Mortgage Professional Australia magazine Issue 10.10 by Key Media

www.brokernews.com.au ISSUE 10.10

We reveal the brokers in this year's 100 club

WORDS OF WISDOM TOP DOGS SHARE THEIR SECRETS

PERFECT PITCH THE KEY TO SUCCESSFUL SEMINARS

SMART SOFTWARE THE NEW BREED OF USEFUL PHONE APPLICATIONS

EDITOR’S LETTER

Cream of the crop One of the main benefits of the new licensing regime is the enhanced professionalism it will bring to the industry. A side effect of this is that part-time brokers and those not operating by the letter of the law will inevitably fall by the wayside. While this may lead to a reduction in broker numbers, it is for the best if it means that those introducers left are of the highest standard. The effects of the GFC have already streamlined the broking community to some extent; while no-one likes to see businesses fail, brokerages that have weathered the storm are enjoying the increased opportunities. Several of the country’s top brokers cited this as a reason for their stellar performance this year in our Top 100 Brokers rundown. The quality of submissions this year was extraordinarily high – entrants needed to have settled more than $40m of home loans to even qualify for the list and more than $86m to make the top 10. This high level of achievement and the number of new faces paint an encouraging picture for the future health of third party lending in Australia, so long may it continue.

10. 10 issue

As well as lauding the country’s top brokers, this issue of MPA also contains pearls of wisdom from some of the industry’s most prominent figures. Some of the tips are simple, others more philosophical, but all are useful for helping you to perform at the top of your game. Elsewhere in the magazine we discuss market issues in our roundtable report, tell you how to host successful seminars for your clients and look at how the latest wave of smartphone applications are transforming the property market as we know it. Enjoy the magazine and all the best for a busy month.

Barney McCarthy Editor

MPA 2.0 Our multimedia edition features on-camera interviews with the industry’s biggest players. Visit Brokernews. com.au/MPA to hear their thoughts on the hottest issues facing mortgage brokers.

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CONTENTS

cover story

12 past and present MPA digests the forecasts of economist Phil Ruthven

36 MPA Top 100 Brokers 2010 Australia’s elite intermediaries revealed and profiled

10. 10 issue

BROKERNEWS TV EXPERT PANEL DISCUSSION Visit our website now to see a range of clips from our newest roundtable event covering: »» The impact of the election »» Rate rises and competition »» Innovation and white-label mortgages www.brokernews.com.au

CONTENTS

EDITOR Barney McCarthy

COPY & FEATURES CONTRIBUTORS Andrea Cornish, Laura Carew PRODUCTION EDITORS Jennifer Cross, Moira Daniels, Carolin Wun

NEWS ANALYSIS 10 No longer solely the preserve of tech nerds, smartphone apps could revolutionise the propertybuying process

ART & PRODUCTION DESIGN MANAGER Jacqui Alexander DESIGNERS Paul Mansfield, Lucila Lamas SALES & MARKETING NATIONAL SALES MANAGER Rajan Khatak

FEATURES 22 Four home finance figureheads chew the fat on licensing, industry associations, first homebuyers and more 30 Hosting seminars for first homebuyers and property investors could lead to increased business volumes. MPA tells you how to host a successful event 48 The mortgage market’s most esteemed share the secrets to their success

BUSINESS DEVELOPMENT MANAGER Lisa Tyras ACCOUNT MANAGER Simon Kerslake MARKETING EXECUTIVE Kerry Buckley MARKETING COORDINATOR Anna Keane TRAFFIC MANAGER Stacey Rudd CORPORATE DIRECTORS Claire Preen, Mike Shipley CHIEF OPERATING OFFICER George Walmsley PUBLISHING DIRECTOR Justin Kennedy ASSOCIATE PUBLISHER Rajan Khatak CHIEF INFORMATION OFFICER Colin Chan HUMAN RESOURCES MANAGER Julia Bookallil

COLUMNS 34 David Garner explains why responsible lending requirements are a positive thing for the industry

PROFILES

10. 10 issue

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16 Leader: AFG MD Brett McKeon’s success isn’t just limited to the mortgage market 60 Lender: Greg Charlwood from debtor finance specialist Bibby Financial Services highlights the importance of diversification

LIFESTYLE 20 A day in the life of... Lisa Montgomery, Resi Mortgage Corporation 64 My favourite things: Steven Heavey, St.George

Editorial enquiries Barney McCarthy tel: +61 2 8437 4790 barney.mccarthy@keymedia.com.au Advertising enquiries Rajan Khatak tel: +61 2 8437 4772 Sales Manager rajan.khatak@keymedia.com.au Simon Kerslake tel: +61 2 8437 4786 Account Manager simon.kerslake@keymedia.com.au Subscriptions tel: +61 2 8437 4731 • fax: +61 2 9439 4599 subscriptions@keymedia.com.au Key Media www.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 www.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 MPA magazine can accept no responsibility for loss

This magazine is printed on paper produced from 100% sustainable forestry, grown and managed specifically for the paper pulp industry

NEWS

MORTGAGES

AFG makes bold claims on pay AFG has invested in a new IT platform that will help it pay commissions three times faster. The aggregator’s $1m purchase of Oracle’s Exadata technology will allow it to process payments in less than six hours, as opposed to the former 19 hours. The purchase also improves performance speed by three times for brokers using the web. AFG says it also significantly reduces the risk of system outage, and provides a comprehensive sales reporting tool for larger member groups via a new business intelligence system. Brokers will also see improvements in the product qualification area, particularly when there are a lot of products returned. “Performance is key for the future,” said AFG director Malcolm Watkins. “Testing shows that combined transaction time will be reduced from an average of 97 hours per day to less than 12 hours. As there are an average 500 concurrent users transacting in any given day, brokers will save around one-and-a-half hours a week.” Watkins said that could equate to savings of $75 per week for every broker.

ASIC grants registration extensions Credit regulator Australian Securities & Investments Commission has been forced to grant extensions to the official NCCP registration period for a number of industry parties, it has been established. Though the deadline for registrations under the new national licensing regime passed on 1 July, ASIC has confirmed that extensions have been granted, and it is in the process of considering more. As of 4 August, ASIC had granted 19 parties extensions under the National Consumer Credit Protection Act to allow them to lodge registrations under the new regime. The regulator has also confirmed it is still considering a number of other applications for extensions, and expects more to be added to the list of those that have been granted extra time. ASIC would not elaborate on the nature of the parties concerned, or the reasons for extending their registration period. However, at least one medium-sized business had to have its licence registration period extended, following a mistake where the business had failed to register its loan writers as well as the business when intending to apply for credit representative status. Under the legislation, companies appointed as credit representatives in effect can’t do any loan writing under new laws, as this has to be done by ‘human beings’ or ‘natural persons’ under the common law legislation. These ‘natural persons’, therefore, need to be individually accredited by ASIC.

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MFAA backs DEFs

6 hrs how quickly AFG’s new technology will allow it to process commission payments

The MFAA has indicated its support for deferred establishment fees (DEFs) as part of its formal response to ASIC in regard to the regulator’s consultation on unfair and unconscionable exit fees. MFAA claims that DEFs are a mechanism allowing the non-bank sector to offer increasingly competitive interest rates to borrowers. “A deferred established fee … is applicable when a lender gives the borrower the option of deferring the establishment costs of the loan (which most lenders require to be paid upfront) in return for a lower rate,” said MFAA chief executive Phil Naylor. “There is no requirement to pay the fee at all if the loan continues beyond a specified period; usually 3–5 years.” Naylor warned that any regulatory intervention on DEFs could “ultimately be to the detriment of consumers”.

NEWS ECONOMY

Population growth continues apace The population of Australia has increased by just under a tenth between 2004 and 2009, according to new statistics. The Australian Bureau of Statistics (ABS) has revealed that the estimated resident population in Australia at the end of June 2009 was 21.96 million – an increase of 1.83 million since June 2004. That equals a total population growth of 9.1%, and a yearly average of 1.8%. Should population growth continue at this rate, Australia would have a total population of 23.93 million in 2014 and 26 million by 2019. The ABS figures also revealed that just under one-third of the country’s population lived in NSW as of last June, with the Northern Territory and ACT containing the fewest people. In terms of population growth, Queensland saw both the largest and fastest growth. There were also around 92,000 more women than men in Australia last June.

Property comes into favour for SMSFs Self-managed super funds are increasingly investing in property, according to new figures. SMSF administrator Multiport has revealed that, out of the $1.1bn invested in funds it administers, 17% was allocated to property either directly or through trusts and funds as of 30 June. This brings SMSF property investment levels to their highest level since December 2008. Multiport CEO John McIlroy attributed the increase to the better performance of listed property trusts. The figures also revealed that SMSF asset allocation is still dominated by investment in shares, with Australian shares taking up 40% of SMSF assets (down from 42.6% in March). Cash and short-term deposit holdings accounted for 21.4% of SMSF assets.

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million Extended projected Australian population by 2019 according to the ABS

period of stability ahead Interest rates are unlikely to change until November at the earliest, according to RP Data. Tim Lawless, senior research analyst at RP Data, said that an extended period of interest rate stability is in store. “All the fundamentals apart from inflation are looking subdued,” he said. “There may be some increase in consumer goods over the next few months, which could spur the RBA to act after the next CPI data is released in October. However, that means there’s very little chance of an increase before the Monetary Policy Board’s November meeting.” This will provide some welcome certainty to the housing market, Lawless added, particularly for owner-occupiers. “The renewed certainty over rates may even translate to a small bounce in first homebuyers,” he said. “However, price growth is still likely to be relatively flat for the next six months at least, and we’re likely to see the balance of the market swing back towards buyers.” Mortgage Choice spokesperson Kristy Sheppard agreed an extended period of rate stability would be good news for borrowers. “This will be a great relief for anyone repaying a variable interest loan or approaching the end of their fixed-rate term, just as it will be for those who are looking forward to jumping into the market during spring. A rate rise would surely have discouraged many people from acting on their property plans, be that selling up or purchasing. Now there is another reason to move ahead with confidence.”

If it’s support you want, it’s support you’ll get. At Commonwealth Bank, we want to ensure you get the right support to help your business grow. It all starts with commbroker.com.au which gives you all the information you need to lodge a home loan application, plus access to useful tools including real-time loan tracking 24/7. We also provide the most advanced training and education programs in the industry.* And when you do need personal assistance, our Relationship Managers will give you the one to one support you’re looking for. To find out more about how our service can help yours, call your Relationship Manager today.

*The Adviser – Third Party Banking Report 2010. Commonwealth Bank of Australia ABN 48 123 123 124. CBACM2011_B

NEWS ANALYSIS

Appytalk iPhones aren’t just for tech geeks willing to queue around the block for the latest model, they could be about to change the property market as we know it, says Barney McCarthy

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ver the past couple of decades, a number of technological developments have made life easier, from mobile phones to the internet. Socalled ‘smartphones’ such as Apple’s iPhone have opened up a whole new world of opportunity, giving people access to a wealth of information at the tap of a finger. One major selling point of this new generation of phones is the applications or ‘apps’ available – downloadable programs which utilise the phone’s internet, camera and GPS to provide realtime information on everything from the nearest place to eat to how to check whether a shelf is level. A new wave of these handy programs is focused on the mortgage and property markets. Last month, Commonwealth Bank launched its Property Guide app which uses ‘augmented reality’ technology to allow potential buyers to access a range of rich data. Put simply, by using the app and the iPhone’s camera, users walking down the street can view the past sales history, current property listings and recent sales of 95% of residential properties in Australia. By pulling in data from analytics company rpdata.com and property portal realestate. com.au, users can even evaluate the profile of a property including the number of bedrooms and

bathrooms, a price guide, auction data and pictures. The comprehensive program also provides detailed suburb profiles, a repayment calculator and video ‘how-to’ guides. The app allows users to contact an agent or lender directly from their iPhone, but the bank moved to allay fears that the program would be cutting brokers out of the equation by describing itself as ‘channel agnostic’ and saying it simply helped users find a property and wouldn’t influence their decision to use an introducer or not. Another interesting app launched for the property market is by Planning Alerts. Utilising an existing augmented reality app called Layar which allows users to see what restaurants, shops and amenities are around them, an add-on allows users to see what is being knocked down and built in different communities. This program could prove useful not only for homebuyers, but also for any investor clients you have. Finally, MPA’s very own website Broker News has launched its own app to make sure you can access all the breaking news from the mortgage industry. As well as the live RSS news feed, the free program also features a repayment calculator. MPA

COLUMN ECONOMICS

Past and present Nothing splits broker opinion quite like the ruminations and predictions of economists. MPA recently sat in on a thoughtprovoking presentation by economist Phil Ruthven entitled ‘Now What? Where to for the Economy & Mortgage Market’, and shares the salient points

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veryone has their own opinions on what 2011 and beyond holds for the Australian economy and the mortgage market, yet when economists dare to poke their heads over the parapet, many pundits are quick to shoot them down without offering their own forecasts. A recent presentation by IBISWorld founder Phil Ruthven caught MPA’s eye with some bold predictions for the future, as well as some comprehensive statistics of the housing scene to date. Ruminating on the financial year to the end of June 2010, Ruthven revealed that the total value of Australia’s nine million homes was $4,080bn but that 4.2% of properties were unoccupied for various reasons, including use as holiday homes. Just over one million housing loans were written, a 4.6% improvement on 2008/09, and total lending was $280bn, a 10% fillip. Looking at the wider economic picture, GDP rose 2.1%, the fastest rise among large OECD nations. Ruthven calmed fears

of a double dip in world GDP by saying that if it does happen, it is likely to occur in 2011, but won’t bring a negative year for world GDP, just a growth of around 1.8% instead of 4%.

Global perspective In terms of the world’s 30 largest economies in terms of purchasing power parity, joint CIA/ IBISWorld statistics place Australia in 17th position with a 1.2% share. The US, China and Japan occupy the top three spots, with a burgeoning India not far behind. In terms of economic growth, Australia sits just outside the world’s top 10 in joint 11th, alongside the US, Iran and Japan. When it comes to public debt as a percentage of GDP, Australia occupies a “virtuous” position according to Ruthven, with just 19%. Only Russia (7%) has a smaller percentage, while at the other extreme, Japan is in the perilous situation of public debt account for 192% of GDP. Similarly,

COLUMN ECONOMICS

when it comes to budget deficits as a percentage of GDP, Australia posts a figure of -3.1%, far healthier than the double figure readings from Ireland, the US and the UK. Looking into 2011, India is expected to record the world’s biggest economic growth, although Australia is a sold ninth with a forecast of 3.4%.

Household financials Of particular interest to mortgage brokers was a section of the presentation about household income and expenditure. The average Australian household has an income of $127,370, 12.7% of which is accounted for by rental or mortgage payments and other dwelling costs. This isn’t the largest outgoing though – that goes to taxes and social contributions with a 13.5% share. Financial and insurance services make up 8.7% of the picture too, a useful fact for brokers to have in their arsenal. Interestingly from a social commentary point of view, food takes up 7.2% of the average Australian’s budget – less than entertainment and gaming at 7.5%. When it comes to household assets and debt, housing plays a far more central role, accounting for 42.2% of the average Australian’s balance sheet. Household savings as a percentage of gross household income are encouragingly hovering around the 4% mark having dipped into minus figures between 2002 and 2006.

The housing market Looking at the housing market, Ruthven acknowledged the shortage of housing supply facing Australia, a result of a static rate of construction over the last four decades, despite population growth. Another potential problem facing the domestic market is the overvaluation of house prices. The Economist suggests Australia’s property is over-valued by as much as 61.1% – the highest figure of any country in the world – although Ruthven’s stance is closer to the 44% mark. This is in stark contrast to Japan, where property is undervalued by as much as 34%. In terms of the split of total dwelling finance, established dwellings currently account for 41.9% of the market, refinancing 15.5% and new purchase just 10.2%. Investment dwellings continue to take a larger share of the market, with the sector now worth 25.7% of total dwelling finance, up from 8.7% in 1990. Looking at the type of housing loans being

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“ Variable products continue to be the darling of the Aussie borrower, worth a staggering 87.5% of all loans ”

taken out, variable products continue to be the darling of the Aussie borrower, worth a staggering 87.5% of all loans, compared to just 7.8% and 4.7% for revolving and fixed loans respectively. The type of lender responsible comes as no surprise either, with banks controlling 91.3% of housing finance, while building societies, wholesale lenders and others fight for the scraps. The geographical split is as expected too, with NSW (32.1%) edging out Victoria (24.1%) and Queensland (20.5%). In the financial year to the end of June 2010, the mortgage broking industry generated revenue of $1.37bn and contributed 0.06% of Australia’s economy as a percentage of GDP. It employs over 12,000 people and is expected to grow by 5.1% over the next five years.

Future thoughts Gazing into his crystal ball, Ruthven expects there to be around 1,000,000 housing loans in the current financial year, a slight decrease on the 1,045,000 in the 12-month period just completed, but then an increase in 2011/12. He also expects total lending to remain fairly static at around $275bn. The average loan for an established dwelling is forecast to creep up slightly to $275,000. Ruthven also envisages GDP growth to recover well, with the possibility of an increase in excess of 4% while unemployment could edge downwards to 5% and he expects the credit markets to free up a little. Perhaps Ruthven’s boldest prediction is that the global shares market could experience a one-year surge of up to 45% at some stage in the next few years as pent-up demand is released. MPA

Bio Phil Ruthven is the founder and chairman of IBISWorld, an international corporation providing online business information, forecasting and strategic services. He is also a director of other companies, advisory boards and charitable organisations. He addresses around 75 congresses, seminars and conferences each year and has done so for three decades. His involvement as a communicator takes him around Australia and overseas into the AsiaPacific, North America and Western Europe. Ruthven is a science graduate and added to these qualifications with further studies in management and economics at various universities and institutes, and was a Rotary awardee to the US in the late 1960s.

COLUMN

ECONOMICS

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BUSINESS PROFILE LEADER

Man for all seasons Brett McKeon is the founder and managing director of aggregating superpower AFG, but his expertise isn’t confined to the mortgage market, as Barney McCarthy finds out

ven Australian Finance Group’s (AFG) telephone on-hold music leaves you in no doubt as to the aggregator’s prowess. A recorded message reminds the caller that AFG is now responsible for 11% of all new residential lending in Australia – not bad going for an institution only founded 16 years ago. It’s easy now to observe AFG’s position and assume it was always thus, but as Brett McKeon explains, things weren’t always so easy. “We were the first aggregator in the Australian mortgage market and it was an uphill struggle for the first few years as we didn’t have a lot of working capital,” he remembers. “We didn’t have consumer support either, initially, as people were used to dealing with the Big Four banks and they resisted our model.” Track record Before co-founding AFG with Kevin Matthews, McKeon had already spent eight years in financial

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services in a variety of roles. After a year of travelling, he worked with AMP in a self-employed agent role in financial planning and insurance and was responsible for helping the bank grow those divisions. McKeon soon struck out on his own though, setting up an independent practice – West Australia Insurance Services – which later diversified and became AFG, after McKeon and his fellow directors identified the fledgling mortgage broking sector as an area with massive growth potential. Investment solutions provider Sealcorp was making waves at the time, and McKeon admits he replicated part of its model, when originating AFG in 1994 with fellow founding directors Malcolm Watkins and Bradley McGougan. The aggregator began in Perth, but within a few years McKeon had decamped to Melbourne to help establish AFG on the east coast. As McKeon says, the nascent AFG model didn’t hold much sway

“ We were the first aggregator in the Australian mortgage market and it was an uphill struggle for the first few years ”

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BUSINESS PROFILE LEADER

with the banks to begin with. “At that time, the market was controlled by three or four banks who had money invested in their branch network,” he recalls. “There were a lot of old-school bankers who didn’t like change or the notion of control moving away from the banks and it took a fair while for them to change their view of the aggregation model.” McKeon also remembers juggling many roles in the early days. “Malcolm and I were responsible for all functions of the business, from sales and administration right through to accounts. It was hectic at the time, but I look back at it fondly now.” AFG’s foray into Melbourne was set against the backdrop of a recession and McKeon says a third of the city was plastered in ‘for lease’ signs. “Of the first 1,000 applications we received, half of them were refused because the values didn’t stack up. It wasn’t a pleasant period for the market.” Sitting pretty All of this is a far cry from where AFG now sits atop the aggregation pile. McKeon claims AFG’s forward-thinking perspective has allowed it to continue to prosper. “We had a clear vision of where the Australian mortgage market was headed and invested widely based on that,” he states. “We were pre-emptive in terms of installing compliant systems way ahead of licensing and we are two or three years ahead of our rivals in terms of technology.” McKeon welcomes the enhanced era of professionalism that regulation will bring to the mortgage market, and welcomes anything that will help banish rogue intermediaries from the industry, but is mindful of any over-governance. He predicts that around 80% of brokers will seek their own individual licence to begin with, but expects the split to be closer to 50/50 in time when introducers tire of the regulatory burden. AFG recently rebranded its mortgage manager division to AFG Home Loans in a bid to become more appealing to the consumer and to try and provide a genuine alternative to the big banks, but

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“ Of the first 1,000 applications we received, half of them were refused because the values didn’t stack up ”

In his own words + Family: Married to Connie, with two children; Lachlan (12) and Morgan (9). + Hobbies: I love sport, particularly AFL, soccer and hockey, coaching junior teams in the latter. I also enjoy good food and wine, and travelling with my family. + Business motto: Treat other people how you would like to be treated. I always look to be fair and pragmatic in business and have a win/win ethos. The end consumer has to have a win first, but we want the aggregator, broker and lender to all win too.

won’t be marketing directly to consumers as it still intends to champion the broking sector. McKeon says the aggregator is on the cusp of returning to the securitisation market. It has also dipped into a subdivision-style property concept where it has purchased land in WA to split into lots, but that AFG’s core focus will always be aggregation. While McKeon says the mortgage market in general is still affected by a number of issues – including low consumer confidence, rising interest rates and a fluctuating property market not helped by the dampening effect of the election – he expects strong fundamentals underpinning the industry to help provide the base for an improving situation moving into 2011, assuming there are no further problems in the US and Europe. Jack of all trades Despite his impressive track record in the mortgage industry, McKeon has not confined his business pursuits to the world of financial services. He was involved in the stock market flotation of Queste Communications, the first Australian company to provide a Voice over Internet Protocol (VoIP) solution in 1998. It was Australia’s most profitable initial public offering (IPO) that year, rising to $1.05 within weeks after being listed at 20c. McKeon also sits on the board of solar energy company Sungrid, admitting he is a “self-confessed greenie”. His passion for sport also manifested itself in a two-year stint as a stakeholder in A-League soccer team Perth Glory. Despite his love for the game, he decided to pull out from the soccer club due to the lack of profitability. “All the focus on soccer in Australia goes on the Socceroos, so there isn’t much of a spotlight on the domestic game,” he says. “I couldn’t see the A-League even breaking even in the next seven or eight years, so I decided to end my business interest in the club.” One thing is for sure, whether it be in the mortgage aggregation market or elsewhere, it seems that McKeon has the Midas touch. MPA

COLUMN

A DAY IN THE LIFE OF...

A day in the life of… Lisa Montgomery, new CEO of Resi Mortgage Corporation, juggles a senior management role with an omnipresent media profile

0530h

If I don’t have a really early morning meeting and when the weather allows, I’ll catch the ferry into Circular Quay and walk through the city to our office at Ultimo. The walk kickstarts my brain, keeps the body moving and reminds me of what a great city we live in.

0700h Lisa Montgomery

“ We find ourselves already diarising dates and deadlines up to Christmas and beyond ”

When I’m not travelling, it’s breakfast at my desk with a side order of the news of the day – which I love. Then onto emails and sorting out the priorities to be actioned. I also review the media clips from overnight and then re-read a couple of weekly reports before the morning meetings.

0830h

Interview with a potential franchise relationship executive, as we look to recruit another key person to provide more support to our hard working franchise network.

0900h

My one and only coffee for the day, just as I head into our regular weekly meeting. I also review the new business leads and look at phone and web activity.

1000h

Senior team meeting. We hear all the updates on the status of our current projects – we find ourselves already diarising dates and deadlines up to Christmas and beyond.

1130h

A quick phone update with our major funder, Advantedge, on what’s planned for the next few months.

1200h

The lunch of champion dieters: grilled chicken breast and cucumber.

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1300h

Go through my emails and return some calls. Speak with one of our franchisees in Queensland about an upcoming event they’re hosting and check through content, event run sheet and marketing arrangements.

1400h

Jump in my car and head off to the Sky Business studio to be part of its live rates reaction program.

1530h

Make a few calls in the car on the way back to the office.

1600h

Back in the office for a photoshoot with the AFR for an upcoming story.

1700h

Catch up with Andy Grace for the Night Show on WSFM. Andy is hilarious and he combines humour with the serious aspect of finance.

1715h

Email, phone – at this point there are a few last minute boxes to be ticked for the day, but it’s mainly spent planning and prioritising for the day ahead.

1930h

Arrive home. Hopefully, my wonderful husband has thought about dinner and that it contains something better than chicken and cucumber.

1931h

A glass of red in hand and a look at Sky News, then a download of both of our days over dinner, a few chores and the thought of doing it all again tomorrow!

FEATURE

WORDS OF WISDOM

Ever wonder how other people manage their day-to-day stresses and time pressures? MPA asks some of the industry’s brightest lights how they avoid burnout

Tips from the top 22

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FEATURE

WORDS OF WISDOM

ould there be anyone that handles the stress of being extremely successful better than Sir Richard Branson? He has somehow managed to balance being one of the world’s greatest entrepreneurs with enjoying life. According to Sir Richard, there’s no secret. As he once quipped: “There are no rules to follow in business. I just work hard and, as I always have done, believe I can do it. Most of all, though, I try to have fun.” High performers know how to not only handle stress, but also use it to their advantage. Because the fact of the matter is that not all stress is bad. In small doses, stress can actually be a little fun – hence the popularity of thrill-seeking activities like bungee jumping or riding rollercoasters. When the brain perceives physical or psychological stress it sends bursts of chemicals such as cortisol, epinephrine (also known as adrenaline) and norepinephrine into the body. It causes the heart to beat faster, your senses to heighten, an increase in blood pressure and a spike in blood glucose. The short-term buzz can be the kick in the pants you need to meet a deadline, pull an all-nighter at the office or go the extra mile to make your business a success. Meeting these kinds of challenges can in turn give you a sense of accomplishment that makes you feel good. Health experts indicate it can also improve heart function and build the body’s resistance to infection. But as with most things in life – too much of it can actually be damaging. Long-term stress, whether it be job-related or outside the office, can lead to high blood pressure, heart disease, exhaustion and depression. That’s why you need to learn how to switch off those flight-or-fight hormones and take steps to improve your health overall. Suggestions include finding a hobby, exercise, massages, deep breathing, meditation, sleep, laughing more, drinking less and quitting smoking. MPA talked to some of the mortgage industry’s most successful

figureheads to find out the most pivotal events in their careers (arguably the most stressful moments), how they handle stress and what they do to reduce stress-inducing issues like time management.

James Symond Executive director, Aussie Home Loans As executive director of Aussie Home Loans and former president of the MFAA, James Symond has been one of the most influential figures working both in and for the mortgage industry. He got his start early and hit a dramatic turning point in his career aged 25 years when he took over the leadership of Aussie’s large national sales team. “I look back (30 kilos later) and while I still can’t believe I was responsible for so much at such a young age, it does go to show that it is not the age of the car but the miles under the bonnet that counts,” he says. One of Symond’s greatest professional risks was in leading the sales team as Aussie evolved from being a mortgage manager to a mortgage broker eight years ago. “Now it seems a masterstroke considering the environment and our success; however, it was still a risk at the time as our business was already a household name and profitable, but we knew we were stuck in third gear.” Symond tries to keep everything in perspective when stressful situations

“ Long-term stress, whether it be job-related or outside the office, can lead to heart disease, exhaustion and depression ” BROKERNEWS.COM.AU

FEATURE

WORDS OF WISDOM

arise, and as he gets older spending time with family and friends has become more valuable and a great way to de-stress, he says. His secret to handling time management is to have an “awesome assistant and a good wristwatch”. According to Symond, the best piece of advice he’s ever received is: “Nothing changes if nothing changes”.

John Flavell General manager, NAB Broker John Flavell’s career received a massive boost last year: he was appointed general manager for NAB Broker, which effectively put him in charge of Homeside, MLC, Allianz and Vivid. Flavell says the biggest risks he’s taken professionally have coincided with the most dramatic turning points in his career. “I have changed industries, changed cities and sought new opportunity. In all of these instances I have taken risks. I have been prepared to put a lot on the line, I have backed myself and held myself to account for the outcome,” he says. “I have always done this on the back of strong well-formed beliefs that the upside was worth the risk and that if things did not work out as intended then I would grit my teeth, get on with it and focus on getting through the tough stuff and creating the next opportunity.” Flavell says the best advice he ever received came from his father, who told him that the shortest distance between two points was a straight line. “That has held pretty true and served me well,” he says. “Simple advice from people you respect and love is very often the best.” When it comes to time management, Flavell recommends you prioritise the key things that only you can do. “Everything else can be done by others if need be. You need to first do things that nobody else can do.” An avid fan of water sports, Flavell lets off steam by surfing, swimming or sailing and he admits to spending “too much time messing around on the guitar”.

Lisa Montgomery Chief executive officer, Resi Homeloans Lisa Montgomery has been the face of Resi Homeloans since 2004 and has almost 30 years’ experience in financial services. Four of those years were spent at Infochoice, where as CEO she brought a public company to profitability and to sale – an experience she describes as being the most dramatic turning point in her career. The best advice she ever received was from her father, who imparted the importance of speculating to accumulate. “That has helped me get across the line in more than just a few situations, most of them with a positive outcome,” she says. According to Montgomery, pressure doesn’t come in just one form. “There are varying degrees in a variety of situations and keeping your cool comes with experience and maturity. Broadly speaking, in pressure situations I use my tried and trusted PR skills, then I evaluate later – breathing space leads to better decisions.” Montgomery’s love of music has been a valuable outlet for her. She loves singing and admits “there is something wonderful and liberating about belting out a tune”. “I have also taken to walking to and from work, although not in winter. The sounds and the sights of the city in the early morning and evening are a clear reminder not to take life too seriously.” Montgomery’s secret to time management is keeping on top of her email inbox. “I receive and send an extraordinary amount of mail – so I endeavour to keep my inbox at around 20 messages, dealing with the priorities and delegating what I can – it’s important not to let it get out of control.” When it comes to tasks and priorities, Montgomery sticks to the tried and true ‘to do’ list. She also recommends setting goals. “It’s so easy to work ‘in’ the business rather than ‘on’ it, so allocating time for strategy and growth objectives is essential. It’s a constant battle to stay focused when there are so many competing priorities. That’s where my whiteboard comes in handy – it’s an interactive visual reminder.”

“ It’s so easy to work ‘in’ the business rather than ‘on’ it, so allocating time for strategy and growth objectives is essential ”

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Allan Savins Chief operating officer, Resimac In the last year, Allan Savins has steered Resimac’s retail launch, Hemisphere Financial Solutions. But that’s not the first challenge Savins has faced in his professional life. He left a 17-year banking career to become involved with a start-up non-bank, non-conforming lender, right at the emergence of that market. Savins says he handles pressure by reminding himself to look at the bigger picture and “look for the little accomplishments that have been achieved along the way for inspiration”. He also likes to take a two-hour walk on weekends to clear his head and plot the upcoming week. Savins has some solid advice for email addicts. “Don’t be controlled by your email inbox, otherwise you become distracted from your priorities. Have a robust tasking system and strong self-discipline. When you cannot meet a deadline, communicate it in advance to set expectations and alleviate the pressure build.” Other advice? “No matter where you go or how successful you become, never forget your roots and who you are.”

“ There are varying degrees in a variety of situations and keeping your cool comes with experience and maturity”

Chris Acret Managing director, Smartline The greatest risk Chris Acret ever took professionally was starting Smartline, in 1999. It has proven to be a sound move – the business has consistently been recognised as one of the best franchises in the country, both by Topfranchise. com.au and the Australian Mortgage Awards. Acret says he stays focused on the job at hand by not being reactive all day, just responding to emails or the phone. “I still hardly use a mobile phone, which gives me a lot more time,” he says. Acret keeps cool under pressure by focusing on the things he can control and not worrying about the things he can’t. But when the pressure rises, he lets off steam by getting some exercise. “Surfing is great as it is physical and somehow clears your head. So is yoga. If all else fails, beer can help.” Acret admits to checking comsec.com.au and coastalwatch.com.au a little more than is

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WORDS OF WISDOM

necessary and says he also enjoys thinking about gardening “for some reason”.

Peter Hayward Head of distribution for mortgages, Citibank The biggest professional risk Peter Hayward has taken was to leave primary teaching to join a bank. “All I knew about banking at the time was that was where my wage was deposited,” Hayward says. He’s been in the financial industry since 1997, and at Citibank for the last five years. Managing a high-performing sales team during the financial crisis was one of the greatest challenges Hayward has faced. “To come out the other side with our respect and integrity intact is very satisfying. I believe the GFC was a terrific learning experience for all involved,” he says. Hayward handles stress by sticking to a mission and purpose. He adds that a little sense of humour can go a long way as well. And the best way to let off steam is to spend time with people outside of the industry, he says. “Talking shop is irrelevant to them and is a great way to escape.”

Peter Langham CEO, Scottish Pacific Benchmark The best piece of advice Peter Langham has ever received is as follows: “Picture what failure looks like when embarking on a new venture – it allows you to progress without fear”. Langham is no stranger to risk. He started Benchmark Debtor Finance from scratch, which was merged with Scottish Pacific in 2005. His secret to time management is to prioritise, and to stay on top of workload stress he makes task lists and diarises activities.

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Ray Hair CEO, PLAN In 2001, Ray Hair was the national BDM for Fortis Insurance. When it was acquired by a much larger organisation he was offered an ongoing role, but chose to join a small company that was just two years old, had 24 employees and was a new entrant into the mortgage broker aggregation market. “PLAN Australia went on to be an industry leader and success story. I’ve enjoyed every day of this exciting journey,” he says. The best advice Hair ever received is that in business “it is not necessary to have the best or a perfect strategy; it is more important to effectively and successfully execute your chosen strategy. Do not get distracted by competitors or so-called ‘opportunities’; focus on implementing your strategy.” Hair contends that there is no secret to time management, but he does credit his PA with helping him stay on track. Focusing on the big picture and not letting the little day-to-day incidents build up is another way Hair manages to keep stress in check. Good food, good wine and great friends (with the occasional spot of exercise to keep it all in balance) helps Hair overall.

Steve Lambert Chief operating officer, Vow Financial After 22 years of working in mainstream banks, Steve Lambert switched gears in 2000 to join a small mortgage aggregation company. In 2008, he was appointed chief executive officer of National Brokers Group. Last year’s merger of NBG with The Mortgage Professionals and The Brokerage to form Vow Financial has been one of the biggest risks of Lambert’s career. His secret to time management is ‘to do’ lists and a “strong dose of delegation and review”. Meanwhile, he handles pressure by looking at things realistically and being tenacious.

“ I believe the GFC was a terrific learning experience for all involved ”

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WORDS OF WISDOM

Kristy Sheppard Senior corporate affairs manager, Mortgage Choice Highly sought after for her commentary on everything from the Reserve Bank’s rate decisions to the latest statistics on borrowers, Kristy Sheppard is familiar with the stresses of being in demand and in the hot seat. Her secret to time management is a departmental spreadsheet that lists daily tasks with whose responsibility it is to fulfil each item. That aside, she says her other secrets are fast fingers, the ability to multi-task and a keenness to execute tasks quickly with as much quality input as possible. “The working day of a PR professional is frantic and can change course at any time. We have to be ultra-organised,” she says. Having a great team, confidence, innate optimism and knowing which resources to utilise help her stay cool under pressure, but Sheppard says she also knows when to take a break. “Over the years I’ve realised a positive mindset can change any situation, so it’s not in my personality to panic,” she adds. Sheppard does admit to spending the odd spare moment looking at what’s out there in the housing market. “I’m a bit of a property perv. I’m looking to upgrade at the moment so I enjoy poring over email alerts for properties that are on the market.”

Bridget Sakr Chief commercial officer, Genworth Bridget Sakr says getting through the rollercoaster ride that was the financial crisis, and coming out the other side “stronger and wiser” has been one of the most dramatic turning points in her career. “It was a time when our customers were facing some harsh realities. I had to make some tough decisions too, and what that time really proved was that ‘partnership’ really is the essence of a good working relationship. It reaffirmed all that I held true about the way I work and the way that my team works.” Sakr uses her sense of humour and some deep breathing to keep cool under pressure. She also

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recently started an exercise program. “I find that those things really help to relieve stress and the pressures I am under on a constant basis. When I’m exercising, all I think about is the next squat or push up. It clears the mind and gets the endorphins going,” she says. “Getting frustrated simply wastes energy, so I would much rather exert the energy into thinking things through before reacting, and then express my well-thought out opinion/responses calmly, and in a timely manner.” According to Sakr, time management is not just a work-related issue – she applies the same tactics to all aspects of her life. “I need to be organised all the time, have the right support system, prioritise appropriately and delegate where possible. To do this, it’s important to include and talk to people wherever you can,” she says. “Make sure you get and give the full context of a situation, so all involved know exactly what is expected of them and what the objective is. It saves time and avoids the time wasted through miscommunications. Meeting the broader challenge of being a working mum and being a successful leader at Genworth has made me much more versatile.” MPA

“ Over the years I’ve realised a positive mindset can change any situation ”

BUSINESS PROFILE LEADER

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FEATURE SEMINARS

talk Let’s

nless you’re planning on speaking at a nudist camp, imagining your audience naked is probably not going to help you give a great seminar. There are lots of tricks to help people overcome their fear of public speaking, but according to communications expert Brett Rutledge, the key is to practise. “Prepare. The more you know your material, the more likely you are to overcome nerves,” he says. Rutledge knows his way around a podium. In 1998, he became the youngest World Champion of Public Speaking and one of only five to hold the title outside North America. And while mortgage brokers don’t need to be elite communicators to give great seminars, it does help to learn a few tips from the best.

Dealing with nerves According to Shyness and Social Anxiety Treatment Australia, the most commonly reported social phobia is public speaking. Mortgage brokers talk to people for a living, but most of that communication is face to face. Stepping in front of an audience, whether they are potential clients or a group of your peers, can be a nerve-wracking experience for anyone. But it’s okay to have a little anxiety. Experts say that being a little nervous is actually a good thing. It can give your presentation a little more

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First homebuyer and property investment seminars can be a great way to introduce new clients to your business, but not if you’re afraid of stepping up in front of an audience. Andrea Cornish reveals the key to overcoming public speaking jitters

energy and help you avoid sounding like you’re droning through a lecture that you’ve given a hundred times before. Judith Field, founder of Direct Speech, is another one of Australia’s foremost public speaking gurus. She agrees that practice makes perfect.“This is obvious, but most people spend 90% of their time writing their presentation and 10% practising. It should be 50:50.” She suggests that you practise as if you’re in front of a real audience. And remember to breathe deeply and fill your lungs with air, she says. The increased flow of oxygen will calm you down and help you focus. And lastly, she suggests you get rid of the voice in your head. “This is the most important tip. It means you are acknowledging the fear and deciding to let it go. As a result, you can focus on what you are delivering and not things like, ‘they are all looking at me’ or ‘what if I go blank?’ ”

Communication breakdown Understanding how communication works will give you a good foundation on which to build your speaking skills. Rutledge says it boils down to four ingredients: the audience has to understand you; agree with you; care about the message; and take action. “All four things have to be there for you to be effective,” he says.

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“ The more you know your material, the more likely you are to overcome nerves ” Biggest mistakes Judith Field, founder of Direct Speech, outlines some of the biggest blunders people make when presenting to an audience: Having technological difficulties and being thrown by it Making sexist, racist or politically insensitive comments Talking too long Providing attendees with too much detail Big-noting yourself Trying to sell yourself too much and too obviously Denigrating others Turning around to the PowerPoint Filling in the PowerPoint with too much detail and too many points or irrelevant data Standing up with your fly open or buttons popped Talking with hands in pockets and jingling money or keys BROKERNEWS.COM.AU

Case study: Raymond Teh Mortgage Choice broker Raymond Teh has been running seminars through his office since May 2005. He admits that standing in front of a crowd was nerve-wracking at first, but after getting a few seminars under his belt, it became second nature. As a new business, the seminars proved to be a valuable tool in helping Teh build his database. However, Teh advises brokers not to expect an immediate increase in the number of people walking through the door. “The lead time in running a seminar and reaping the benefit could range from six months to two years. For instance, a first homebuyer may attend your seminar but not commit to purchasing for a while due to lack of savings, unsuitable properties, etc.” Raymond Teh While it’s no longer one of the brokerage’s core marketing It was nerveactivities, Teh still runs wracking at seminars on a monthly first, but after to bi-monthly basis. getting a few In the beginning, Teh’s seminars attracted seminars under 50-plus attendees. Since his belt, it then, the numbers have became second progressively dropped to nature between 15 and 20. He suggests that perhaps the decline in numbers is due to an over-saturation in his area. Another change over the years has been Teh’s collaboration with strategic partners. While he has run the seminars in conjunction with buyer’s agents, real estate agents and property developers, since 2006 he’s been partnering with a neighbouring law firm, Masu Lawyers, which he believes has added more value to the attendees. Teh says the drop-out rate in people registering for the seminar to those actually attending can be close to 50%. To minimise the discrepancy, he sends clients an automated email on the same day they register as well as giving them a courtesy email and call two days prior to the seminar. And if someone does not turn up, Teh suggests emailing them with details of the next event. He also recommends brokers choose a smaller site if they are not expecting a large number of attendees, “otherwise it can look embarrassing if you have a capacity for 100 people and only two people show up”. Also consider access to parking and proximity to a wellknown landmark.

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Judith Field

It’s also incredibly important to present people with facts, emotions and symbols together. He explains: “No one gives a toss what an interest rate is; they care what it means to their mortgage.” So while it’s important to give people factual information, you also need to explain what it means to them. And when it comes to emotions, Rutledge says brokers should both understand the feelings of the people they are talking to, as well as sharing their own. “If you want people to be excited, you’ve got to be excited yourself,” he adds. Acting too professional can actually work against you. If you try to hide your emotions people will assume you either don’t care, you’re up to something, or both, Rutledge says. “During the GFC, every broker should have been telling their customers how frustrated they were,” he adds, by way of example. And as for symbols, brokers need to tell their audience a story, as it gives people a way to remember what the message is.

Be yourself According to Rutledge, Cate Blanchett is an academy award-winning actress because she doesn’t look like she’s acting. But for the layperson, focusing too much on skill and technique can really become a problem. “Most people are not that skilled,” he says. “But that’s okay, as long as you’re just yourself. That’s the only thing you can pull off with any credibility.” He cautions brokers to be genuine in trying to help people with the information they’re providing. People will respond much more warmly to you if you’re not trying to sell them anything. And while no one expects you to be a comedian, humour is an effective element of communication. “There’s a place for humour in everything,” Rutledge says, “even at a funeral.” Not only is it a great way of learning, but it shows people that

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you’re human. But the key to humour is to make it relevant – don’t tell a joke just for the sake of it. A better way is to incorporate humour through a story. A little self-deprecation is also effective. “I often say that the fastest way to make friends is to make fun of yourself,” Rutledge says. And at the end of the day, content matters more than delivery, and good structure will save poor delivery. “When a mortgage broker gets up in front of an audience, they know it’s not what they do for a living,” Rutledge says.

Avoiding distractions The best way to keep the presentation running smoothly is to save question time for the end. If you take the time during the presentation to answer specific queries, you risk losing the other members of the audience. Some brokers choose to serve light refreshments at the end of the presentation, which gives people a chance to come and chat afterwards. That also gives the broker an opportunity to answer questions, and perhaps a chance to better win them over as a client.

Brett Rutledge

“ I often say that the fastest way to make friends is to make fun of yourself ”

Shyness and Social Anxiety Treatment Australia recommends presenters stay calm if the information they’re presenting is challenged. The association suggests presenters thank the audience member for raising the question or comment. And in the face of criticism, presenters should resist the temptation to become defensive and argumentative. When challenged, try to find some common ground with the person – this will help you appear open minded. According to Rutledge, handout material is also better saved to the end. Giving people fact sheets and information beforehand opens the door to “cognitive overload”, he says. “The brain tends to choose the visual over the audio.” And the last thing you want is for people to be hung up on the spelling mistake on page three, rather than listening to what you’re saying. PowerPoint presentations can also be distracting, Rutledge says, and recommends keeping the information per slide to a minimum. And lastly, how do you avoid the biggest distraction of all? Picture all the attendees fully-clothed. MPA

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COLUMN LICENSING

Brave new world T

he lending landscape changed on 1 July, 2010 for the better, with the introduction of new responsible lending criteria setting a best practice benchmark for mortgage brokers across the board. While the most successful mortgage broking companies have had their own minimum standards in place for a long time, there has been too much scope for variation across the industry. The tighter regulation is an extremely positive step – and makes brokers more accountable than ever before. The biggest change is that brokers must show they have made enquiries to determine whether a loan is unsuitable for the client. While the phrasing might sound a little strange, it requires the broker to investigate the client’s repayment capacity and to prevent people from obtaining loans that they can’t really service. Satisfying this responsible lending requirement will be a three-stage process, starting with making reasonable enquiries into a borrower’s needs and objectives. Next, brokers must investigate the borrower’s financial situation, and take reasonable steps to verify that situation. Importantly, brokers must be able to demonstrate that the client can repay the loan without experiencing substantial hardship – which can vary from one person to another. As defined by the new legislation, ‘substantial hardship’ occurs when a person can only repay the loan through the sale of assets, such as the client’s home, rather than through income. Brokers will be able to assess substantial hardship by using a loan affordability calculator. But remember that borrowers should not be

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David Garner looks at what licensing holds for the mortgage market and why responsible lending requirements are good for the industry

disadvantaged by any conflicts of interest. Under the new requirements, comparison rate schedules are abolished, although you must still show comparison rates in advertisements that mention repayments or interest rates. All brokers must be registered or appointed as a credit representative, and must have been registered by 30 June 2010, apply for a licence by 31 December and obtain that licence by 30 June 2011. However, an education campaign is needed to ensure brokers clearly understand the measures required to consistently assess a consumer’s capacity to pay a loan, how best to provide a preliminary or final credit assessment and what constitutes ‘reasonable inquiries’ to verify a consumer’s financial situation. The value of such a campaign becomes even more important when you consider the penalties for failing to meet the new legislative requirements. Brokers could face having their credit licence revoked, million-dollar fines and/or imprisonment for up to two years. Simply registering for a licence under the legislation is not enough. The new responsible lending obligations will mean brokers will have to make major changes to application processes. The first thing a broker should do is create a lending process that can be documented and audited. The best place for more information is the regulatory guides on ASIC’s website.

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LICENSING

Brokers also should review those lending procedures and adjust them to meet the three key elements of the responsible lending requirements. As providers of credit, we all have a greater responsibility for making sure our client’s needs and borrowing capacity are properly evaluated. Part of assessing that capacity includes checking the borrower’s current loans and their credit history, as this will help you assess their needs and recommend the most suitable product. Finally, you’ll need to create responsible lending processes that can be documented and you will need to train – and monitor – all relevant staff. They should be briefed and understand their role in achieving compliance – that it’s not just the risk manager’s responsibility. It’s important to also know there are expert advisors out there to help. We’ve already seen the industry go through rocky times in recent years with the rationalisation that followed the collapse of global markets in September 2007. As economic conditions started to ease, it was the more sophisticated mortgage brokers who could maintain their businesses – and whose services are now in demand. Now, as funds have become increasingly available, the pendulum is swinging back to brokers and non-bank lenders. Subjecting the industry to tighter regulation will enable brokers to capitalise on that pendulum swing and ensure a brighter future based on higher, consistent standards. If we all work together to raise standards, make better lending decisions and take the industry to the next level in conjunction with the responsible lending requirements, then we will put the broking sector in a stronger position than ever before. MPA

Training academy At Club Financial Services, we are working with Acompli compliance consultants to ensure our business and our brokers meet all facets of the legislation. They have been able to provide an unbiased review of our application process and they are helping to simplify compliance for us. While compliance is essential, it’s worth remembering that there is a lot more to being a successful broker. A good broker will provide a David Garner transparent and tailored service that educates their clients about the best options for them, while also meeting all of the legislative requirements. These are the main elements that Club is aiming to instil in a new generation of brokers who will complete our second annual Club Academy, to be run in Adelaide in September. The Academy aims to help participants meet the new legislation – but also to develop the skills needed to provide a financial service to suit the varying needs of their clients. It’s also designed to help us source new brokers who subscribe to Club’s core principles and set a benchmark for standards across our national network. The Academy is an intensive two-week course and successful attendees may be offered a position within the Club group or a new franchise territory (with the added incentive of no franchise fees). Participants from the first Academy held earlier this year said the program gave them the confidence that they would be meeting industry standards, while also learning a range of skills to help them generate business leads and start writing loans. Tristan Crafter from Club in Burnside, Adelaide, says it was great to see an organisation embracing compliance while also ensuring that attendees learned the business and people skills needed to successfully operate in the industry. Another Academy participant, Michael Hinde, who is now a finance consultant at Club’s Prospect office in Adelaide, says the Academy was an essential part of becoming established as a broker, and all for negligible cost. “The Academy not only taught me the basic skills of a mortgage broker, but also highlighted the importance of building a business model that allows me to generate a significant income – not only from writing loans, but from financial planning and accounting referral arrangements,” he says. “The chance to see how the Club Needs Analysis can be used as a fact-finding tool and to ensure you’re complying with the new legislative requirements is invaluable. It was also great to hear from a range of lenders about the wide range of products available.” The enthusiasm of this new generation is inspiring.

David Garner is director of Club Financial Services

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COVER STORY TOP 100 BROKERS

Forget those supposedly tough market conditions – this year’s Top 100 list was as keenly contested as ever before. Barney McCarthy counts down the elite

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risis, what crisis? That seemed to be the attitude of our top-performing brokers this year as entries came flooding in for our prestigious Top 100 Brokers list. As licensing dominates the agenda for introducers, plenty of talk in the market has surrounded diversification and the need for brokers to add other elements to their core home loan business. Yet if our figures are anything to go by, plenty of you seem to have your hands full with residential mortgage transactions. It may seem bizarre, but many of you actually welcomed the GFC and the subsequent impact it had on business. A number of our elite brokers cited the decreased competition as a boon to their business – proof that every cloud has a silver lining. Despite the supposedly dwindling numbers of brokers, we were inundated with submissions this year and there was a marked increase in loan volumes from our 2008/09 survey. Last year, settling $40m of home loans would have seen you placed 78th on our list: this year, that wasn’t even good enough to make the Top 100. It is a testament to the ongoing health of the broking community that more than 100 brokers submitted that level of business in 2009/10. While there are plenty of familiar faces, there is also a staggering amount of new blood in the mix – 49 of our Top 100 are new entries this year. Some of these are returning faces who didn’t enter last year, but there is also a healthy percentage of up-and-coming talent, an encouraging sign for the future success of our industry. There was also a fairly even geographic split of entries. Victoria can lay claim to being the top state for top brokers with a quarter of the Top 100, but NSW was hard on its

heels with 24 elite intermediaries. The rest of the country was well represented too, with Queensland (19), Western Australia (15), South Australia (11), ACT (4) and Northern Territory (2) all hosting brokers at the top of their game.

And the winner is... The Top 10 had a familiar feel to it this year, with four of the brokers having featured in the upper echelons 12 months ago. Special mention must go to Alex Shumsky from Consolidated FS who leapt a huge 52 places to 10th position. Two recent winners also made the Top 10 this year, with Colin Lamb from Mortgage Solutions Australia coming in third (winner – 2008) and Katrina Rowlands placing sixth (winner – 2006). Australia’s top mortgage broker was Wendy Higgins from Mortgage Choice, making it back-to-back triumphs after her success last year. Two of her colleagues also made the list, with Julie Mahony landing 44th spot and Christine Albon placing 65th. MPA would like to thank all those brokers who took the time to enter the Top 100 this year and congratulate all those who made the list. See overleaf for the full list of brokers and profiles of the top 10 brokers.

“ It may seem bizarre, but many of you actually welcomed the GFC and the subsequent impact it had on business ”

State-by-state:

25 24 19 15 11 04 02 VIC

NSW

QLD

ACT

The spec: Entry for the top 100 list was open to all accredited brokers and loans had to be originated solely by the individual entrant in the BROKERNEWS.COM.AU FY2009/10. Entries were then verified by lenders, aggregators and franchisors to ensure the integrity of the submissions.

COVER STORY TOP 100 BROKERS

Recognising the industry’s leaders Top brokers have the ability to perform through the most difficult times. While the past year posed challenges to the industry in general, for many groups business was strong, supported initially by solid first homebuyer appetite and later by investor demand. Nevertheless, a continually changing economy and market environment had its impact – with many brokers reassessing their businesses in order to remain competitive. Huw Bough

It is this type of key trait that underpins professional brokering operations. Westpac considers these brokers as its key market segment and we strive to be the lender of choice for professional brokers and their clients. The industry is rapidly evolving and realising its full potential as a highly-professional services sector. National Consumer Credit Protection legislation is but one of the many factors that will help to elevate the standing of the profession, and the professional broking groups within it. Consumers need to feel confident in their financial decisions and brokers play the very important role of trusted and independent advocate, helping to advise, mentor and facilitate their customers’ needs. Ongoing recognition of those professional brokers at the frontline of the industry is key to the industry’s continued evolution. Only through benchmarking the industry’s top performers can we establish best practice that we can all aspire to. We’re proud to sponsor MPA’s Top 100 Brokers; we see great value in supporting those brokers that are collectively building a better mortgage industry through continued dedication to their profession and an underlying client-focused approach. Congratulations to those brokers that have made this year’s Westpac and MPA Top 100. I encourage all brokers to learn from the success of others – and to push ahead with the ongoing improvement of your business. I wish you all the best for the year ahead. Sincerely, Huw Bough General manager Westpac Mortgage Broker Distribution

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What makes you a good mortgage broker? It’s all about the service you provide, making sure you take care of the customer’s needs and ensuring they get the right loan with the (62) Alex Shumsky right bank. Consolidated FS What has been the Oakleigh, VIC most challenging Settled: aspect of 2009/10? $86,508,288 Getting used to all the licensing and NCCP requirements. What has been the most positive aspect of the last financial year? The first homebuyer grant from the federal government and relatively low rates. What are your targets for 2010/11? To stay in the top 10 next year. What do you enjoy doing outside the office? Relaxing, spending time with family and personal training sessions. Top tip for other brokers? Get back to the basics and work hard. Don’t concentrate on the figures, more the processes.

What makes you a good mortgage broker? A decade of experience and always putting client service first. What has been the most challenging aspect of 2009/10? (new entry) Nick Caple Doing more work Choice Capital than ever before Albert Park, VIC and receiving less Settled: commission from $87,495,948 the banks. What has been the most positive aspect of the last financial year? A shortage of lenders in the market has meant that experienced and professional mortgage brokers are more highly valued and sought after. What are your targets for 2010/11? To grow the business and seek to cross-sell other products to our client base. What do you enjoy doing outside of the office? Bike-riding and property development. Where do you see yourself in 12 months? Doing much of the same – working hard. Top tip for other brokers? Obtaining product knowledge is vital. It really pays to be professional and courteous at all times.

What makes you a good mortgage broker? I try to be a little bit inspiring to our customers – it’s important to them that we are passionate about what we do. What has been the (9) Gerrard Tiffen most challenging Tiffen & Co aspect of 2009/10? Kingston, ACT A lot of the compliance Settled: procedures brought in $93,605,473 this year have proved tough. Banks introducing credit scoring has been a real learning curve too – some of the decisions have been baffling. Whereas before most files could be completed in one go, now they have to be revisited three or four times. What has been the most positive aspect of the last financial year? It’s great to be in a role where you are meeting new people every day and receiving referrals when you’ve done a good job. What are your targets for 2010/11? I don’t tend to set myself business targets, but I’ve got a lot of personal goals I would like to achieve such as going on holiday with the family and finishing the house we are building. At work, I just try and always do the right thing by my clients. What do you enjoy doing outside the office? I’ve recently developed a passion for adventure racing – multi-sport events that include mountain

“ It’s great to be in a role where you are meeting new people every day and receiving referrals when you’ve done a good job ”

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COVER STORY TOP 100 BROKERS

biking, kayaking and running across a range of terrain. Top tip for other brokers? Having a point of difference is important, something that makes your proposition different from your competitors. It is also vital to establish good relationships with your referrers – not just occasional contact, but a daily phone call. If you have common interests and they are actually a friend, your relationship will be more fruitful.

07 (7) Michael O’Reilly MO’R Mortgage Options Mawson, ACT Settled:

$95,839,731

What makes you a good mortgage broker? We are only a relatively small operation, so we can’t compete with some of the larger franchises on scale, but we focus on the client. We specialise in property investment finance and I think the fact we are investors ourselves makes us

valuable to our clients as we understand the process. It’s not just a case of sourcing a cheap loan for the client and sending them on their way. What has been the most challenging aspect of 2009/10? There hasn’t been anything too bad, although sometimes it seems as if banks are looking for reasons not to do business rather than just admitting they are struggling for funding. Volume hurdles are a worrying development too – the banks are asking us to prioritise them ahead of |the client, which is dangerous. What has been the most positive aspect of the last financial year? We won a state-wide award acknowledging our real estate operation which was good. Awards aren’t the be all and end all, but they help clients to recognise the cream of the industry. The fact that the market has been tough has actually been good for us in that there has been a drop-off in the number of mortgage brokers. What are your targets for 2010/11? We are looking to establish other bolt-on businesses to our core focus that will help us to generate leads. There are only two of us writing the business with minimal support and I still managed to write more than $95m. I was recently acknowledged by Choice as the first broker in ACT or NSW to write more than $400m with it, which I did in just over five years. What do you enjoy doing outside the office? I’m currently building a house and I’m enjoying choosing the decor and furnishings with my wife. I also enjoy training dogs for obedience competitions and I’m currently working with two cavoodles – cavalier King Charles spaniel and poodle crosses – called Montgomery and Sebastian. Top tip for other brokers? Investment in yourself is vital, both in terms of experience and education. If you are just starting off as a mortgage broker, it’s probably best to work with someone and learn from them first rather than setting up on your own. I also think there has been too much focus on commission in our industry, which encourages the wrong kind of people to join.

“ I think the fact we are investors ourselves makes us valuable to our clients ... it’s not just a case of sourcing a cheap loan for the client and sending them on their way ”

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business ... the next 12 months will be a time to refresh long-term friendships within the industry. I have been extremely busy over recent years and have lost contact with many of my friends. Top tips for other brokers? Remain passionate, want to make a difference and create industry relationships that are going to support your goals. It is also important to constantly look for and seek out new challenges. If I had stopped at what everyone else thought was my capacity, I would not be where I am today.

What makes you a good mortgage broker? My integrity, empathy, dedication and innovation. What has been the most challenging aspect of 2009/10? (14) Katrina Rowlands Trying to keep Mortgage Success everything going. It has Wollongong, NSW been one of the most Settled: demanding years I have $96,631,545 ever had. What has been the most positive aspect of the last financial year? There has been a really solid move towards professionalism industry-wide. What are your targets for 2010/11? I’m very proud that we have had huge results for 12 years now, so I really hope to keep that up. I also want to have a bit more fun as well. People often ask me about retirement and I tell them that I will retire when I am not having fun anymore. I also have goals that I would like to achieve in my personal life: I want to concentrate on my health and get back into training with others. What do you enjoy doing outside the office? I love deep-sea fishing. I love spending time with my children. We have a big backyard with lots of animals, so I enjoy getting out there and playing with my kids. Where do you see yourself in 12 months? Heading a much larger organisation and working towards increasing broker numbers. Spending more time on my business rather than ‘in’ my

05 (new entry) Phillip Nguyen IFG Home Loans Malaga, WA Settled:

$96,806,966

What makes you a good mortgage broker? Having good relationships with customers and banks, support from BDMs who are committed to their job and paying attention to what the customer needs. Being a good listener who pays extra attention to detail is key too, along with going the extra mile for clients.

What has been the most challenging aspect of 2009/10? Changes in the global economy have had an impact. It has also been challenging keeping up to date with the numerous policy changes from the banks and withstanding the interest rate rises.

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COVER STORY TOP 100 BROKERS

What has been the most positive aspect of the last financial year? More opportunities for me as many brokers have left the profession. I now have a better market share and more selective customers. What are your targets for 2010/11? The rest of 2010 will see the tail end of the GFC, but 2011 will be a time to go for commitments. What do you enjoy doing outside the office? Recreational activities with the family and socialising. Where do you see yourself in 12 months? Hopefully still broking. Top tip for other brokers? Stay committed, even during the tough times. Persistence is the key to success. Be a good listener to properly identify the needs of your clients.

04 (new entry) Greg Sterland Australian Property Finance Charlestown, NSW Settled:

$102,030,613

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What makes you a good mortgage broker? Professionalism is probably the most important thing. We also try and provide a level of service that keeps clients coming back and we keep in contact with them regularly to make sure they are happy throughout the process. We also offer financial planning and

accountancy services if the client requires them. Having 37 years of experience as a banker certainly doesn’t hurt! What has been the most challenging aspect of 2009/10? The only issue has been coming to terms with the new legislation as it is not fully in place yet. I don’t think it will have a significant impact on our business though as we have already been doing the things required. We have no fear of legislation, it has simply reinforced that we were doing the right thing all along. What has been the most positive aspect of the last financial year? The low interest rates experienced last year created a positive progression of clients interested in investment property. Even the subsequent rate rises haven’t really dampened this appetite. What are your targets for 2010/11? Ensuring all our licensing requirements are fulfilled and maintaining our level of professionalism. We are also planning a revamp of our brand and logo as it’s important to keep moving these things forward. Making sure the clients are satisfied is the most important thing. What do you enjoy doing outside the office? I travel extensively and go on holiday four or five times a year. I also enjoy skiing, golf and bike riding. Maintaining a healthy work-life balance is essential for brokers as you spend a lot of time stuck behind a desk. Top tip for other brokers? If you don’t have a genuine desire to help people, nor a commitment to professionalism, you can’t succeed in this industry. It is also important to invest in your own business which some brokers won’t do until they have enough clients.

“ Changes in the global economy have had an impact. It has also been challenging keeping up to date with the numerous policy changes from the banks and withstanding the interest rate rises ”

COVER STORY TOP 100 BROKERS

What makes you a good mortgage broker? A good broker cares about their client, understands what they’re going through when buying a property or needing finance, and (4) Colin Lamb explains all aspects of Mortgage Solutions Australia the finance, from the time of application and Doubleview, WA throughout the whole Settled: process to settlement $106,771,475 and beyond. What has been the most challenging aspect of 2009/10? This has been a year like no other. The main challenge has been a tapering off in the property market, which has seen a drop in prices in certain areas. The top end has come off with not a lot of sales occurring, and there’s been a slowdown in the number of first homebuyers. This has seen a reduction in the number of overall property sales and hence a reduction in the number of loans. What has been the most positive aspect of the last financial year? The banks are still lending and they have money to lend. There seems to be a bit more confidence in the banking sector with a few banks coming back into the market and putting some pressure and competition on the Big Four. What are your targets for 2010/11? The main target for 2010/11 is for settlements to be at least $10m per month, along with building

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out number of brokers – we are planning on adding another 10 brokers this year. What do you enjoy doing outside the office? I love to spend time with my wife Christina and my three daughters, Dana, Jessica and Chelsey, especially watching them play netball and basketball. Watching the Dockers play this year has been enjoyable as well and I very rarely miss a game. Summer time is usually spent at the beach. Where do you see yourself in 12 months? I see our business transitioning into a much bigger business with a lot more brokers and loan writers. I will be taking a lot more time working on the business setting up referral relationships for our brokers. Top tip for other brokers? Education. Make sure you keep up-to-date with the bank’s policies and procedures and treat a client how you would like to be treated. Communicate – you can never over-communicate with both clients and referral sources.

02 (8) Justin Doobov Intelligent Finance Bondi Junction, NSW Settled:

$116,923,796

What makes you a good mortgage broker? We go the extra mile for every client we deal with. We also take the time to listen to what our clients require and build them a financial structure that satisfies not only their current needs, but future needs.

What has been the most challenging aspect of 2009/10? Managing the 30% growth of the business has been the most challenging. We are waiting for a new CRM package to be delivered later this year, so in the interim we have had to do a lot of manual processing. What has been the most positive aspect of the last financial year? To watch our office culture evolve. I have built an amazing team that has even surprised me at how client-focused they can be. Most clients comment to me that the service they receive from us is the best they have ever experienced. Everyone loves coming to work and the camaraderie is fantastic. What are your targets for 2010/11? To increase our loan settlements by over 50%, to enjoy a little more work-life balance and to ensure that Intelligent Finance continues to be an enjoyable environment to work in. What do you enjoy doing outside the office? When I’m not at work I love spending time with my wife, building things such as my new cocktail bar and spending time with my friends discussing new ventures that they want to invest in. Where do you see yourself in 12 months? I would have to say that I see myself doing what I am doing now. I do see myself working more on the business and less in the business though. This will be a good step for me as well as propelling the business even further forward as my team can take on more responsibility. Top tip for other brokers? Don’t put a client with a lender just because they have the cheapest interest rate. While the interest rate is important, it is only one of the components that make up the right loan. You can save a client a lot more money by having the right loan structure with the right lender than you can by having a cheap rate with the wrong loan structure and wrong lender.

“ Professionalism is probably the most important thing. We also try and provide a level of service that keeps clients coming back and we keep in contact with them regularly to make sure they are happy throughout the process ”

What makes you a good mortgage broker? Being able to get the appropriate finance approved for all clients. Buying a home or an investment property is a big financial decision (1) Wendy Higgins and the right finance is Mortgage Choice an integral part of the Glenelg East, SA transaction. Looking at Settled: clients’ long-term needs $141,344,304 is part of this and I always build this into my recommendations. What has been the most challenging aspect of 2009/10? Turning around declined applications so they are approved, adjusting to lenders’ changing policies and getting the right lender upfront. Keeping staff motivated and positive during the tougher months was also a challenge. What has been the most positive aspect of the last financial year? Growing my own results by approximately 14% and my overall business by 7% year-on-year during a much tighter credit environment. What are your targets for 2010/11? A hundred loans a month for my business which would equate to $260m written for the year. My personal target will be $100m of home loans settled as I have employed an extra loan consultant so that I can delegate some of the leads so that I can spend more time on developing existing and new referral relationships. What do you enjoy doing outside the office? I love being with friends and family over a barbeque and a glass of red wine. I enjoy a short break at my brother’s shack at Nora Creina. I follow the local Glenelg Football Club and let’s hope 2010 is their year as it’s the Year of the Tiger. I also find time to shop, and when I need to totally relax, I either read a book or do a jigsaw puzzle. Where do you see yourself in 12 months? I will still be 24/7 involved with my business. I love the loan writing part of it so I will still be doing that. I will be mentoring my staff more.

Additional reporting: Laura Carew BROKERNEWS.COM.AU

COVER STORY TOP 100 BROKERS

KEY: ★ = New entry 2010 Rank

2009 Rank

Name

Company

Location

Total home loan settlements

Number of loans

Wendy Higgins

Mortgage Choice

Glenelg East, SA

$141,344,304

562

Justin Doobov

Intelligent Finance

Bondi Junction, NSW

$116,923,796

208

Colin Lamb

Mortgage Solutions Australia

Doubleview, WA

$106,771,475

282

★

Greg Sterland

Australian Property Finance

Charlestown, NSW

$102,030,613

595

★

Phillip Nguyen

IFG Home Loans

Malaga, WA

$96,806,966

299

Katrina Rowlands

Mortgage Success

Wollongong, NSW

$96,631,545

341

★

Michael O’Reilly

MO’R Mortgage Options

Mawson, ACT

$95,839,731

420

Gerard Tiffen

Tiffen & Co

Kingston, ACT

$93,605,473

381

★

Nick Caple

Choice Capital

Albert Park, VIC

$87,495,948

Alex Shumsky

Consolidated FS

Oakleigh, VIC

$86,508,288

186

Scott Marshall

The Loan Arranger

Adelaide, SA

$86,466,694

416

★

Ruan Burger

Home Loans Etc

Gladstone, QLD

$84,391,610

307

Peter Goldberg

Pinnacle Capital

Bondi Junction, NSW

$84,029,407

179

Andrew Brumby

Develop & Invest

Seaford, VIC

$80,122,000

271

Alistair Baker

Aussie

Melbourne, VIC

$79,590,720

257

★

Sean Beavis

Aussie

Newtown, NSW

$76,233,212

168

Murray Kent

Pacific Home Loans/Borrowers Choice

Redcliffe, QLD

$75,514,020

317

Brett Amos

Seven Point Finance

Port Melbourne, VIC

$69,141,063

248

Rael Bricker

House + Home Loans

Osborne Park, WA

$69,060,000

320

David Friend

Tiffen & Co

Kingston, ACT

$68,868,897

212

★

Vivian Wei Wang

V Money

Melbourne, VIC

$68,055,974

168

★

Andrew Monk

Investloan

South Melbourne, VIC

$66,563,725

248

Troy Cameron

Stratique Finance

Nedlands, WA

$63,055,000

178

★

Glenn English

Aussie

Carnegie, VIC

$62,636,878

201

Jeff Hart

Club Financial Services

Unley, SA

$61,947,423

290

★

Cameron Stillman

Choice Capital

Albert Park, VIC

$61,568,397

125

Kelly Cameron-Tull

Get Real Finance

Windsor, QLD

$60,680,481

243

Paul Taylor

Toowoomba Home Loans

Toowoomba, QLD

$60,475,280

244

Peter Ellis

Oxygen Home Loans

Edgecliff, NSW

$60,000,000

★

Athol Halvorsen

Australian Finance Club

Sydney, NSW

$59,304,955

109

Simon Orbell

Smart Move Home Loans

Neutral Bay, NSW

$59,235,963

155

★

Adam Bourke

Mortgage Choice

Paddington, QLD

$57,814,624

190

Kobi Chillman

Members Alliance Home Loans

West Perth, WA

$57,762,626

182

Chris Bibby

Accurate Financial Consultants

Port Melbourne, VIC

$57,398,407

170

Darin Yacopetti

Able Finance Broking Services

Perth, WA

$57,256,937

203

Heather Nyssen

Queensland Financial Services

West Burleigh, QLD

$57,248,703

368

Steve Marshall

The Loan Arranger

Adelaide, SA

$57,108,172

256

Stephen Smith

Mortgage Solutions Australia

Doubleview, WA

$56,207,764

198

★

Mark Roesler

Easy Loans

Fannie Bay, NT

$55,845,895

181

★

Jon Somers

Aussie

Bondi Junction, NSW

$55,566,148

119

★

Vera Mortimer

Bernie Lewis Home Loans

St Peters, SA

$54,742,301

225

★

Xavier Quenon

Go Mortgage Corporation

Springwood, QLD

$54,442,960

144

★

Anthony Ciavarella

Aussie

Clayfield, QLD

$54,434,115

147

Julie Mahony

Mortgage Choice

Glenelg East, SA

$54,042,879

295

★

William Mangafas

Aussie

Narellan, NSW

$53,755,393

166

Mario Borg

Mortgage Achievers

Melbourne, VIC

$53,740,687

164

Hye Young (Leanne) Kim

Now Home Loan

Eastwood, NSW

$53,701,756

126

★

David Pringle

Aussie

Hamilton, NSW

$53,603,229

152

Terry Hill

Queensland Financial Services

Noosaville, QLD

$53,158,076

181

Anthony Smith

Mortgage Choice

Cheltenham, VIC

$52,532,701

178

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2010 Rank

2009 Rank

Name

Company

Location

Total home loan settlements

Number of loans

★

Aaron Grofski

Aussie

Morley, WA

$52,274,010

147

Daniel O’Brien

PFS

Bella Vista, NSW

$52,010,000

229

Mike Buchecker

Aussie

Brisbane, QLD

$51,996,814

162

Max Ivanoff

Mortgage Fair

Elsternwick, VIC

$51,878,406

130

★

Kerry Kalendra

Optim Financial

St Kilda, VIC

$51,040,567

181

★

Ian Griffiths

Aussie

NSW (Mobile)

$50,891,968

156

★

Brad Oliver

First Choice Home Loans

Brisbane, QLD

$50,705,227

204

★

David Brell

Smart Move Home Loans

Neutral Bay, NSW

$50,695,685

★

David Wegener

Club Financial Services

Norwood, SA

$50,074,498

172

Serge Scekic

Aussie

Balgowlah, NSW

$49,429,447

126

Sandra Joseph

Mortgage Solutions Australia

Doubleview, WA

$49,335,161

182

★

Trevor Ryan

Aussie

Brisbane, QLD

$49,081,861

197

★

Kristian Moore

SAJ Home Loans

Fremantle, WA

$48,970,679

130

Paul Wright

IPS Home Loans

Wollongong, NSW

$47,978,649

215

★

Christine Albon

Mortgage Choice

Glenelg East, SA

$47,182,652

222

Stephen Gravina

Toowoomba Home Loans

Toowoomba, QLD

$46,959,743

204

★

Michael Kemp

Aussie

Cairns, QLD

$46,765,814

146

★

Paul Bieg

Club Financial Services

Norwood, SA

$46,433,703

197

★

Andrew Kemeny

Kastle Group

Robina, QLD

$45,642,460

191

Peter Fitzpatrick

Outback Financial Services

Alice Springs, NT

$45,406,609

159

★

Warren Dworcan

Rate Detective Home Loans

Osborne Park, WA

$45,200,000

153

Duane Brown

Aussie

Sydney, NSW

$45,050,372

152

★

Lee Seabrook

Aussie

West End, QLD

$44,975,208

107

★

Alana Massignani

Growing Equity

Runaway Bay, QLD

$44,938,579

161

★

Cameron Wiles

Smart Move Home Loans

Neutral Bay, NSW

$44,922,428

106

Greg Cook

Insight Home Loans

Belrose, NSW

$43,944,116

Brian Hocking

Smartline

West Footscray, VIC

$43,924,348

181

★

George Antonas

Investloan

North Sydney, NSW

$43,561,684

147

Paul Mazzella

Broker House

Shepparton, VIC

$43,275,692

211

★

Alex Ralec

Aussie

Hornsby, NSW

$43,239,616

Robert Hodson

Aussie

Melbourne, VIC

$43,105,548

135

Steve Moore

Expert Lending

Raceview, QLD

$42,764,425

181

★

Steve Matsoukas

Defiance Consulting

Epping, VIC

$42,740,257

159

★

Ray Zahra

Aussie

Carlton, VIC

$42,684,228

102

★

Anu Dua

Aussie

Knox, VIC

$42,236,135

126

★

John Speiks

Bernie Lewis Home Loans

Adelaide, SA

$42,089,192

131

★

Abel Cabrera

Aussie

Melbourne, VIC

$41,926,444

103

★

Andrew Walker

X Inc Finance

Osborne Park, WA

$41,547,734

129

★

Xavier Howard

Broker House

Shepparton, VIC

$41,371,617

217

Jamie Demas

Aussie

Gold Coast, QLD

$41,359,040

118

Richard Velliaris

Resolve Financial Solutions

Osborne Park, WA

$41,181,981

173

★

Clair George

Aussie

Newtown, NSW

$41,136,542

100

Angelo Benedetti

Orcale Lending Solutions

Kent Town, SA

$41,123,620

161

Galvin Dawson

Finance Edge

Perth, WA

$41,086,845

169

★

David Thomas

Trilogy Investment Property Funding

Canberra, ACT

$40,962,972

152

★

Evelyn Crawford

Crawford Mortgage Services

Melton, VIC

$40,842,252

151

★

Stephen Sillett

Aussie

Raymond Terrace, NSW

$40,679,398

152

★

Kirsten Junge

All Finance Services

Joondalup, WA

$40,595,559

187

★

Karen Moseley

Aussie

Mentone, VIC

$40,295,763

142

100

★

Sally Whitworth

Acceptance Finance

Kew, VIC

$40,260,839

128

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play PANEL DISCUSSION EXPERT OPINION

State of

MPA recently invited four industry personalities to discuss the burning issues affecting the mortgage market at present, and a lively discussion ensued

Barney McCarthy: What is the outlook for the Australian mortgage market over the next 12 months? James Austin: I have just returned from a euro asset-backed securities conference in London and we received very positive feedback and responses. Interestingly, there were 43 representatives from the Australian industry, whereas 12 months ago there were only four – which gives you a flavour for the level of demand. In terms of investor and funder meetings, we had more requests than pre-GFC which came as a surprise. There is huge demand for Australian mortgage-backed securities of a triple-A standard because Australia is seen as a safe haven. The safe haven countries are seen as Australia, Holland and – surprisingly given all that has gone on – the UK. We left the event buoyed by the news. Lisa Montgomery: It is definitely encouraging that appetite is coming back into our market. We all know we have a safe market. Demand is driven by consumers, but we are looking down the barrel of an election and have had six rate rises. The market started to trend up in terms of appetite for home loans until the sixth rate rise, but that has led to borrowers sitting on their hands with a degree of caution being displayed. Elections do seem to have that dampening effect on behaviour.

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Lisa Montgomery CEO, Resi

Steve Kane managing director, FAST

PANEL DISCUSSION

EXPERT OPINION

As the year goes on, there is that appetite for non-bank lending, but there is that consumer caution and European economies are still in trouble and that is filtering over here, but I think we are looking at steady volumes over six months, with a caveat on that of what banks do in terms of going outside of the RBA cycle with any rate rises. Simon Dehne: The first homebuyer segment of the market has slowed, but that decrease in demand has been picked up by investors. The overall market was growing too quickly and the RBA rate rises have made things more manageable. Clearance rates have come off a bit but are now more sustainable. Every year is tough in different ways, but there are always opportunities and it’s about how you maximise them. I’m optimistic about the overall economy and it’s a good place to be. Steve Kane: We support a positive outlook going forward. The fundamentals in the Australian economy are more around the housing supply shortage and low unemployment. Rate rises are possibly something that could dampen demand,

Barney McCarthy editor, MPA

but the money markets are not forecasting rises, so it’s out-of-cycle rises that banks may want to bring into play because of funding issues. The first homebuyer market has definitely come off, but the investor market has improved. June numbers are strong for housing finance approvals too. System growth is tipped by most major economists to be around 8–10% and we would support that. BM: Are there any sectors within the mortgage market that appear to be in trouble or any particularly thriving? The commercial sector seems to have had a tough year. LM: The commercial market is starting to pick up and there is some positivity returning. In terms of legislation and who is going to be hurt by licensing, it’s probably the part-time brokers and the one-man bands with the choice of how they continue to trade in terms of what licensing route they choose. It’s more those types of people that will be hurt; most lenders are moving forward and it is a positive time for them.

Simon Dehne national sales manager of non-core distribution, Mortgage Choice

“ Every year is tough in different ways, but there are always opportunities and it’s about how you maximise them ”

James Austin chief financial officer, FirstMac

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“ Affordability is the biggest issue – people wanting to buy, but they can’t afford the repayments ”

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SD: There is a rationalisation being caused by the regulatory changes. It is difficult to be a part-time broker with volume requirements. There is a need to have a reasonable selection of lenders and you really can’t do that if you’re only doing it a few days a week. To do justice to the customer and the industry, either those people fall aside or the cost of being regulated will play a part in that. In terms of commercial lending, we’re seeing more interest from our panel of lenders approaching us to expand that within our network. We’ve been upskilling our own franchising network in terms of commercial, insurance, leasing and equipment finance to ensure they capture more of the customer’s wallet and meet more of their needs rather than just letting them walk out the door. JA: In terms of potential stresses in the mortgage market it has certainly been resilient, delinquencies remain low and rates have risen, but 2008 was a good test case of rates rising over 9% before we saw any real stress. With recent rate rises, first homebuyers are the most vulnerable, but equally investors have replaced them so overall volumes have stayed the same. First homebuyers and high LVR products are areas where there would be stress if things were to change. LM: It’s an issue of affordability. SD: That’s the biggest issue – people wanting to buy, but they can’t afford the repayments.

LM: It will be interesting to see what product changes emerge to support first homebuyers. It is costing even more to put together a deposit to get into the market in Sydney and Melbourne and product developments could support the sector. SK: In relation to serviceability, it is further intensified by responsible lending guidelines. This means introducers, brokers and mortgage managers need to focus more heavily on serviceability. Whereas previously applications centred on historical data, the focus is now on the customer affording the debt going forward rather than their history and the continued pressures on affordability. For first homebuyers things are more difficult with the level of deposit required, particularly in New South Wales, and the ability to enter the market is impinged. On the commercial side, there has been some improvement, but the major funders supporting the sector have books that are quite full, so until there is freeing up of capacity, particularly with Westpac and CBA, we are going to see tighter credit conditions. JA: The Big Four’s cost of funds have risen dramatically for new funding and there is a risk that commercial lending could bear the brunt of those margin increases, rather than other sectors. SD: It has happened before. Pressure on margins may limit product development as lenders focus less on growing their book and more on relying on revenue from their existing one.

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LM: It’s also going to create a point of difference for whoever does that the best. It’s all about attracting the consumer and increasing brand awareness. Whoever pulls that rabbit out of the hat will be successful. There’s talk of going down the shared equity route in a more significant way. It’s been around since 2002, but no one has really done well. Investors will be driving that argument rather than consumers. SK: It’s an inter-generational thing, with the transfer of wealth from Baby Boomers to their children. As the children try to enter the market using the equity built up by their parents, it’s less about an investment and more about enabling family members to enter the market. There is significant pressure in terms of credit from the LMI providers too and that is adding to a tightening of credit in the marketplace. Genuine borrowers will be okay, but the ones playing at the margins will struggle. Low-doc is dead and buried and self-certification has come under pressure. JA: With NCCP coming in, it remains to be seen if low-doc is even possible.

BM: Should more be done to help first homebuyers? They are often seen as the lifeblood of the industry, but how much should be done to help them onto the property ladder while still staying onside in terms of affordability? SK: Responsible lending will play a key part in all of this. High LVRs of around 95% and marginal capacity to repay the debt won’t exist in the future and probably shouldn’t have existed in the past. That will add pressure to the whole argument around first homebuyers. If borrowers can genuinely afford the loan and are in stable employment, there will always be a level of activity. We saw a rapid increase around 18 months ago, but traditionally first homebuyers have accounted for around 15% of the market and it has probably now retreated to about that. It’s just a normalisation whereas it took up a large space for a while. That space has been filled by investors and we are also going to see better conditions for developers going forward, and we are already seeing a loosening of some of the controls. The big issue

“ Genuine borrowers will be okay, but the ones playing at the margins will struggle ”

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is the ability for developers to be able to do their job cost effectively. SD: They still have to get funding though, which is another challenge. JA: The issue with first homebuyers is lack of supply of dwellings. If it is a case of needing product development, that should be around construction lending. BM: The rapid rise of house price growth has gone through the roof over the past year. Is this sustainable, or is the bubble about to burst? JA: It’s an interesting one given the conference I attended in Europe. We had 23 meetings and in each of them the Australian bubble theory was discussed, as was whether property was overinflated or not. The answer is that it’s not. The lack of supply with a great shortage of dwellings and rapid population growth is supporting prices. Rising rates will dampen the rate of increases, but we’re not going to see prices coming back; it may be steady and slow, but it’s sustainable and the level of undersupply is a fundamental. SD: So you don’t think there is a bubble? We don’t. ALL: No. SK: It’s a bit of a misnomer. You see headlines about how property prices in Sydney are up 20%, but that’s only in very select suburbs and certainly isn’t the case in the south-west of the city. LM: There are huge generalisations when it comes to reporting on the Australian property market. You only have to look at recent Canberra figures, in terms of it overtaking growth in Melbourne and stories of people camping out 14km from the CBD for land. That tells you something. The government has let Australians down in certain ways, in not allowing new developments. If we didn’t have restrictions on land allocation, we wouldn’t have such issues. In five years’ time we will still be talking about it. You have to look at 16 councils that have caps on development in those areas and passing that cost back on to ratepayers, it’s ludicrous; it’s simply not going to happen. They are hamstrung about what development they can do. People are moving to centres other than Sydney; wage growth in Canberra is far stronger, for example, and we are seeing an amazing amount of people flocking to that area. JA: We also saw a pullback in 2003 in New South Wales that didn’t happen offshore. We may have

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seen recent increases, but growth was negative for a long while. BM: Licensing is going to be a big topic this year and the benefits, including enhanced professionalism, have been well documented, but are there any potential pitfalls? SK: We have to be careful of the statement advice type concept out of FRSA being placed across the mortgage market. We need clear guidelines around that as we don’t want an 80-page statement of advice for a mortgage loan. We’ve just completed a survey of brokers and 78% of respondents think the new legislation will have a positive effect in lifting professionalism and allowing the profession itself to be recognised as a true profession. Overall, we are positive about licensing, we just need to be on our guard that we don’t over-complicate the situation in the way that happened with FRSA. SD: We agree with that, we welcome it. Mortgage Choice has had a finance brokers agreement for many years now. Licensing just makes the market more professional and ensures customers are aware of exactly what they are getting into. I would agree that we need to not over-complicate things and need to monitor the situation so we don’t end up with a 100-page document. LM: Some lenders have seen this document and complained about all the questions, but I think this is such a positive move for the industry. We needed to lift our profession from where it was sitting up into a professional opportunity for people to practise within it and enter it. When I hear the feedback about all the questions, I just wonder that if people haven’t been asking these questions in the past, what have they been doing? A tick and flick situation in a 20-minute interview? This is going to lift mortgages into an area where it is a wealth creation tool, and it is a tool for people to move onto that next aspect of their investment strategy – it allows talk about more than just the home loan. SD: It further enhances the industry and the MFAA-approved broker campaign just strengthens that message. SK: We in the mortgage fraternity, particularly the third party and broking sector, need to realise that licensing is not about regulating brokers – it’s about protecting consumers at the margins dealing with brokers who aren’t doing the right thing, who shouldn’t really be in the industry. LM: Isn’t it about change as well? Don’t we think that maybe there will be greater retention because

“ We had 23 meetings and in each of them the Australian bubble theory was discussed, as was whether property was over-inflated or not. The answer is that it’s not ”

PANEL DISCUSSION

EXPERT OPINION

we are investing more time in them and how they repay? I think a really positive part of legislation will be enhanced retention and postsettlement communication. JA: Good brokers will have been doing all these things already and legislation won’t change that; it’s the fringe brokers who need to be removed. One part I find curious is that I would have thought brokers would have to be licensed individually rather than as a credit representative of another organisation. I would have thought that if ASIC is a regulatory body protecting the consumer it should be licensing brokers individually for their own business and that for brokers, being independent is the way to go. If the initial intention of legislation was to do that, has it been watered down if that doesn’t happen? SK: It’s an interesting point. I was fortunate enough to attend some briefings in the UK last year and they’ve had regulation for a number of years now. They found the vast majority of brokers got their own licence to start with, but found over time that the real benefit of having your own licence was lost in terms of the time consumed and the ability to actually do it from a risk management perspective. They needed assistance along the way. The market in Australia is probably equally divided and over time it will change because the regulatory environment and the risk management side of things is not intrinsic to each individual business, there is a lot of standard procedure that brokers will not enjoy doing. There are two sides to the argument, but I don’t think there is any added value in having your own licence. LM: I agree. In terms of the credit representative agreement we have, there will be requirements

they will have to honour and commit to in line with the requirements. It gives organisations such as Resi more control over the system and there are certain requirements they have to meet already, most of which are covered in our franchise agreement anyway. Some of the requirements are onerous and we want our guys out there selling home loans and getting referrals, rather than loading them up with licensing requirements. SD: You have to ask what having an individual licence brings to you that being a credit representative doesn’t. What are you measuring; is it the value of your business? Is having your own licence going to increase its value? JA: But isn’t it about independence and competition? I can see the benefit of more control for organisations, but surely having a licence is about competition and should be for those who are managing their own business to maintain independence. I think there is a degree of scaremongering over how much time legislation will actually take up. SD: There is still a lot of competition between aggregators, so I’m sure if brokers have a good business plan, a good retention strategy and service focus, Resi, Fast, Choice, Loankit and whoever will be more than happy to talk to these people, licensed or credit representative. It’s all about the person and due diligence to the customer. Having your own licence is irrelevant – you still have to abide by the rules. JA: Good brokers are doing the right thing anyway; legislation isn’t going to change those behaviours. SD: Are smaller brokers going to want to adhere to annual requirements and all the administration and auditing side of things instead of focusing on their business?

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LM: As a franchisor, that’s what we’re trying to provide – not only support on a daily basis, but also supporting licensing requirements so they have the opportunity to do what they are best at – selling home loans and growing their business. BM: What role do industry bodies have to play going forward? JA: I think there’s a need for a body to lobby on all aspects of our industry, whether that be dealing with issues internally, dealing with government or with regulators. I think the comments suggesting that with ASIC as regulator there’s no need for an industry body are nonsense. You need an industry group to promote industry concepts. SK: I have to declare my hand because I sit on the board of the MFAA. It’s about making sure there is a representative body of brokers and the MFAA has now moved away from the quasi-policeman role and become a real body representing the industry to regulators. It’s also about setting the bar and making sure the industry continues to develop and drive the value of the businesses and drive entry into the industry. If you look at the demographic of the broking fraternity, someone needs to replace them when they retire and we need to make the mortgage industry attractive to university graduates and people working in other sectors. LM: The MFAA has done an excellent job in the lobbying process on behalf of mortgage managers and that’s been really important in terms of some of the areas ASIC and the Treasury have been grey on with regards to how we do business. The MFAA and Jon Denovan in particular have done a great job in lobbying the needs of mortgage managers and the issues around that. An industry body should represent everyone and also play a part in education. We don’t want broking or lending to be a fall-back profession; it should be something people aspire to. SD: If you look at the financial planning industry, they have industry bodies that represent them and that is a key role. ASIC is not going to be out there promoting you as a profession, so we need an industry body like the MFAA to do that. The approved broker campaign is a good start and education is essential to keep new blood coming into the industry over the next 10 years. BM: The lobbying role is important, as we’ve already seen the MFAA seek clarification from

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ASIC on volume hurdles. How will they fare under licensing; will they still exist? JA: Volume hurdles will remain regardless of licensing issues, but they are another hurdle that prevents competition and markets should be free and open. SD: Having worked for a lender and trained brokers, I understand they are trying to ensure that brokers have a full understanding when representing their product. If brokers are not doing some deals with a particular lender, it is difficult to maintain that knowledge. I’m not against such targets, we just need to ensure the reaccreditation process is easy and maybe there shouldn’t be a cost. You may not use a lender because they don’t have the products you are looking for. SK: We have a situation where there is a goal to maintain professionalism and knowledge. NCCP is about protecting consumers and ensuring brokers know the products, policies and procedures of each particular lender. That’s the rationale and I support it and we don’t want brokers to not understand what they are doing. However, the methodology over time has been smashing a walnut with a sledgehammer. Ongoing training is essential and if there is a cost then that should be passed on. The intent of volume hurdles is right, it is the methodology that has created problems. LM: I’m probably a little different from everyone else around the table. I understand it is a commercial right of any lender to choose to put volume hurdles in place and to deal with less brokers. Do I think it will improve the quality of

“ I think the comments suggesting that with ASIC as regulator there’s no need for an industry body are nonsense. You need an industry group to promote industry concepts ”

PANEL DISCUSSION

EXPERT OPINION

submissions? If that is the case, why are there not quality assurances on all lenders and not just the Big Four? SK: I think your view is consistent with what we’re saying. The reality is contractual or commercial obligations between brokers, lenders, aggregators or whoever will be determined on commercial terms and that’s the bottom line. JA: It’s worth bearing in mind that volume hurdles were not heard of when non-banks were providing competition, they only emerged when the Big Four gobbled up the competition. BM: Do you think the Big Four monopoly will be broken any time soon? Will we see non-banks and second-tier lenders coming back into the equation? JA: The Big Four have a solid franchise in the mortgage industry and I don’t think anyone could suggest otherwise. Second-tier lenders need to operate in niche markets so they can provide alternative products and service offerings to the Big Four and that will certainly improve. I don’t think it’s about the demise of the Big Four, it’s more

about having an alternative service and product offering so you can provide competition. LM: It’s a well-known fact that the Big Four supply a lot of funds directly and indirectly to the non-bank sector and we are enjoying on-balance sheet funding from the Big Four to help us to continue to be profitable. There are other opportunities for non-banks to obtain funds, but we are enjoying it in terms of how the consumer looks at how they obtain their finance. There is still appetite as the GFC influence peters out of consumers looking for the personal proposition provided by the non-banks. Even if we are funded by the Big Four, we provide that personal service. SD: That’s where product development will come in, it’s about second-tier lenders doing something different. LM: When we see the securitisation appetite coming back in the Australian mortgage market, we are not going to see the pricing of pre-GFC, but it will certainly be better than we’ve seen. We can’t ignore possible overseas influences in terms of banks looking to come in too.

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SK: The differentiation in the customer experience is the key thing. Initially non-bank lending started on a price point, but that petered out and it came to be about service. Whether that’s around different credit policies, a better approach to customers or how they interact with their distribution mechanism, be that brokers, franchises or otherwise, development of that has gone too far to go away. The oxygen for that to improve rapidly is competitive funding. Mortgage broking has been well supported by the major banks, particularly where they are supplying funding for non-bank badged products, which has allowed brokers to thrive. Another thing that is important to recognise is that 60% to 80% of new-to-bank Big Four customers come through brokers and 40% to 44% of all mortgages come through this channel so it is a very viable and vibrant part of bank operations. They need and want to support it and it is still a very symbiotic relationship, albeit if whoever has the gold makes the rules. GFC funding problems have created a playing field where the big banks dominate. SD: That’s where the industry needs to evolve. We’re supplying a large part of their distribution and the banks are now starting to capitalise on the additional cross sells and revenue offered by commercial loans and insurance and that’s where the industry needs to evolve to make sure we have identified all the customer’s needs before they walk out the door. SK: It’s changed from a transactional business that the smaller brokers at the fringes use, to it now being an advice model where brokers are becoming the trusted advisor, not just sorting the mortgage at that point in time. BM: Similar to the controversy around volume hurdles, exit fees have also been a bone of contention recently. Where do we all stand on exit fees? LM: They have been a contentious issue; it’s interesting to see that the movement has been around the banks and the switching side of things. Every time we see movement to change some policy, sometimes it flies in the face of competition. In terms of how we recoup any upfronts that have been paid, rather than taking profit from that situation, it’s important that it’s a level playing field out there and we do see a change in how exit fees are treated. There’s a lot of work going on behind scenes by a lot of lenders to ensure there

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are changes to that and I think the consumer is going to be the real winner with regards to how this ends up. JA: I think the consumer could be the loser. The risk with exit fees is that the actions of a few cost the many. Exit fees mean interest rates are invariably low and the cost is not incurred by the consumer unless they leave within a certain period. If borrowers want development finance because they are churning their loans all the time, get development finance and pay the interest rate for it. If exit fees are removed, the cost will be borne by many. What’s largely missed in this debate is the action of a few lenders who we know well who have increased their rates dramatically or not passed on reductions; they now have extremely wide margins and they are not waiving exit fees to let borrowers go because of their own funding problems. LM: What about the really high exit fees whereby the rate is reduced, but the exit fee is high? Where products are loaded at the back end? JA: If a consumer takes on a loan where they receive a low rate because the costs have been built into the exit fee, then they should stay in for that time. I’ve had my mortgage for eight years and I don’t shop mine around. If borrowers want to churn, there is a cost for that and they can’t expect to get the lowest rate if they keep moving. Those few people have everyone pay for it with higher rates. SD: At the end of the day, the cost has to be passed on somewhere, whether it’s in the rate or the application fee. I think the majority of lenders are reasonable with exit fees. LM: It is interesting when you look at borrowers leaving institutions, as a high percentage do pay an exit fee to leave and you have to wonder why. How is it sold to them that the payment of that fee is going to end up to their benefit? SK: I think the problem is how the exit fee is calculated. If it can be justified in the overall pricing strategy and the customer is fully aware of it, there is a viability to it. There would be unintended consequences if we were to go to the extreme and abolish them. It would force rates up. In terms of the competition it has brought to the market, it has been a good tool. There have been some bad examples post-GFC, where consumers have been hurt by excessive fees and not by fringe institutions either. There needs to be a balance. MPA

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MPA LENDER NEWS

CONTENTS 58 NEWS: A REVIEW OF NEWS IN THE WORLD OF NON-BANK LENDING AND MORTGAGE MANAGEMENT 60 IN PROFILE: BIBBY FINANCIAL SERVICES

Heritage makes channel comeback Heritage Building Society will ramp distribution through the broking channel back up to 50% of all originations, following a sharp reduction in brokersourced loans down to 40% during the GFC. The mutual’s chief executive John Minz revealed the group had reintroduced its standard variable rate and professional pack products to its preferred broker distributors in July, as part of a renewed push. “We’re budgeting for an increase of what comes out of the [third-party] channel,” Minz said. During the GFC, Heritage culled the number of broker partners through which it distributed its loans back to “those that gave us more significant support. Really, we kept the majority by value and by number of our brokers, so this was a tinkering around the edges of our business model,” Minz said. However, Minz has flagged the possibility Heritage could again expand distribution through additional broking groups, a decision that would be based on continued economic and market improvements. “There was a business decision behind the partners who were retained and those who were culled, and at some point if we have to revisit who those set of parties are then we will, and [they] will look at that at the time based on what the potential benefits are,” he said. The group is confident it has the support of the third party channel despite the cutbacks, having taken a “relationships-based approach” to handling the move and not “throwing the channel away”.

CBA profit sparks mixed response CBA’s end of financial year profits have been labelled a ‘double-edged sword’ by the FBAA. CBA announced full-year after-tax profits of $5.7bn – a 20% increase on the previous year and a record for an Aussie bank. The announcement has drawn criticism, with a number of commentators accusing it of excessive profiteering. FBAA president Peter White said the bank was in a ‘catch-22 situation’. “We have to have a healthy banking sector, and we need our banks to be profitable,” he said. “The announcements we’ve seen from banks all week certainly show that Australian banks are healthy. However, I’m not surprised people have criticised [CBA]: coming out of the GFC and posting a 42% increase in cash profits while many people are still hurting is going to provoke anger.” The bank saw growth across the board. Average home loan volume growth was 18%, which the bank said was driven by “competitive customer interest rates and strong growth in the first homebuyer market”. CBA chief executive Ralph Norris attributed the record profits to the bank’s “unrelenting focus over the last four years on our customers and our people”. He warned that underlying business activity will likely be softer than anticipated in the next six months, due to lower business and consumer confidence in the face of economic volatility in Europe and the US.

NAB and Westpac to help homeless women NAB and Westpac have joined forces with The Big Issue in a bid to help disadvantaged women secure employment and training opportunities. By becoming foundation subscribers to the Women’s Subscription Enterprise, NAB and Westpac have pledged their support for homeless and disadvantaged women across Australia. Rowan Arndt, head of inclusion and diversity for NAB’s Business Bank, said its subscriptions would allow business banking employees throughout Australia to learn more about homelessness and enable them to raise awareness of these issues with customers. The Women’s Subscription Enterprise uses a model selling subscriptions to The Big Issue magazine to offer paid employment, training and pathways opportunities to homeless and disadvantaged women.

$5.7bn 58

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The record after-tax profit reported by Commonwealth Bank

COLUMN LMI

New confidence index a window on homebuyer sentiment In order to better understand the Australian borrower, Genworth Financial has launched its Homebuyer Confidence Index to see what drives homebuyer confidence and what is affecting their property purchasing decisions. Paul Caputo explains Paul Caputo, acting CEO, Genworth Financial

s Australia’s largest lenders mortgage insurer, Genworth Financial (Genworth) is committed to providing the market with valuable insights into the attitudes and sentiment of homebuyers and would-be borrowers. This is why we’ve launched the Genworth Homebuyer Confidence Index (GHCI) and the report, Streets Ahead – to gain greater insights into what factors are driving homebuyer confidence in Australia and what is enabling – and hindering – their decisions to purchase property. The residential property market is one of the key drivers of the Australian economy and, unlike many other countries, our residential property market held its own during the global financial crisis. Indeed, results from the GHCI show homebuyer confidence is back to pre-GFC levels. But while confidence is up, cautious optimism should prevail, with a number of signals suggesting confidence is on a delicate balance. The bi-annual index is based on five years of consumer attitudinal data collected by Genworth and examines respondents’ ability to service debt, past and future ability to repay home loans, levels of comfort with LVRs and whether or not respondents believe it’s a good time to buy a property.

Results from the inaugural GHCI show rising employment was the primary driver behind strong levels of confidence, with the index reaching 99.1 in 2010 – a slight decrease from 99.5 in 2009 but well above 2008 levels of 92.4. Factors such as higher levels of employment, lower interest rates and government stimulus made it easier for homebuyers to meet their mortgage payments over the past year, with 49% of respondents over-paying their mortgage – up from 41% in 2009. While most borrowers have comfortably met their mortgage obligations, rising interest rates and higher costs of living are expected to impact on confidence in the future. Indeed, the GHCI shows the proportion of respondents who expect to experience repayment difficulties in the next 12 months has jumped from 15% to 20% over the past year. Of these, the amount citing rising interest rates and rising cost of living rose to 61%. Meanwhile, the rental trap is set to return for many would-be homebuyers who are renting and finding rent rises, coupled with increasing cost of living expenses, are hindering their efforts to save for a deposit. In fact, the survey results indicate that saving for a home is harder than it was before the GFC. Just 25% thought it was a good time to buy a house in 2010, a sharp plunge from the 50% in 2009. The next edition of Streets Ahead and the GHCI will be released in March 2011 and it will be interesting to see any changes to homebuyer confidence, once we have more clarity around the future direction of interest rates. For brokers and lenders, new borrowers will need your help to negotiate their entry into what is likely to be the largest, most important purchase of their life to date. This will inevitably include the vital role of lenders mortgage insurance in their purchase. For a copy of Streets Ahead visit the website www.genworth.com.au Paul Caputo is acting CEO of Genworth Financial BROKERNEWS.COM.AU

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“ I thought there was a fair chance a company such as Bibby [in the UK] would be looking to cast its net a bit wider ”

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Game,

As the need to diversify increases, sectors previously unfamiliar to brokers such as debtor finance have started to register on their radars. Barney McCarthy sits down with the chief executive of one such company, Greg Charlwood of Bibby Financial Services

debt and match A

lthough Australia escaped the worst of the GFC, there is no doubt that mortgage brokers have felt the strain over the last couple of years. The days of introducers sitting back and waiting for a steady stream of first homebuyers to keep their margins healthy are long gone, as potential borrowers struggle to accumulate a deposit. While property investors have handily plugged that demand gap, savvy brokers are realising that while home loan business can still provide their staple income, they need to start looking elsewhere to ensure they are sustaining their income at the level they are accustomed to. Insurance products have long been a complementary sell during the mortgage process, but as the role of the introducer morphs into that

of a more all-encompassing advisor as licensing comes into effect, the opportunity is there for brokers to meet more of their customers’ needs. One such avenue that brokers can explore is debtor finance, particularly if their clients are small business owners. There are various methods of this, including factoring and invoice discounting, but the principle is the same – helping ease cash flow problems for small and medium-sized businesses by effectively providing them with a cash advance based on orders received. When companies send an invoice to a client, Bibby Financial Services will pay the company 80% upfront and then the remainder, minus any fees, when the debtor settles the balance, making it a convenient solution for start-up businesses or

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five years with ORIX, Charlwood began to explore the possibility that some of the English banks and financial institutions would want to expand into the Australian market. “Factoring is quite a mature product in the UK,” explains Charlwood. “I thought there was a fair chance a company such as Bibby would be looking to cast its net a bit wider.” He effectively tendered the Asia-Pacific expansion idea to the group and was convincing enough in his pitch that he was given the remit to grow its business in the Australian market.

those who don’t have large amounts of capital. Bibby Financial Services is a major player in this arena and has experienced a 12% increase in referrals from finance brokers in the past year. Its BDMs provide free training seminars and reference materials to finance professionals looking to develop their understanding of debtor finance. History lesson Bibby Financial Services has existed for the best part of 25 years now, but has only been operational in Australia since 2002. It is a wholly-owned subsidiary of Bibby Line Group, a UK-based company that has been trading for over 200 years and has its roots in shipping and marine services. The group now also offers logistics, retailing and offshore services and has operations in Poland, France, Germany, the Czech Republic, Slovakia, the US, Canada and India, in addition to its UK and Australian arms. Greg Charlwood, chief executive of Bibby Financial Services – Asia Pacific, was instrumental in helping the global group establish its factoring division on these shores. Having worked in factoring for Mercantile Credit in the 1980s, Charlwood was headhunted by ORIX Corporation, a company specialising in finance for ships and planes. He was general manager of its cash-flow finance division and his factoring experience again came to the fore. After spending

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Going for broker Charlwood acknowledges that debtor finance is unlikely to become “bread and butter” for mortgage brokers and is more likely to be a case of the odd referral, but is wise to the fact intermediaries are on the look-out for further income streams. “Astute brokers will realise when a borrower runs their own business and this can lead to a scenario where cash flow needs are discussed,” he says. “Instead of small business owners having to re-mortgage their house or use it as collateral for the company, debtor finance can provide an easier solution.” Not requiring real estate security makes debtor finance attractive to small business owners not wanting to risk their family home against their business. While diversification remains optional for mortgage brokers, Charlwood told our sister website Broker News in a recent multimedia interview (see right, MPA 2.0) that saturation of the mortgage broking market may soon leave brokers with little choice but to seek alternative revenue streams. Conversely, he claims there are only two or three dedicated debtor finance brokers in Australia, despite the sector growing at the astonishing rate of 25% pa. Tighter bank credit for smaller businesses has made debtor finance one of the most convenient and accessible forms of finance available to them and the credit crunch has actually allowed the sector to flourish and become a more mainstream option. If mortgage brokers still aren’t convinced about debtor finance, Charlwood’s mention of healthy upfront fees and ongoing trail commissions is bound to make people sit up and listen. There is no harm in brokers considering debtor finance as another string to their bow. Standing still in any business is as bad as moving backwards, so you owe it to yourself and your bottom line to consider all possible income streams. MPA

“ Instead of small business owners having to re-mortgage their house … debtor finance can provide an easier solution ”

MPA 2.0 Want more information on debtor finance? You can watch Greg Charlwood discuss the benefits in a video interview on the Broker News website. As well as the opportunities afforded by the sector, Charlwood also discusses the outlook for factoring, how it has fared over the past 12 months and why the GFC has actually been a positive development for debtor financiers.

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LIFESTYLE FAVOURITES

BOOK 'My Life' by Bart Cummings. It was given to me by one of our great brokers, Katrina Rowlands. She had Bart sign it and it was a fantastic read. He has had more ups and downs than any broker I know

VACATION SPOT We took the family to Trinity Beach last year and it was the best family holiday ever. We stayed in a house right on the beach, the kids loved it

PLACE TO BE With all the travel I do as part of my role, my favourite place to be is at home with my family

Steven Heavey + general manager, intermediary distribution + St.George

Favourite things

Steven Heavey

HOBBY Given I hail from Orange in NSW, my family has always been into breeding racehorses. I currently have a few brood mares which I breed from and retain a few which I race with friends. Willow Park Stud is owned by members of my family

FOOD Eye fillet medium rare with chilli sauce at the Breakfast Creek Hotel in Brisbane. Beautiful!

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MUSIC I am not ashamed to admit it but I have dusted off a few of The Eagles CDs recently in anticipation of their visit in December

DRINK I can’t look past a Coonawarra shiraz or cabernet sauvignon

SPORT I love golf and football. I’m still struggling to come to terms with the Melbourne Storm debacle.

CELEBRITY Apart from rubbing shoulders with the likes of Kevin Matthews, James Symond, Mark Haron and Michael Russell, I live a pretty sheltered life

MOVIE I don’t get to see a lot of movies given we have a tribe of kids, but my wife and I are going to see 'Inception' soon, which is supposed to be pretty good