortgage director Iain Forbes said with record-low interest rates, it’s little wonder the
demand for commercial property is rising. “Rental income is attractive, and in most commercial leases the tenant pays the outgoings. It is certainly growing and AFM have seen an increase in commercial lending,” Forbes said. Liberty Financial general manager of commercial finance Suresh Pillai agreed, and said the lender is seeing an influx of commercial customers. “We continue to see more and more small businesses that have not been getting a fair go from their banks
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SPECIAL REPORT 15
PETER VALA
because their needs are quite customised. We are also seeing strong growth from mainstream customers looking for a more flexible alternative to bank funding at comparable rates,” Pillai said. Moreover, as self-managed superfund borrowing gains popularity, Thinktank head of sales and distribution Peter Vala said many business owners are looking to move from leasing their premises to owning. “It makes a huge amount of sense for business owners to acquire property in an appropriate structure and set themselves up for longer term real wealth creation, right through into retirement. Despite some geographic and microeconomic pockets where commercial property is still struggling to overcome high vacancy rates and structural change, we more broadly expect to see an ongoing lift in the health of the sector and increasing opportunities for brokers,” Vala said. And it’s not just the commercial market itself that’s growing, according to Macquarie Business Banking’s head of partner origination, Brian Steele. Steele said broker use in the commercial borrowing sector is seeing
significant growth. “The main reason for this is that borrowers are more aware of the broker proposition and it has become more appealing for them. Historically brokers focused more on mortgages, although there are now more who have diversified into commercial lending. The availability of products and the choice of lenders for borrowers has led to a significant increase in share of broker wallet in the commercial space,” Steele said.
THE WRONG IDEA
Regardless of the opportunity, many brokers have passed by commercial lending. Forbes said this is due to the idea that commercial lending is too complex. “The most common misconception is that commercial is difficult, and some brokers do not understand commercial lending,” Forbes said. Pillai argued that the stereotype that commercial deals are byzantine and complicated is often inaccurate. “Whilst some commercial deals may be more involved than a standard residential loan, there are a range of commercial offerings that provide a
SPECIAL REPORT
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PETER VALA __
BY THE NUMBERS
687,000* *The Colliers International Office Demand Index has hit a record high, with businesses enquiring for 687,000 square metres of office space nationally over the June quarter Source: Colliers
simple and swift solution. With about one in five Australians being selfemployed or running small business, the opportunities in commercial lending are significant,” Pillai said. Wells said brokers may believe, for example, that the financial analysis for serviceability is more complex for commercial deals than for residential. “It can be, but for many deals it shouldn’t need to be. One solution is using alternate verification to step through this. That is not typically a bank solution but specialist lenders exist to provide this solution. Another example is the misconception that, if you encounter a multiple entity structure, this means a complicated solution across entities and multiple guarantors. Again this needn’t be the case. Simple structures offering targeted security are available, not requiring extended ‘lock ups’ across the structure. Again brokers may need to look beyond banks for these standard solutions,” Wells said. In addition to complexity, commercial deals often have a reputation for being protracted. Again, Steele said this is not often the case. “Within the broking industry there is often a misconception that the deal origination process for commercial lending is long. For a successful commercial lending process, brokers can manage it well by understanding
PAUL WELLS __
TIPS AND TRICKS
THE MOST COMMON MISCONCEPTION IS THAT COMMERCIAL IS DIFFICULT, AND SOME BROKERS DO NOT UNDERSTAND COMMERCIAL LENDING - I AIN FORBES, AFM
the process and gathering all the relevant information upfront from the client,” Steele said. Many of these misconceptions are easily dispelled, Vala said. He urged brokers to attend professional development days to assist them in identifying and subsequently converting commercial opportunities. “This is something we have been doing a lot of right around Australia over the past year or two. A commercial deal can also be brought together quite quickly and efficiently with the right input and assistance from the lender so it is a case of getting aligned with lenders you know you can turn to when you need them,” Vala said.
For brokers looking to break into commercial lending, Steele said education is key to grasping the opportunity at hand. “From the outset it is important for brokers to gain a solid understanding of the opportunities and the potential pitfalls of commercial lending. How brokers approach commercial lending is the key to success in my view, with knowledge and understanding setting a solid platform that everything else can be built upon. The deal origination process, including the information requirements and the flow of the process, is not as predictable for commercial lending as it is for residential. Given this, brokers need to be aware of what is expected throughout the process so they can manage client expectations accurately and smoothly,” Steele said. Wells added that brokers should make sure they have a firm grasp of the products on offer, and the types of borrowers suited to them. “Confidence based in some product knowledge also always assists. But for simple deals the good news is that knowledge can be readily developed, for example talking to any of other brokers, mentors, your aggregator, or lender BDMs that you know who bridge both residential and commercial IAIN FORBES lending. Specialist lenders should bend
SPECIAL REPORT
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17
IAIN FORBES __
over backwards to assist a new broker bringing them a deal. Even if the deal is a little more complex, with a bit of support from these same sources, you can rapidly accumulate the skills required to get the first deal at this level under your belt,” Wells said. Vala said there are three key pieces of information brokers need to grasp. First, he said they must understand the details and characteristics of the security property – what it is, where it is, its condition, occupancy and rental income. Second, he said brokers must know the parties involved in the loan and how they relate to each other. Finally, he said brokers must have a good grasp of serviceability, and where the net income to service the loan is coming from. “These requirements work along the same lines as residential lending, and while there often is a bit more detail that enters into any given deal, the fundamentals remain very similar,” Vala said. But any gaps in knowledge can be addressed with the proper help, Pillai said. “Given the breadth of Liberty’s product range, we often help brokers who have been promised the world only to be let down. My tip would be to work with BDMs who have proximity to the decision makers and who are willing to champion the deal for you,” Pillai said.
And Forbes said brokers can speed the process along by ensuring they have all the information the lender needs upon submission of the application. “Complete the application form fully, and send all the supporting with the application. Avoid submitting bits and pieces. This only delays the process,” Forbes said.
PITFALLS TO AVOID
While commercial lenders are quick to talk up the opportunity and dispel myths surrounding the sector, they also concede that there are aspects of commercial lending of which brokers should be wary. For Vala, it’s being wooed by a deal too big and complex for anyone but a specialist. “One thing to really be wary of is the attraction of the big deal. For any transaction above $2m, take a step back and really analyse what the opportunity is, how likely it is to actually come off and what will be involved in getting it over the line. The strike rate on the larger deals for anyone other than the real specialists in the area is very low and you are probably better advised to focus attention on multiple smaller resi and commercial transactions that can be accomplished in a more manageable timeframe and produce a similar pay off,” Vala said.
SURESH PILLAI __
Wells pointed out that, despite understanding the key issues involved in commercial lending, brokers can often find themselves waiting for lenders. “The key points in our view for commercial loans are to understand the structure, servicing and valuation. If a broker has a decent grip on these issues they have the most important bases covered. Brokers, however, can find themselves in limbo for extended periods in some credit departments dealing with these fundamentals. Often a specialist lender who can step through these offers the ‘occasional’ commercial broker a much faster and easier path to settlement, allowing them to keep moving with their broader business,” Wells said. For Steele, however, almost any pitfall can be overcome by education. He urged brokers to learn the ins and outs of commercial lending, saying knowledge can stave off most potential problems. “Knowledge is really key in the commercial lending space and the biggest potential pitfall is having a lack of it. Ensure you understand the process and information required, discuss it upfront with the lender and communicate with your client to manage expectations,” Steele said.
DID YOU KNOW?
$46.5bn* *The seasonally adjusted value of commercial finance for June 2014 was nearly $46.5bn Source: ABS
NEWS 18
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Sam White:
A FRANCHISE WITH A DIFFERENCE Loan Market chairman Sam White says the company’s move to a franchise model was about empowering brokers, not restricting them
O
perating atypically in the franchise space means that Loan Market doesn’t want to restrict its brokers, White said. He said this was one of the reasons the company had shied away from the model in the past. “We didn’t go with a franchise structure earlier on because we felt that our brokers didn’t want the restrictions that can come along with a franchise, and that they didn’t want to be told what they could and couldn’t do too much,” he said. White said the company wanted to ensure the move into a franchise model wasn’t a disruptive one. He argued that the company’s ethos remained essentially the same, despite the shift in business model. “Our DNA really hasn’t changed from a broking group. Beforehand, everyone pretty much traded under our brand. They still do that now. They had a certain operating model, which we have now. So most things haven’t changed,” White said. But after 20 years in business – years in which White said the company had been through many market cycles, both good and bad – White believes that branding is becoming increasingly important. While branding has long been an integral part of the company’s strategy, he said the move to a full franchise model would enable its brokers to gain even greater leverage from the brand. “As we continued we realised how important brand was going to be, and how important its capital value to a broker’s business was going to be. This is no longer just a profession; it’s an industry that brokers create goodwill and value in. As more and more brokers start to exit, they say, ‘Hang on. We want to sell a business, not just a trail book’. We see the franchise being better for getting value out of a business on exit, but we also try to do it without the restraints that come from that,” he said. Restraints are often part and parcel of the franchise experience, White suggested, but he said this was an
THIS IS OUR 20TH YEAR IN BUSINESS, AND WE WANT TO BE ABLE FOR OUR BROKERS TO SHOW THAT WE’RE NOT A FLY-BY-NIGHT COMPANY
area in which Loan Market had sought to differentiate its offering. “Often brand implies to a broker that you’re obligated to comply with rules that are set in place to prevent people from doing something. We really wanted to make sure we got a brand structure that worked for our individuals, but at the same time they weren’t told what they couldn’t do – that the franchise structure really enabled them to reach their potential rather than restrain and restrict them. That’s what we set out to do.” From a practical standpoint, White said this meant the Loan Market offering would have some key points of difference from other franchise models. “We don’t have any restraints on trade areas, so we don’t say you can’t do this or market that. If someone leaves us, they can keep their trail and their database. They don’t have to sell us back their business,” he said. This means people can join the network with the assurance that there is flexibility, and they won’t remain locked in should they decide to leave, White said. “Sometimes a franchisee joins us and we may not be the right option for them for the rest of their career. They may decide that for a big part of their career we’re the right choice, and then after that they want to make a change, or they want to sell or go somewhere else. We really wanted to
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DID YOU KNOW? Loan Market was recently named Commonwealth Bank Strategic Business Partner of the Year at the Third Party Banking 2014 National Conference. The company received the award for industry-best conversion rates Source: Loan Market
be the group that gave people the flexibility and the certainty that they can grow their business with us without sacrificing too much of the autonomy that they have that makes this business a really good one,” he said. Another area White said would set the business apart was its pricing structure. “Typically with a franchise structure one of the problems is that the commission payments to the franchisees can be quite low. That can mean it’s hard to recruit and retain loan writers underneath that. With our model we pay out between 80% and 92% of the commission that we receive from the lenders – and that’s on upfront and trail – depending upon the volume. We want to be able to pay commissions well for good performance, and that enables our team to be able to grow and develop their people underneath them,” he said. While White said Loan Market wanted to break free of some of the negative traits associated with franchise systems, he pointed out that there were several positive aspects of the model. First and foremost, he argued that it put consumers’ minds at ease. “Consumers want to know that there’s something more than just the individual they’re dealing with, so if they’ve got a problem there’s a body they can go to to get it resolved. We survey all of our customers. If there’s a problem with a customer we can go and help get it solved. I think customers
NEWS 19
want to know there’s another point other than the individual, and we want to be that point,” he said. The longevity and continuity of the brand is also a strength, he said. “This is our 20th year in business, and we want to be able for our brokers to show that we’re not a fly-by-night company.” And the franchise structure also provides a clear path for new entrants, as well as making it easier for brokers to grow their business, White argued. “The third thing that’s important for brokers growing their businesses is that loan writers want to know they’re part of something bigger. When they’re joining a business they want to know that there are systems and infrastructure in place for them to be able to grow within the business. What we’ve seen is it’s been easier for people with a brand to recruit than it is outside of that,” he said. But ultimately the decision comes back to the customer, White said. The brand behind the franchise fosters a sense of trust, and this is an invaluable part of the broker proposition. “The broker proposition of choice is also combined with trust. Going forward, I think brand will be an element customers will identify with, and it will be an element that helps convey trust more broadly to the people under it. We think brand is critical.”
MARKET TALK
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20
A super idea or a super catastrophe? Should first home buyers be able to dip into their super for a deposit?
V
ery few would argue that affordability is an issue for first home buyers. First-time buyer participation is at near-record lows. Recent figures from AFG show first home buyers accounted for less than 10% of the market in March. The issue for many prospective first timers is saving for a deposit. With median house prices skyrocketing, saving a deposit is getting further beyond reach for many wanting to enter the market. This may be why HomeStart CEO John Oliver recently recommended a rather drastic plan. Speaking to the Senate Inquiry on Affordable Housing, HomeStart CEO John Oliver has argued that first home buyers should have access to their superannuation to contribute to deposits for home purchases. Oliver said such programs already exist in other countries. “We are aware of the Canadian Home Buyers Plan which allows borrowers to use up to $25,000 of their superannuation for a deposit and then repay the funds later,” he said. Oliver said access to finance was as important a factor in housing affordability as supply and demand. “It is ironic that a household in difficulty with their mortgage has the option to access superannuation to clear arrears, whereas a household in otherwise good financial condition cannot temporarily access their super for a deposit,” Oliver said. Oliver’s idea garnered some high-profile support. Outspoken independent Senator Nick Xenophon has called for the government to support the idea. “With more and more Australians finding it difficult to break into home ownership, adopting the Canadian scheme would make a difference to many thousands of Australians each year,” Xenophon said. Xenophon argued that the scheme has made a dramatic difference to housing affordability in Canada. He said it has safeguards in place which could be implemented in Australia, including the requirement to repay the super fund within 15 years of a home purchase. “As HomeStart Finance said today, there’s something strange about being able to access your super fund if you are about to default on your housing loan, but you can’t access it to put a deposit on a home in the first place,” Xenophon said.
SAVE YOUR SUPER
But not everyone has cheered the proposal. In particular, the superannuation industry has questioned the merits of allowing first-time buyers to dip into their super. Australian Institute of Superannuation Trustees (AIST) CEO Tom Garcia said the solution to housing affordability doesn’t come from our superannuation funds. “[Superannuation] is a key plank of the nation’s retirement incomes policy and should never be used for any
other purpose than helping people save for their retirement… Removing even relatively small amounts of savings from the superannuation system would see many more Australians reliant on the Age Pension and significantly worse off in retirement,” Garcia said. Placing more reliance on the Aged Pension could be problematic, considering pensions formed a part of the budget cuts announced by the Abbott Government. The 2014-15 Budget will see pensions indexed to inflation from September 2017 – in a bid to make these payments more sustainable to meet the demand of Australia’s ageing population. It is currently indexed in line with the higher of the increases in the CPI, Male Total Average Weekly Earnings or the Pensioner and Beneficiary Living Cost Index. Superannuation is often not even enough as is, according to Garcia. “Even when the superannuation contribution rate eventually reaches 12%, most young Australians will need every cent of their superannuation to achieve adequate levels of income in retirement,” he said.
BROKER INDUSTRY RALLIES
But mortgage industry figures have said the proposal can work, provided the proper stipulations are put in place. Mortgage Choice chief executive Michael Russell said the franchise brokerage had long called for a similar scheme in which first home buyers could access their super for a housing deposit, reducing the need for LMI. “While lenders mortgage insurance has a crucial role to play in assisting first home buyers into the property market, if the premium can be reduced by lowering the loan to value ratio, then this would seem to be in the best interests of buyers. First home buyers should be allowed to invest part of their super in their own bricks and mortar,” Russell said. Russell said the scheme should be put in place with the stipulation that the money will be reimbursed to the buyer’s super account either at the sale of the property or within 15 years, whichever comes first. 1300HomeLoan managing director John Kolenda also voiced his support for the plan, saying it could be a boon to first-time buyers, provided the proper stipulations were put in place. The plan from Senator Xenophon deserves consideration and they can set parameters around it such as a maximum withdrawal from a super fund of $25,000,” he said. Kolenda predicted that the plan could benefit not only the housing industry, but the superannuation system as well. “If first-time buyers are allowed to access their super for a home loan deposit you might actually see people contributing more money into their fund, which will be beneficial to the superannuation sector.”
FAST FACT:
9.8%* *First home buyer participation for July Source: AFG
MARKET TALK brokernews.com.au
21
Government must own up to fixing affordability
T
he Real Estate Institute of Australia says all levels of government need to take responsibility for housing affordability restricting first home buyers from entering the property market. REIA CEO Amanda Lynch has told the Senate Economics References Committee Inquiry into Affordable Housing that first home buyer participation is reaching record lows. “We have seen home ownership in Australia fall and first home buyer numbers at near historic lows. Governments at all levels must address structural factors that reduce the responsiveness of supply to demand. Projections from REIA’s recent roundtable at Parliament House showed the cumulative housing shortage is likely to increase from 100,000 dwellings in 2006 to 375,000 in 2015,” Lynch said. Aside from the financial benefits, Lynch stressed the importance of the social benefits that come with home ownership. “Studies have found that the stability associated with home ownership ultimately contributes to positive social outcomes, such as improved education levels for children, better mental and physical health, and greater social connectedness and participation in local community and voluntary organisations,” she said. Recommendations by REIA to address housing affordability include: • All states and territories recommit to
PROPERTY LOBBY CALLS FOR DEATH OF STAMP DUTY
the intergovernmental agreement which states that assistance to first home buyers should be across the board for new and established homes • The Commonwealth Government assess the various international schemes that assist first home buyers, including the release of superannuation, and replicate those successes in Australia • Negative gearing be retained in its current form for the purpose of property investment to underpin the viability of the rental sector • Conveyance stamp duties be abolished and replaced by an efficient source of revenue for states and territories
HOUSING COOLING OFF?
Quarterly growth for house prices as of 31 July SYDNEY
2.0%
MELBOURNE
1.8%
BRISBANE
-0.4%
ADELAIDE
-2.6%
PERTH
-0.1%
HOBART
-1.2%
DARWIN
0.8%
CANBERRA
2.1%
COMBINED CAPITALS
1.1% Source: RP Data
The Property Council of Australia has called for stamp duty to be abolished to encourage labour movement. The comments follow the release of the Building Australia’s Advantages report by the Business Council of Australia, which says removing barriers such as stamp duty will encourage more workers to relocate for work opportunities to up and coming employment hubs. “Today’s report by the BCA reinforces what we have been saying for years – stamp duty is a ball and chain that deters many Australians from relocating for work,” Property Council of Australia chief executive Ken Morrison said. Morrison said mobility was essential as the country transitions away from the mining boom toward new areas of investment. “As new areas become employment hubs, we need to make sure we have the right people in the right places and that means assisting Australians to relocate to where the jobs are,” Morrison said. Morrison argued that the additional costs of moving such as stamp duty may be the make or break for some families. “For people already feeling the pinch, particularly those looking for work, the additional hit to savings of stamp duty costs makes the decision to relocate a last resort. The Property Council has consistently argued that stamp duty is a handbrake on workforce participation and locks many Australians into housing and locations that do not suit their needs. Abolishing stamp duty is essential to encouraging greater productivity in our changing economy and must be considered as part of the Federal Government’s tax reform agenda,” Morrison said.
BUSINESS INTELLIGENCE 22
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Marketing your business like a superstar Doren Aldana shares how to position yourself as an industry expert
M
ost mortgage professionals have it absolutely backwards! They believe they need to be the most technically adept with the best underwriting skills, product knowledge and customer service in order to be successful. While all of those skills are nice to have, they certainly aren’t critical to your success. In fact, most successful mortgage professionals are quite mediocre in their technical knowledge and abilities; however, they are extremely good marketers. And if you’re an excellent marketer, you have the power to attract clients at will, and therefore you have funds to hire a team to help you with the customer service. On the flip side, without clients, you are out of business! It doesn’t matter how good you are at what you do, if you don’t know how to attract clients you’ll be the best-kept secret around. And another point to remember is that good marketing covers many sins. If you are a great marketer and you have the ability to bring in clients, even if you’re a mediocre underwriter you can still have a very successful business. Now I am not suggesting it’s OK to be mediocre; I’m simply pointing out that marketing your services is far more important than how good you are at the technical stuff. In fact, you’ll have a lot more clients to practise on in order to get good at the technical stuff, if you are a great marketer!
When you position yourself as an expert, people start talking about you, and your name and reputation spread quickly. Once you build your brand as the ‘go-to’ mortgage authority in your local market, you become the only logical choice for mortgage financing – at which point, your clients are willing to stand in line and even pay higher fees just to have the privilege of working with you. That’s the power of expert positioning. In contrast, prospectors myopically focus on getting that ‘next deal’ to pay the bills. They lose sight of the distinction between income and equity, activity and productivity. Therefore, they stay stuck in the hustle, going from transaction to transaction like a guinea pig on a guinea pig wheel. Instead of investing their time in developing marketing assets that build wealth for the future, they spend their days prospecting for their next sale. They do crazy things like cold calling internet leads and knocking on doors.
WHEN YOU POSITION YOURSELF AS AN EXPERT, PEOPLE START TALKING ABOUT YOU, AND YOUR NAME AND REPUTATION SPREAD QUICKLY
POSITIONING VERSUS PROSPECTING
What is a positioner? A positioner is a mortgage professional who builds a brand and reputation such that prospects come to them. Prospectors, on the other hand, chase clients. You see, positioners command respect, while prospectors are seen as beggars. Positioners pick and choose their clients, while prospectors will take anyone with a pulse who can fog a mirror. Positioners are seen as experts, while prospectors are seen as a replaceable commodity. As a result, positioners enjoy a lucrative income, with more clients than they can handle, while prospectors are always hustling just to put food on the table.
And then they wonder why they feel burned out, overworked and underpaid. That’s the prospector’s way! At the same time, they’re watching the positioners who seem to effortlessly attract all the clients they want, while enjoying lots of time off to play golf, hang out with family and go on vacation. So what’s their secret? Their secret is that they position themselves as ‘mortgage experts’ who are authorities on solving their target market’s unique problems as they relate to mortgage financing! How is this accomplished? Admittedly, there are no easy buttons or quick fixes. If there were, everyone would be successful! However, there are several factors that contribute to manufacturing expert status, just a few of which are credibility, third-party endorsement, publicity and education-based marketing. Doren Aldana is considered by many to be the nation’s leading mortgage marketing coach and has won the Best Industry Service Provider Award three years in a row at the 2012, 2013 and 2014 Canadian Mortgage Awards. He has been dedicated to helping mortgage professionals attract more clients with less effort, regardless of market conditions. For a free copy of Doren’s new CD titled 21 Secrets of Superstar Mortgage Brokers, visit www.SuperstarMortgageBroker.com
THE COALFACE 23
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Maestro of the commercial market Phil Ginis has made commercial lending his specialty, and says brokers looking to break in must do their homework
P
hil Ginis, managing director at Oakmont Group, is a maestro of the commercial lending market. He started his career, modestly, at one of the major banks, where he learnt from the ground up. “I started off as a teller and worked my way up. I wanted to get a complete understanding of the whole banking process. I worked my way up to becoming a commercial business manager, where I stayed in that position for four years. Then, in 2010, I decided to branch out on my own and opened the Oakmont Group.” The challenges and complexities the commercial market faces is what drives Ginis’s passion for commercial lending. “I love it because it can be a lot more complicated. One of the biggest hurdles I face with my clients in this market are valuations coming in short. If a client comes short of a certain bank’s or a certain lender’s LVR policy, finding another one within a good timeframe is always a big challenge. Unlike the residential market, there are not as many lenders which suit commercial clients. Residential lending can be more simplified, in the sense that all banks and non-bank lenders cover pretty much the same policy, but with commercial clients there are more factors that come into play when finding the right loan for a business owner. Matching the specific requirements, even in difficult times, you have to understand that every
commercial loan is different and can also be affected by a wide range of variables – which may require extensive structuring to secure the appropriate solution.” Ginis’s advice for brokers wanting to crack the commercial industry or to drive their success in the industry is to do their due diligence and be more than just brokers. “Do your research. You have to continuously keep up with what the industry and majors are doing. In residential you can have several different lenders, but in the commercial game you don’t have that large competition, so you must keep on top of all the lenders’ policies and really know the finer details. “On top of that, you must understand the business your client is running. That is going to affect their goals and needs, which you need to know so you can offer them the right solution. For example, I have a pharmacist as a client who came to me about refinancing his commercial business property, and the medical industry is forever changing with government legislation and Medicare. I need to understand every aspect of the business, such as how the rebate system works, etc., so I can understand how it is run and what the business goals are for the next five years. “There are many additional areas outside of banking that you have to research and know if you are going to be successful in the commercial game.”
FINANCIAL SERVICES 24
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INSURANCE PROGRAMS TO FORM PART OF NATIONAL FINANCIAL LITERARY STRATEGY
Small business confidence sturdy in face of dour consumers
S
mall business confidence has eased but still remains strong in the face of negative consumer sentiment. NAB’s quarterly SME survey has found that SME business confidence fell slightly from its highs following last year’s federal election. The confidence index fell two points but remained well above the survey’s long-term average. “SME confidence is still positive, supported by enthusiastic property and construction firms,” NAB said. But weak consumer sentiment could eventually impact on SME confidence, the bank predicted. “How long confidence levels can be sustained will largely hinge on how consumers respond to concerns about their financial wellbeing, particularly in light of the Commonwealth Budget. Despite some recent improvement, consumer confidence measures are very weak, while NAB surveys of consumer behaviour suggest a degree of spending restraint is on the way,” the bank said. Should consumer spending taper off in light of lower levels of confidence, NAB has forecast that SME confidence will be impacted. “It seems unlikely that firms will maintain current confidence levels if this manifests into a significant pull-back in consumer spending,” NAB said. a
BY THE NUMBERS
55% Fifty-five per cent of clients using Financial Wisdom financial planning services believe the business is an independent planner, even though it is owned by Commonwealth Bank Source: Roy Morgan
The insurance industry has welcomed ASIC’s national financial literacy strategy, which aims to improve the financial education of Australians by providing a framework for action for stakeholders. The strategy will consist of key consumer programs, including the Insurance Council Australia’s (ICA’s) understandinsurance.com. au, findaninsurer.com.au, and the ICA’s efforts to improve affordability in the insurance sector. The 2014–17 strategic priorities are to: • educate the next generation, particularly through the formal education system • increase the use of free, impartial information, tools and resources • provide quality targeted guidance and support, strengthen coordination and effective partnerships, and improve research, measurements and evaluation The national framework applies to stakeholders across the government, business, community and education sectors, and is being led and coordinated by ASIC, the Australian government agency responsible for financial literacy. Over the last 12 months, ASIC led a comprehensive consultation process with over 200 stakeholders to shape the new strategy and identify the key priorities for action. In addition, the new strategy is informed by relevant consumer and investor research, including insights from behavioural economics and the experiences of other countries around the world.
ADVISERS FEEL ASIC IRE
Brokers aren’t the only ones under the keen eye of the regulator. A recent review of AFSL holders saw ASIC strip seven AFSLs. The watchdog announced that it had completed a proactive review of Australian financial services licensees, targeting those who had not requested a release of a security bond that was required to be lodged with ASIC under a previous licensing regime. ASIC said it was concerned that some licensees may not have requested the return of their security bond as they did not have an adequate professional indemnity insurance policy. As a result, ASIC cancelled seven AFS licences, referred three licensees for further action for failure to have adequate compensation arrangements, and prompted 17 entities to voluntarily cancel their AFS licences as they were no longer operating a financial services business. “This review has assisted ASIC to remove licensees which are failing to meet their professional indemnity obligations, and further, to identify licensees that are no longer active. Licensees must ensure they are up to date with and actively complying with all current obligations, otherwise ASIC will take further regulatory action, including cancellation of the AFS licence,” ASIC deputy chairman Peter Kell said.
BANK SATISFACTION AT 18-YEAR HIGH Banks are hitting the mark with low-value customers, but higher-value customers are being left dissatisfied, new data suggests. The Roy Morgan Consumer Banking Satisfaction survey saw the satisfaction level of personal banking customers hit a record high of 82.2% in June, up from 82% in May. Consumer banking satisfaction is now at its highest in 18 years, the research company said. But the news isn’t all good for banks. While low-value customers showed high levels of satisfaction at 85.9%, satisfaction among high-value customers was 79.1%, while satisfaction was only 65.4% among business customers. “Improving satisfaction among low-value customers should not be the focus if there is very little to be gained by doing so. The challenge is to increase satisfaction at the top end. The relatively low satisfaction among business customers is also likely to be impacting negatively on banks’ business growth, as the potential value to be gained from this group is considerable,” Roy Morgan communications director Norman Morris said. Morris said that despite moves by banks to increase focus on business customers, business banking satisfaction was also lagging.
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ONE YEAR ON 26
ONE YEAR ON What a difference a year makes… or not. Australian Broker reflects on the punditry, news and trends that made headlines 12 months ago Australian Broker Online, September 2013
RBA cuts cash rate to 2.5%
The Reserve Bank largely followed economists’ expectations at its August meeting last year, dropping the official cash rate by 25bps to a record low of 2.5%. A Bloomberg survey prior to the announcement saw 25 of 26 economists predicting the cut. RBA governor Glenn Stevens said the Reserve Bank was concerned about major areas of the Australian economy, particularly the passing of mining and credit growth booms.
What’s happened since?
The Reserve Bank has remained sidelined for a solid year now, and it doesn’t look like rates will be moving anytime soon. At its August meeting this year, the RBA left rates untouched at 2.5%, and Stevens said the board expected inflation to remain within the bank’s 2–3% target band for the next two years. While some economists have tipped rates to eventually head back up to 4%, most believe they will remain on hold until mid-next year.
Non-major home loan market share reaches record high
Non-majors took a growing share of the mortgage market last year, with AFG figures for July 2013 showing the highest share for non-major lenders since the aggregator began compiling data in 2010. Non-majors saw their collective share of home loans hit 26.4% in July 2013, up from 20.7% in March.
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Training mentors vital to deliver new entrants success
A
long with the mortgage broking industry’s increasing emphasis on mentoring comes a growing focus on mentor quality. Karen Hambleton-O’Grady of Simply Mentoring serves as an MFAA tutor, teaching brokers how to properly mentor new industry entrants. She says the program that new mentors learn to deliver to their prospective students is structured and organised. “It takes the new person through the very fundamentals of setting up a mortgage broking business, and then taking them through product knowledge, research projects, how to market themselves, their business planning right through to diploma level and eventually getting their own licence if they want to,” she says. Hambleton-O’Grady explains that the ‘Train the Mentor’ course is designed to teach existing brokers who have been in the industry for more than four years how to run the MFAA’s Certified Mentor program. Hank Schumacher, mentor-in-training and director of Hank Schumacher Property and Financial Services, says the training is invaluable for brokers looking to expand. “I really wanted to be able to recruit and train up some new employees for my company, because I’d never really had any formal training as to how to actually train somebody in the role. We’ve always done it as a hands-on arrangement in the office. Sometimes that’s not right and you miss things. The reason I did the course was so we didn’t miss anything,” Schumacher says. The story is much the same for Centrewest Group Financial Services principal Damien Rao, who was already a mentor but looking to improve his training processes. “I’ve got a few brokers now who are working with me, so I can take this course back to those brokers and use this as a benchmark and leverage against this to help them out and teach them the right way – not what I think is right, but going by the book,” Rao says.
What’s happened since?
Sadly, the momentum for non-majors was not to last. AFG’s figures for 2014 show the non-major market share at 25.2%. While the number is only a slight decrease on the 26.3% of the year prior, AFG general manager of sales and operations Mark Hewitt said it was disheartening that non-majors had made “little or no headway” over the year. For the full interview, head to www.brokernews.com.au/tv
FORUM 27
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A super idea Should first home buyers be able to dip into their super to buy a house?
I
APRA, TREASURY ON ANOTHER PLANET
Treasury secretary Martin Parkinson recently expressed concern that a sustained period of low rates could see Australians feeling the pinch when rates inevitably begin to rise. On top of this, APRA chairman Wayne Byres said the banking regulator was keeping a close eye on the big four as they aggressively slash fixed rates. One commenter lamented that the government could risk stymying the housing recovery with such rhetoric.
What do you think? Leave your comments at brokernews. com.au
“What planet is Treasury on? So much for the government needing housing to help the rest of the economy recover from the Treasury failure to keep our exchange rate competitive. There are many activities Treasury could have done to save our tourism, farming, manufacturing, education for overseas students and export markets. The mining boom has been squandered by the Howard, Gillard and now Abbott governments. Our interest rates are very high by world standards, and consistently are. The cost of living in Australia is one of the most expensive by global standards. Government expenditure has been slashed. Now Treasury wants to snuff out a housing recovery that seems to be our only ray of economic hope. Their answer is to enter into more Free Trade Agreements that have now been proven to consistently work against Australia. Heaven help our kids.” Housing Recovery on 28/07/2014 11:39AM
n answer to recent calls to allow first home buyers to access their superannuation for a house deposit, Australian Institute of Superannuation Trustees CEO Tom Garcia said the idea could damage the superannuation industry. Nevertheless, independent senator Nick Xenophon has thrown his support behind the proposal. John said it was better to use super for something worthwhile now than later. “Please. Tom Garcia is looking after himself. I could be struck by lightning and my super will be worth nothing to me. If I take out a deposit, at least it will appreciate over the years and I will be able to enjoy it. How do I enjoy my super now? I believe it is a great idea, but in saying this there has to be some sort of agreement that when the property is sold, those funds need to be returned to the super fund.” Jon Colley agreed, and said homeowners would be better fixed for retirement than those forced to be lifelong renters. “While I agree in part to your sentiment, those that retire and own their own home will require significantly less income than those that retire and are still renting, as I would hate to think what the rental costs will be in another 30 years. There are a lot of barriers to entry to the property market for first home owners these days, so why not allow them to access their retirement savings specifically for the purchase of one of their largest assets that will set them apart in their retirement.” HEM took the opposite tack, saying that saving for a deposit
was an important part of the commitment to buy a home. “I don’t agree with accessing super for a deposit on a home. In most families there are two incomes and some or no children. Why is it that some can save for a deposit whilst others cannot. Some lenders will do up to 97% lends. Deposit is the commitment that the borrower is making to the purchase. Super was designed to maintain a lifestyle after retirement and to reduce or do away with pensions. I would imagine that the funds they are accessing are predominantly the employer’s contribution. Why should their employer fund a deposit for an employee’s home purchase? The only way I would see this working is if they are able to access their own contributions and after the home is sold reimburse the Super with the original draw.” And Michael of Kambah said the idea needed to be taken even further. “I’m not sure why the Hon. Senator is advocating for use of super funds only for first home buyers. Why not make it available to everyone? For example, a custodial parent on break-up of a marriage.”
EXPERTS PREDICT CASH RATE TO SKYROCKET
A group of economic experts recently predicted that the Reserve Bank would eventually raise the official cash rate above 4%. Brokers had harsh words for self-branded ‘experts’. Experts? on 1/08/2014 12:57PM “We hear the experts’ medium and long range predictions all the time, and they are not the slightest bit accurate. They have an idea of what may happen in the short term, but that’s all. It’s more of where they want the cash rate to be. This economy has too many structural issues with only egotistic showmen in parliament for anyone to be honestly expecting cash rate rises for Australia anytime soon.” Coast Broker on 1/08/2014 10:04AM “So we have experts predicting a large increase next year in the cash rate. I would call 150 basis points a large increase in the current period of low cash rates. However we are seeing further reductions in lenders’ fixed rates. Who were these experts?”
PEOPLE 28
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Time the most valuable commodity For Queensland broker Scott Hawkanson, charity is about more than giving money
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or Scott Hawkanson, principal mortgage consultant at Australian Mortgage Brokers, getting involved in charitable causes is more about time than money. “It is easier to donate money to causes, and I don’t intend to discount donations because everything does help, but in my experience it is much more significant to donate your time.” Hawkanson is heavily involved in Rosies, a Queensland-based not-for-profit organisation whose philosophy centres around donating time. Hawkanson has been a volunteer at Rosies for two and a half years, and is involved in its street outreach and youth detention visitation programs. “It’s all about trying to make people feel that society hasn’t left them behind. It is about connecting with people and engaging in meaningful discussions with these people who don’t get the chance to have meaningful discussions.” There is often a stigma attached to homelessness that these people are lazy; that they could go out and get a job if they really wanted to, or they are in this situation by choice – but this is not the case. “The one thing I have learned through the people I have come in contact with through the street outreach program is that they have only had one or two unfortunate things happen to them in their lives, and it is the lack of a support network to lift them up through these times that leads them to homelessness. It could happen to any of us – if we didn’t have solid support networks, then we could find ourselves in the same position. “One man I met used to run his own thriving hire car business before he was diagnosed with type 2 diabetes. Due to the diabetes, he has lost half of one foot and was on the way to losing the other, and now he can’t hold a licence anymore. He can’t drive anymore. This is a prime example of something going wrong which can’t be controlled. His parents passed away when he was relatively young, and he was left with no support network when this happened. No one was there to pick him up and help him move on.” It is this lack of a support network that often causes people to feel left behind. When someone feels left behind, especially through a time in need, they can become disconnected. This disconnect with society can cause homelessness. Hawkanson stresses that you should never underestimate the significance of giving up your time to spend with someone in helping them feel connected again. “There was this elderly lady, in her seventies, that we used to see quite regularly, but then we didn’t see her for three or four months. We were asking the other patrons if they had seen her, and no one had. She eventually turned back up and asked us if it was true that we had been asking about her and asking where she was. When we told her that we had, and that we were concerned when we hadn’t seen her in a while, she burst into tears. She told me, ‘I can’t believe people like you would worry about somebody like me.’ ”
Hawkanson is also involved in the Rosies youth detention visitation program; he visits the Brisbane Youth Detention Centre in Wacol to spend a couple of hours every second Saturday with the 10–17-year-olds who are under youth justice supervision in that facility. “These kids aren’t bad kids. A lot of them are there because they are just caught in a bad cycle. You will hear staff talking about kids in the detention centre who are children of parents who were once in here themselves. Then there are a lot of them who are there because it is better than being at home. Being in a detention centre is better than having to face some of the nasty issues they are confronted with at home.” The facility runs educational programs so the kids can finish school, or they can learn a trade. This often provides a better opportunity for some of these children to learn than if they were at home. Just like with homelessness, there are a lot of misconceptions when it comes to children under youth justice supervision. A lot of them do have aspirations and motivations, but what they don’t have is support. “Somebody once said to me, ‘How do kids spell the word ‘love’? They actually spell it t-i-m-e’; and it comes down to just that. All they want is your time. All they want is your support. When people ask me why I do this, I tell them that if we all cared enough to give up our time for others, then we probably wouldn’t have the issues that we have.” Hawkanson spends his time in the detention centre, playing table tennis, cards, trivial pursuit, or playing touch footy with the kids. There is no agenda behind Rosies, or behind why Hawkanson volunteers in either the street outreach or youth detention visitation programs. It all just comes down to spending time.
HOMELESSNESS IN QLD Nearly 20,000 people in Queensland are experiencing homelessness Most of them are under the age of 12 or between 25 and 34 years old Most of them are male Source: homelessnessaustralia.org
YOUTH CRIME IN AUSTRALIA Around 6,300 youths are under youth justice supervision in Australia on an average day 83% of these youths are male The average time spent under supervision is 26 weeks Source: Australian Institute of Health and Welfare
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lying over 15,000km to compete in the JP Morgan Corporate Challenge Championship, Westpac’s Sports & Entertainment team raced across London’s Battersea Park to take fifth place in the Mixed division.
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No more wacky questions for Google The internet giant has decided outlandish interview questions don’t prove a thing
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o you know how many piano tuners there are in the world? How about the number of times that a clock’s hands overlap during the day? Google job candidates were flummoxed by these very questions and many others like them, until the company banned quirky interview questions. “We found that brain-teasers are a complete waste of time,” Laszlo Bock, Google’s senior vice president of people operations, told the New York Times last year. “How many golf balls can you fit into an aeroplane? How many gas stations in Manhattan? A complete waste of time. They don’t predict anything. They serve primarily to make the interviewer feel smart.” According to Business Insider Australia, Google now uses behavioural interviews, in which candidates are asked about their past work and experience, instead of trying to guess how many golf balls would fit into a school bus. In 2009, job coach Lewis Lin compiled a list of 140 questions that Google had asked his clients. Current Google applicants should thank their lucky stars that they won’t be coming across any of these curly questions in their interviews.
1. Four people need to cross a rickety rope bridge to get back to their camp at night. Unfortunately, they only have one flashlight and it only has enough light left for 17 minutes. The bridge is too dangerous to cross without a flashlight, and it’s only strong enough to support two people at any given time. Each of the campers walks at a different speed. One can cross the bridge in one minute, another in two minutes, the third in five minutes and the slowpoke takes 10 minutes to cross. How do the campers make it across in 17 minutes? 2. How many piano tuners are there in the entire world? 3. How much should you charge to wash all the windows in Seattle? 4. A man pushed his car to a hotel and lost his fortune. What happened? 5. Explain the significance of ‘dead beef’. 6. Imagine you have a closet full of shirts. It’s very hard to find a shirt. So what can you do to organise your shirts for easy retrieval? 7. Every man in a village of 100 married couples has cheated on his wife. Every wife in the village instantly knows when a man other than her husband has cheated, but does not know when her own husband
has. The village has a law that does not allow for adultery. Any wife who can prove that her husband is unfaithful must kill him that very day. The women of the village would never disobey this law. One day, the queen of the village visits and announces that at least one husband has been unfaithful. What happens? 8. You are shrunk to the height of a nickel and your mass is proportionally reduced so as to maintain your original density. You are then thrown into an empty glass blender. The blades will start moving in 60 seconds. What do you do? 9. You have two eggs and get access to a 100-storey building. Eggs can be very hard or very fragile, which means they may break if dropped from the first floor or may not even break if dropped from the 100th floor. Both eggs are identical. You need to figure out the highest floor of a 100-storey building that an egg can be dropped from without breaking. The question is how many drops you need to make. You are allowed to break two eggs in the process. 10. You have to get from point A to point B. You don’t know if you can get there. What would you do?
DIRECTORY BANK
ANZ 13 13 14 www.anz.com.au Page 9
La Trobe Financial Services 1800 707 707 latrobefinancial.com.au Page 11
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Liberty Financial 13 11 33 www.liberty.com.au Page 3
ThinkTank 1300 781 043 www.thinktank.net.au deal@thinktank.net.au Page 13
FRANCHISE
Loan Market Group 13 56 26 www.loanmarket.com.au Page 7
FINANCE
Semper Capital Pty Ltd 1 800 SEMPER (1 800 736737) www.semper.com.au enquiries@semper.com.au Page 21
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Homeloans Ltd 13 38 39 www.homeloans.com.au Page 15
Macquarie 13 62 27 macquarie.com.au/mortgages Page 32 MKM Capital 1300 762 151 www.mkmcapital.com.au Page 8 National Australia Bank www.nabbroker.com.au Page 4 and 5
SHORT-TERM LENDER
Interim Finance 1300 731 317 www.interimfinance.com.au Page 2
To advertise in Australian Broker, call Simon Kerslake on 02 8437 4786
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OTHER SERVICES
Deposit Power 1800 678 979 www.depositpower.com.au Page 6 RP Data 1300 734 318 Page 23 Trailerhomes 0417 392 132 Page 26
Celebr ate your success at the 13th annual Austr alian Mortgage Awards
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