MPAMAGAZINE.COM.AU ISSUE 20.10
BROKERS ON NON-BANKS 2020 A new lender impresses brokers and takes the gold medal position FIRST HOME BUYERS How new buyers have been faring during a tumultuous year
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SPOTLIGHT ON SPECIALIST Females making their mark at an independent aggregator
AUSTRALIA IN RECESSION What we can expect to see in the mortgage market
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OCTOBER 2020
CONNECT WITH US
CONTENTS
Got a story or suggestion, or just want to find out some more information? twitter.com/MPA_Australia facebook.com/Mortgage ProfessionalAU
UPFRONT 02 Editorial
The shifting needs of brokers
04 Statistics
14
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Borrowers cautious and confused due to COVID-19
FIRST HOME BUYERS
08 Opinion
FEATURES
Industry players weigh in on how this sector is performing
Find out what the industry had to say about which non-banks have been performing best
Liberty’s group sales manager chats with MPA about how the non-bank has supported brokers this year
10
The importance of brokers
FEATURES How leading a team can be like raising kids
BROKERS ON NON-BANKS
JOHN MOHNACHEFF
Looking to the future as Australia enters a recession
44 Leadership
SPECIAL REPORT
BIG INTERVIEW
06 News analysis
PEOPLE
36
FEATURES
46 Brokerage insight
Serendipity led this broker down a path into the industry
48 Other life
The broker who relaxes at 200km/h
SPECIALIST FINANCE GROUP
A Q&A with the aggregator’s newest female recruits
40 FEATURES
GENWORTH RESEARCH
Drilling down into what first home buyers are looking for
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UPFRONT
EDITOR’S LETTER www.mpamagazine.com.au
Shifting needs of brokers
B
OCTOBER 2020 EDITORIAL
SALES & MARKETING
Editor Rebecca Pike
National Sales Manager Claire Tan
Journalist Kate McIntyre
Global Head of Communications Adrijana Monevska
eyond the magazine, October is a big month here at MPA. We have already held the 2020 Major Banks Roundtable, which of course had to be virtual this year; we’re hosting another virtual roundtable with the non-banks at the end of this month, and who could forget the Australian Mortgage Awards
Contributors Wendy Born, Aaron Milburn
on 16 October? We’re also working our way through the submissions for the Top 100 Brokers and can’t wait to share those results with you in December! But sticking to this month’s magazine for the moment, the results of the Brokers on Non-Banks survey are in. In a year that has thrown everything we thought we knew up in the air, it’s no surprise that these results show a big change in what brokers are looking for. In particular, BDM support from the non-bank lenders rose through the ranks from lowest priority for brokers last year to joint second in 2020. With the changing situations of Australian borrowers and the varying appetites of non-banks as they face challenges of their own, brokers are relying on BDMs more than ever.
Designer Cess Rodriguez
BDM support from the non-bank lenders rose through the ranks from lowest priority for brokers last year to joint second this year Take a look at the full Brokers on Non-Banks survey results (from page 14) to see which non-banks scored best in categories like turnaround times, interest rates and online platforms. As we celebrate a new gold medal winner this year, you can also read about how the top non-bank has been putting brokers front of mind and why it has done so well in 2020. Our Big Interview in this issue is with Liberty’s John Mohnacheff, who talks about the year the industry has had and explains how the lender is working with brokers as the challenges continue. We also have a special feature on first home buyers in which several groups discuss a segment of the market that has been particularly interesting this year: some FHBs are even resorting to early withdrawal of their superannuation funds, alongside support from the government schemes, to buy their first home. But what have the lenders been experiencing in this sector? Read on for all this and more! Rebecca Pike, editor, MPA
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Production Editor Roslyn Meredith
ART & PRODUCTION
Traffic Coordinator Kristine Jamir
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley Managing Director Justin Kennedy Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
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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 the magazine can accept no responsibility for loss.
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The SFG service has gone above and beyond – like nothing I have ever experienced before in my 10 year career. Deanna Ezzy MORE THAN MORTGAGES
1300 303 382 specialistfinancegroup.com.au Australian Credit Licence No. 387025
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UPFRONT
STATISTICS
Aussies want guidance
HIGH HOPES FOR PROPERTY Eighty-six per cent of Australians believe the rest of 2020 will bring housing opportunities. Compared to the start of the year, more Australians expect to see lower interest rates, better availability of properties and cheaper renovation costs.
As borrowers lose confidence and put their plans on hold, brokers can use this opportunity to help them CONFIDENCE IN the property market dropped from 76% at the start of 2020 to just 46% in June, according to a research report from Aussie Home Loans. More than six in 10 Australians surveyed said the COVID-19 pandemic had resulted in changes to their property plans, including a third who said they had had to delay their plans for buying a property. There is some good news for brokers, though: 42% of respondents said they wanted to take advantage of the market but didn’t know how. This led to more than half of them
35%
of Aussies with a housing priority have delayed their property plans
26%
have accelerated their housing plans
wanting more guidance when it came to property and finances and over a third saying they would be more likely to engage a broker to help them. “During what has been a challenging time for many Australians, including a change in personal circumstances or financial outlook for some, brokers have an important role to play in helping Australians understand their current options, cutting through the uncertainty and helping them make smart choices to keep their property goals on track,” said Aussie CEO James Symond.
60%
42%
are confident in the property market
intend to use a broker to help them reach their property goals Source: Aussie Home Loans COVID-19 Property Impact Report
SEEKING A HELPING HAND
Just over half of Australians wanted more guidance on finance, and 42% wanted help with a mortgage, whether they were looking to change interest rates or refinance. Areas of finance Australians would like help with
21%
Expert information around my personal finances
18%
Expert assurance that I’m doing the right thing
17%
Saving for a home loan deposit
16%
Adjusting my mortgage (eg changing interest rates)
14%
Refinancing a home loan
12%
None of the above
1% 46% Source: Aussie Home Loans COVID-19 Property Impact Report
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While more than half of Australians think that now is a good time to buy property, three quarters believe building up enough savings to do so will be a challenge. Strongly agree
Maximising investments
Other
A CHALLENGE TO SAVE
Agree
23%
Disagree
Strongly disagree
51%
20%
Total agree
7%
74%
10%
70%
10%
56%
Building enough savings will be a challenge to buying a new property
24%
47%
20%
Job security will be a challenge to buying a new property
11%
46%
34%
I think this is a good time to buy a property
12%
34%
40%
14%
46%
I am generally not confident about my finances Source: Aussie Home Loans COVID-19 Property Impact Report
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AUSSIES SEE OPPORTUNITIES AHEAD IN 2020 HOUSING MARKET Better/lower interest rates
34% 24%
Property availability
26% 18%
Cheaper renovation costs
17% 8%
More sustainable housing
13%
Better properties A focus on environmentally friendly options
13% 13%
20%
11% 21% 11%
Less need for large spaces
15% 10%
A property market boom
13%
Cheaper interior design options
8%
A chance to build my own home
8% 8%
10%
More income that I can invest into property Other
7% 16% 1% 1% 22%
Don’t know/not sure
23% 14%
None of the above
12%
June 2020
January 2020
Source: Aussie Home Loans COVID-19 Property Impact Report
PLANS OUT THE WINDOW
Three in five Australians have had to give up on their short-term property plans because of COVID-19, and there is widespread nervousness about achieving property goals. Agree
59%
Disagree
41%
I’ve had to abandon some short-term plans because of COVID-19
Half of Australians surveyed feel more confused about buying a new property thanks to the pandemic, but 42% want to take advantage of the current market. Strongly agree
Agree
21%
58%
42%
My property plans feel more difficult to achieve because of COVID-19
56%
44%
I feel nervous about investing in property at the moment
Disagree
Strongly disagree
47%
Total agree
26%
6%
68%
28%
7%
65%
I’m nervous about spending money on my property plans
18%
47%
COVID-19 has made me more uncertain of how to achieve my property plans
56%
44%
The property market feels more confusing now than before COVID-19
45%
55%
I feel less sure of whether to go through with my property plans because of COVID-19
26%
DOUBT AND CONFUSION
74%
I have more money to put down on a property since pre-COVID-19 restrictions Source: Aussie Home Loans COVID-19 Property Impact Report
13%
41%
35%
11%
54%
Buying a new property feels more confusing because of COVID-19
10%
32%
42%
16%
42%
I want to take advantage of the current property market conditions, but I don’t know how Source: Aussie Home Loans COVID-19 Property Impact Report
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UPFRONT
NEWS ANALYSIS
In the face of a recession Australia has entered a recession for the first time in 30 years, but what does this mean for the mortgage industry moving forward? AFTER A difficult year in which businesses have been forced to close and Australians encouraged to stay inside, it’s no surprise that Australia’s GDP has suffered. At the start of September, figures from the ABS confirmed that GDP had dropped consecutively for two quarters, putting the country into a recession. The three months to June saw the largest quarterly fall since records began in 1959, with a 7% decrease in GDP. The biggest drop recorded before this was just 2% in 1974. This June quarter decline followed a 0.3% drop in the March quarter, when the country first felt the impacts of travel and social restrictions. Spending on services declined 17.6%, with falls in transport services and operation of vehicles and hotels, cafes and restaurants. ABS head of national accounts Michael Smedes said, “The June quarter saw a significant contraction in household spending on services as households altered their behaviour and restrictions were put in place to contain the spread of the coronavirus.” On top of that, imports of services fell by more than 50% and exports declined by over 18%. While it was a positive that Australians spent less money and the household incometo-savings ratio rose to 19.8% from 6%, hours worked fell by a record 9.8%. True impact yet to be felt The last recession in Australia was in the early 1990s, when GDP fell by 1.7%. Back then, the unemployment rate increased to 10.8% after a 3.4% drop in employment. In comparison, the unemployment rate in July 2020 was
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7.5%, shrinking slightly to 6.8% in August. While GDP growth was somewhat affected during the GFC, Australia didn’t experience the recession seen in other parts of the world. Likewise, unemployment rose only slightly from 4.3% in mid-2007 to a high of 5.9% in May 2009 before dropping back down again. Other effects of the GFC were felt, however. S&P Global data shows that mortgage arrears peaked shortly after the GFC, with prime mortgage arrears rising to 1.69% and nonconforming arrears to 17.09%. This time around, arrears are expected to reach much higher levels, given higher unemployment rates and loss of income, said Erin
explained. “We think we’ll probably start to see that towards the end of this year and certainly more into Q1 next year, with the losses and so forth likely to come through or the more severe or advanced arrears likely
“Refinancing your home loan on to a lower rate, repayment buffers, all of these measures help to protect against debt serviceability pressures” Erin Kitson, S&P Global Kitson, director, structured finance, at S&P Global. While unemployment levels in June were still not as high as in the 1990s recession, she said the real figures were probably being masked by the JobKeeper stimulus. In fact, the government has acknowledged that the effective rate is 9.9%. The same can be said for mortgage arrears, which are currently being insulated by payment relief measures. “We can’t yet see the impact from a debt serviceability perspective of COVID,” Kitson
to surface as a result of COVID more towards the second half of next year.” Although some economists are forecasting a quick recovery for the economy, S&P Global’s RMBS Performance Watch suggests that the delayed real numbers for job losses and mortgage arrears will mean recovery may take longer than expected. But while this outlook is negative, Kitson said the measures that have been put in place should help borrowers. “Refinancing your home loan on to a lower rate, repayment buffers, all of these measures
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HOSPITALITY MOST AFFECTED BY COVID-19 Gross value added by industry – % change Q1 to Q2, 2020 Public administration Finance and insurance Education amd training Mining Utilities Agriculture Retail Wholesale trade Professional services GDP Health & social care Construction Info, media and telecommunications Manufacturing Rental and real estate Other services Admin services Transport Arts and recreation Hospitality -40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
Source: ABS, ANZ Research
help to protect against debt serviceability pressures in the coming months,” she said. “There’s still a lot more to be unveiled, particularly when the fiscal stimulus measures have tapered off and mortgage repayment
be prepared for economic contractions. “If you’ve got contractions in property prices, the more modest your loan-to-value ratio is, the more equity you have built up in your properties,” Kitson explained.
“The very heavy competition amongst lenders, especially in their fixed rate products, indicates that loan volumes will continue to grow” James Symond, Aussie Home Loans relief measures expire, but so far the household income with JobKeeper, access to Super and low interest rates have certainly helped households to manage their way through this.” There are other positives to note, too. Kitson pointed out that thanks to the increased regulatory push and guidelines around debt serviceability, the proportion of high-LVR loans is much smaller these days, as well as the number of low-doc loans written. This means the collateral is higher-quality and puts borrowers in a better position to
Looking to the future While the decline in GDP was expected – as were the industries most affected – ANZ economists said it was further confirmation that “the COVID-19 pandemic is the largest shock to Australia’s economy since WWII”. As the country looks to rebuild while still facing into the pandemic and the probability of continued repercussions, ANZ senior economist Felicity Emmett said, “Significant further stimulus over the next few years is likely be required to generate growth and
jobs and drive the unemployment rate down.” But not only has the income-to-savings rate grown during the pandemic but demand for new loans remains strong. ABS data shows that the value of home loan commitments rose by 8.9% in July as social distancing restrictions eased in most states and territories. First home buyers saw a particular boost, with a 14.4% rise in new commitments. Aussie Home Loans CEO James Symond said that while COVID had put many households under pressure to meet their mortgage repayments, some homebuyers were taking advantage of opportunities to get a better deal. “New home loan commitments are expected to continue in coming months, off the back of low interest rates, a variety of competitive deals and incentives from lenders, and the range of government initiatives and schemes now available to support first home buyers in particular,” Symond said. “The very heavy competition amongst lenders, especially in their fixed rate products, indicates that loan volumes will continue to grow despite the economic and social pressures being placed on us by the COVID-19 crisis.”
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UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email rebecca.pike@keymedia.com
The importance of brokers As brokers continue to show how vital they are to borrowers, Pepper Money’s Aaron Milburn explains how the non-bank celebrates and supports them
IT IS doubtful there’s ever been a time when brokers have been more important to the financial landscape of home lending in Australia, and for that they deserve to be congratulated. Not only do we live in uncertain and changing times, but also in an age in which consumers are hungrier than ever for information before making key decisions. When there’s uncertainty in markets and economic environments, trust in the person they are dealing with becomes the key attribute people look for in order to be comfortable about their decision-making. It’s no secret that the key reason the broker market share of Australian home loans has continued to increase over time is anchored to trust. What a broker provides is not only a solution; in fact, the solution is simply the outcome. When a customer chooses to use a broker, they are seeking surety; they come seeking comfort that the decision they are making is the right one. Over time they come to trust that the person who is supporting and assisting them in getting the right loan will deliver. It is well known that trust in the banking sector has waned, yet trust in brokers and the value they deliver has increased – such is the importance of brokers. So, let’s unpack trust. What does trust mean? Well, the dictionary definition of trust is firm belief in the reliability, truth or ability of someone or something.
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To me, that encapsulates precisely what a broker offers a client. They act as a sounding board; they offer the customer hope in the form of a way forward; they
Selector. All of our television and radio advertisements finish by asking people to contact their local broker. We did that because brokers are an important part of Pepper – they are like family to us. In March 2020, at the onset of the pandemic, we were the first lender across Australia and New Zealand to protect broker trail, setting the standard for the rest of the industry to follow. That was a simple decision for us. We knew they would be busy helping their customers – to refinance, rebuild or recover. We wanted to show brokers how important they were to us and repay the loyalty and commitment they have shown to us over the years. Brokers around the country deserve to be recognised for the vital role they play in the mortgage industry, which is more important than ever in 2020. They help lenders increase their customer footprint and give
It is well known that trust in the banking sector has waned, yet trust in brokers and the value they deliver has increased – such is the importance of brokers suggest lending options based on their unique circumstances and keep them updated about the loan process through to completion. It’s no wonder long-term relationships are formed. Brokers are not just important to customers. The value of brokers in the lending landscape and to lenders themselves is immense. Take Pepper, for example. Over 90% of our lending is done through mortgage brokers. It is indeed no secret that if we did not have mortgage brokers we would not be Australia’s number-one non-bank – a title we enjoy today. We have made a deliberate 20-year investment in the broker industry, providing education on key industry issues, offering marketing toolkits and industry insights that help brokers diversify their customer base, and releasing innovative online tools such as the Pepper Product
their customers confidence in the lender they are recommending. They also help build brands and networks across Australia – this is an activity that’s often unseen. It has been said that lenders only consider the broker relationship to be a transactional one. At Pepper we don’t believe that for a second. To us, it is a relationship that is ingrained in the very fabric of our organisation, and is why we absolutely believe in the importance of brokers.
Aaron Milburn is the general manager of mortgages and commercial lending at Pepper, as well as the country head in New Zealand. He has more than 18 years’ experience in the industry.
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PEOPLE
BIG INTERVIEW
JOHN MOHNACHEFF: CHAMPIONING BROKERS’ VALUE For more than 20 years Liberty’s group sales manager has watched the non-bank grow and evolve, all the while backing brokers and helping borrowers ‘get financial’ – and this year that has been more important than ever
AFTER STARTING his working life as a cabinetmaker, John Mohnacheff spent two years travelling abroad before deciding to switch career paths and enter the finance industry. He quickly realised that sales was his strongest suit – and “the rest is history”.
I am immensely proud of the relationships and reputation that Liberty has forged along the way,” the father of four says. As group sales manager, Mohnacheff has been given the opportunity to help shape the future direction of the business and pursue
“I have witnessed the company become ... a true leader in non-bank lending. And I am immensely proud of the relationships and reputation that Liberty has forged” Now, after more than 20 years rising up through the ranks at non-bank Liberty, Mohnacheff remains proud to be part of a business that is willing to “look beneath the surface” of a customer’s situation. “I have witnessed the company evolve and become a champion of diversification and a true leader in non-bank lending. And
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Liberty’s mission of helping more people ‘get financial’. He provides guidance to “the largest fleet of BDMs of any non-bank lender”, a team who he says continually inspire him with their dedication and commitment to helping brokers achieve the best customer outcomes. As a non-bank that has always championed
the third party distribution model, Liberty’s relationships with brokers have been “paramount” to its continued growth and success, Mohnacheff says. Looking back over his long career in finance to date, Mohnacheff says he has learnt some important lessons along the way. There are three standouts, and he believes these have been more relevant this year than ever before. The first is that “you will never reach your full potential on your own”, as he knows the importance of a dedicated and like-minded team. He has also found that a lot can be gained from listening to and learning from the best in the field. “We can learn so much from those around us, but it is important to first seek to understand – and then seek to be understood,” Mohnacheff explains. Finally, he says he has learnt the value of being proactive and making things happen for yourself, particularly in such a competitive industry.
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PROFILE Name: John Mohnacheff Title: Group sales manager Company: Liberty Years in the industry: 30+ Career highlight: “To have been afforded the marvellous opportunity to meet and work with so many talented people who have helped, supported and encouraged me.” Career lowlight: “There have been a few career lowlights, but to me, it’s how you deal with it that matters. Life has a way of throwing you curveballs when you least expect it, but it’s how you handle it that really counts.”
www.mpamagazine.com.au
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ts to ments
PEOPLE
BIG INTERVIEW
Keeping brokers front of mind Brokers have faced additional challenges in 2020, and while Mohnacheff knows that what the industry has experienced is unprecedented, he says the core values of being a successful broker remain the same. “As always, providing a personalised service is essential,” he says. “With many of us working from home, there is an increased reliance on technology – and it’s easy to lose sight of the importance of soft skills and how you engage with customers. However, there is simply no substitute for thoughtful, caring and tailored service.” With brokers front of mind, Liberty has worked hard to continue its support of the industry this year. In fact, brokers have recognised this, as evidenced by the results of the 2020 Brokers on Non-Banks survey. One area for which the lender was particularly praised was its turnaround times – the second most important priority for brokers this year. Mohnacheff acknowledges that the timing of a loan approval could potentially “make or break” a deal or jeopardise a deposit. Liberty has worked alongside brokers to ensure they have all the information they need to support an application and avoid unnecessary delays. With its BDMs there to discuss scenarios and its “market-leading” loan tracking web app, the non-bank is there from start to finish. Mohnacheff says that supporting brokers
with complex lending scenarios is nothing new for Liberty, so in the past year the non-bank has continued to do what it has always done: listen, analyse and innovate. “Thanks to our comprehensive and flexible product offering, we have been able to continue supporting brokers and customers with a range of lending solutions. And, recognising the need for more tailored options for businesses, we have quickly adapted,” he says, going on to explain two new products the group has rolled out.
The value proposition of brokers As Australia continues into the unknown as the coronavirus pandemic takes its course, Mohnacheff remains confident that brokers will continue to play a vital role in helping consumers. He says more borrowers than ever before now recognise the benefits of working with a broker, and there is greater awareness of the
“With many of us working from home, there is an increased reliance on technology ... However, there is simply no substitute for thoughtful, caring and tailored service” The Liberty Access and Liberty Mint products allow the lender to help brokers support their business customers with all kinds of lending needs, says Mohnacheff. “As well as this, we have continued to provide brokers direct access to our under writing teams for support with complex scenarios. This is something we consistently receive positive feedback for, and something that many other lenders are unable to offer. “We were also quick to integrate digital identity verification software into the loan application process to help brokers provide
ABOUT LIBERTY Liberty is a leading lender that offers free-thinking solutions at competitive prices to support customers by providing greater choice. With a wide range of loans for your home, car, business and personal needs, Liberty can help customers get financial even when others say it’s not possible. Its innovative and flexible approach has allowed Liberty to help over 500,000 customers by advancing more than $25bn in funds over 21 years. For more information, visit www.liberty.com.au.
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customers with a faster and more efficient service,” Mohnacheff says.
different services brokers can offer. “More than just home loans, brokers offer an extensive range of lending support tailored to the customer’s individual needs,” Mohnacheff says. “By getting to know the ins and outs of a customer’s current situation and future goals, brokers can work with lenders to find the perfect fit – and that’s where the magic happens. “This is a difficult time for many Australians, but having the right financial support to explore the options available can make a strong impact in both the long and short term.” For mortgage brokers who are still focused purely on home loans, Mohnacheff says now is the ideal time to diversify into other areas of lending and consider the benefits it could bring to their businesses. “By shifting away from the traditional mortgage broker role and building your brand as a trusted financial expert, there is no limit to what you can achieve,” Mohnacheff says.
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SPECIAL REPORT
BROKERS ON NON-BANKS AGGREGATORS
BROKERS ON NON-BANKS 2020 As brokers faced their own personal and professional challenges this year, MPA asked them how the non-banks were doing in areas like turnaround times, interest rates, BDM support, and online platforms and services
THIS YEAR has been one like no other, so it’s no surprise that the results in this survey differ so much from last year’s. Broker priorities have changed drastically for starters. Turnaround times and interest rates remain in the top positions, albeit swapped around since last year, but BDM support in joint second place has jumped from bottom of the pile. In 2019, BDM support scored 3.50, much lower than the score of the second lowest priority on the list. But this year, this support has been crucial. Brokers have needed BDMs to help them keep up with changing appetites and policies as interest rates have moved around and borrowers look for guidance in what has been a challenging year for everyone. It is great news then that last year’s gold
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medallist in this category maintained its position. As brokers required this support even more, this non-bank was there. According to the MFAA’s quarterly Industry Intelligence Service research, brokers’ use of non-bank lenders has fallen in the last few quarters. The proportion of loans sent to non-banks is at its lowest level since the March 2018 quarter. This trend looks set to continue as figures coming out of the coronavirus pandemic show new loans and refinances in 2020 are predominantly going to the major banks. Research from the NSW Land Registry in September showed that the major banks accounted for more than two thirds of all refinances in August.
In this survey, MPA asked brokers whether they had sent more loans to non-banks this year compared to the previous year. While 65% still said they had, this was a drop from 76% last year. The survey also asked brokers what the reasons were for picking a non-bank lender, and what were the barriers to using one – see those results on the following pages. As in the last two years, the 2020 survey also asked brokers to rate their top non-bank lenders in different sectors of the market, like specialist lending, first home buyers, SMSF loans and foreign non-residents. The results showed some changes to the ranking of the non-banks, which is unsurprising given the shifts in lender appetite that the industry has seen.
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OUR TYPICAL RESPONDENT $60m+ $0–$10m
7%
$40,000,001–$60m
18%
11%
Aged 56 and above
Based in NSW (36%), Vic (30%) or Qld (18%)
Has been in the industry for 15 years or more
Writes in a year
24%
39% $20,000,001–$40m
$10,000,001–$20m
WHAT DO BROKERS WANT FROM NON-BANKS? 1 = not important; 5 = very important Interest rates
4.15
Turnaround times
4.13
BDM support
4.13
Commission structure
4.09 4.09
Product range
4.08 4.09 3.85
Brand recognition
3.78
Communications, training and development
3.59
Product diversification opportunities
4.05 4.04 4.03
Online platform and services Credit policy
4.07
3.21
3.99
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21/09/2020 12:59:21 PM
SPECIAL REPORT
BROKERS ON NON-BANKS 2020
WHY USE A NON-BANK The top reason for picking a non-bank lender over a bank remains the same, as brokers look for broader views on their customers’ borrowing capacity
TOP 5 REASONS YOU WOULD PICK A NON-BANK LENDER OVER A BANK
Takes a wider view than customer's credit score
26%
Banks have tightened their credit policies
25%
More personalised services
13%
Regulatory changes have prevented client from going to the bank (ie investors)
10%
Faster turnaround times
7%
IN A year when Australians have had their working hours reduced, or been furloughed from their jobs, or lost them completely, brokers have been working harder than ever to help their clients get by. For some borrowers this has meant repayment deferrals, and for others refinancing. But with government schemes and financial help, many younger Australians have even taken the opportunity to buy their first home. Unfortunately, however, 2020 seems to have had a troubling impact on non-bank lenders. While the majority of brokers are still sending more loans to non-banks than ever before, these dropped 7% from last year. This does not necessarily mean brokers are sending fewer loans to non-banks, but based on other figures in the survey, it looks
BROKERS’ LOAN FLOWS TO NON-BANKS: ACTUAL VS FORECAST Percentage of loans put through non-banks in the last 12 months
0–20%
21–40%
41–60%
61–80%
81–100%
Actual 38%
25%
17%
10%
9%
Percentage of loans forecast to go through non-banks in the next 12 months
Forecast 28%
16
30%
19%
13%
9%
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like they are planning to send fewer loans in the future. The proportion of loans sent to non-banks over the past 12 months remained fairly similar to the year before, except for an increase of 5% in brokers who sent 20–40% of their business to non-banks. This meant there was a drop in the number of brokers sending 40–60% of loans to non-banks. In terms of the proportion of loans brokers expect to send to non-banks in the next 12 months, the results showed that they plan to send slightly more to non-banks, but not as much as they predicted last year. In 2019’s survey, over 10% of brokers forecast sending 81–100% of loans to nonbanks, 16% forecast sending 61–80% and almost 24% expected to send 41–60%. The reasons brokers would choose to use a non-bank over a bank shifted slightly compared to last year. Moving up from the second-highest reason in 2019, this year brokers said they would choose non-banks because they take a wider view of clients’ credit scores. Brokers are dealing less this year with regulatory changes and more with the changing situations of borrowers. Turnaround times also featured in the list of reasons for using a non-bank, replacing the need for alternative documentation.
HAVE YOU SENT MORE LOANS TO NON-BANKS IN THE LAST 12 MONTHS THAN IN THE PREVIOUS YEAR?
35% NO
65% YES
HIGHLIGHTS: BENEFITS OF USING A NON-BANK BDM support
Pepper Money
La Trobe Financial
Liberty
La Trobe Financial
Pepper Money
Commission structure
Liberty
Credit policy
Liberty
Pepper Money
Resimac
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21/09/2020 12:59:43 PM
SPECIAL REPORT
BROKERS ON NON-BANKS 2020
PRODUCT AND PRICING The barriers to sending loans to non-bank lenders remain similar to last year, with higher rates and fees being the biggest problem for brokers
WHILE IT can be argued that more borrowers are needing to turn to non-bank lenders in 2020 as the way they work changes and credit appetites of the banks shift, the proportion of brokers who say their customers are open to using non-banks continues to drop. Last year’s report showed a 10% decrease in brokers who said clients would consider non-banks; the number dropped again this year by almost 4%. The barriers to putting loans through non-banks remains the same. This year, the same percentage of brokers believe that nonbanks’ higher rates and fees are a problem, and just 1% fewer said a lack of brand awareness was a barrier. Speaking of the fees, a broker from SA said, “Set-up costs are geared towards clients who don’t have mainstream options. For a client who is able to fit into the mainstream, the set-up costs through a non-bank lender can be restrictive.” Two years ago, non-banks’ lack of brand awareness was said to be the biggest barrier, which suggests that the work done since then to raise the profile of the non-banks has been successful. The non-banks that won medals for brand recognition have changed this year, with Pepper Money dropping from gold place to bronze. Instead, Liberty was ranked as the non-bank with the best brand recognition, followed by Resimac. Liberty also won a gold medal for its product diversification opportunities, taking
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ARE CLIENTS TYPICALLY OPEN TO CONSIDERING NON-BANK PRODUCTS?
30.17% NO 69.83% YES
“[Resimac has] lower rates for a non-bank and many options to get a deal through with common sense rather than ridiculous auto assessments” NSW broker
WHAT IS THE MAIN BARRIER TO PUTTING MORE BUSINESS THROUGH THE NON-BANK LENDERS?
Higher rates/fees
43%
Lack of brand awareness
24%
Customers want a branch network They are not on my aggregator's panel Poor turnaround times
11% 6% 4%
Fo Fo tr
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SPECIAL REPORT
BROKERS ON NON-BANKS 2020
another medal from Pepper Money. Pepper did retain a medal for its interest rates – albeit a bronze instead of a gold. Interest rates was the top priority for brokers this year, having risen up the ranks from fourth place two years ago. Resimac took home the top prize in that area, followed by La Trobe Financial, which held its position from last year. When asked what non-banks could do to improve their service, one broker said there could be “better interest rates for alt-doc clients” and another said there could be more “competitive rates in the investor space”. Resimac took the gold for its product range this year, up from silver last year. Asked what products brokers thought were the best of the past 12 months, Resimac came out on top with its Prime product. Brokers said it was “easy and clear”, “flexible” and “consistent”. Explaining why Resimac had the best options out there, one broker from NSW said, “[It’s] the lower rates for a non-bank and many options to get a deal through with common sense rather than ridiculous auto assessments by most other lenders which treat clients in a fake and impersonal way.” Another NSW broker praised both the prime and specialist products offered by Resimac, saying it had “Great rates, competitive borrowing capacity, great BDM support and assesses clients on their own merits”.
HIGHLIGHTS: PRODUCTS AND BRANDING Brand recognition
Liberty
Pepper Money
La Trobe Financial
Pepper Money
Firstmac
Mortgage Ezy
Interest rates
Resimac
Product range
Resimac
“For a client who is able to fit into the mainstream, the set-up costs through a non-bank lender can be restrictive”
Resimac
Product diversification opportunities
Liberty
Firstmac
Resimac
South Australia broker 20
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TECHNOLOGY, TURNAROUND AND SERVICE Brokers are split on whether turnaround times have improved or worsened over the last year, but they’re more certain about what non-banks need to improve on HOW HAVE TURNAROUND TIMES AND COMMISSION STRUCTURES CHANGED OVER THE PAST YEAR? Commission structures
Turnaround times
78.21%
34.08% 27.93%
28.49%
2.79%
4.47%
8.94%
7.82%
Improved significantly
2.23% Improved
No difference
Worsened
5.03%
Worsened significantly
TURNAROUND TIMES were a hot topic last year as lenders received more business from brokers and increased their scrutiny of applications. Unfortunately, the events of this year mean turnaround times are still front of mind. The category came in as the joint second highest priority for brokers, only slightly behind that of interest rates. However, brokers were split on what turnaround times looked like this year. According to the survey, a third of brokers said turnaround times had worsened over the past 12 months. This was up 5% on the proportion of brokers who thought turnaround times had worsened last year. Another third said turnaround times had improved, while the remaining third said there had been no difference. “With more brokers going to non-bank lenders to meet loan turnaround times, this has caused non-bank lenders’ turnaround times to blow out,” said one broker from Western Australia. Another broker, from NSW, disagreed, saying, “Turnaround times have never been an issue with non-bank lenders to be honest”. Taking the gold medal for turnaround times was Liberty. A number of brokers highlighted the non-bank for its good service over the past year. One broker from South Australia said, “I have had one situation in particular where I needed a quick turnaround time – Liberty were able to provide exceptional service in this regard, so I have to say that it has improved since last year.” Another broker praised Liberty’s consistency, while other banks and non-banks have varied: “[It] differs from time to time. Liberty have been really good all year through,” said the broker from Victoria. Despite losing its gold medal and falling to fifth place, Pepper Money was still highlighted for its performance in this category. “Pepper has kept its 24hr turnaround times
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SPECIAL REPORT
BROKERS ON NON-BANKS 2020
HIGHLIGHTS: TURNAROUND, TECHNOLOGY, COMMUNICATION Turnaround times
Liberty
Resimac
Firstmac
Communications, training and development
Pepper Money
Firstmac
Resimac
Pepper Money
Liberty
Online platform and services
La Trobe Financial
whilst most other lenders were averaging five-plus days,” said a broker from NSW. There has been no real change in brokers’ attitudes towards commission structures over the past year; just 3% more said there had been no change. When asked how non-banks could improve their service levels, the majority said they could have better technology. This option came in joint second last year, alongside better-trained BDMs/credit assessors and behind having more BDMs/credit assessors. As the industry has had to rely much more on technology this year, this shift is not a surprise. Compared to just 15% of brokers last year, in this year's survey 24% said simpler income verification processes would improve service levels. Income verification is one factor they said contributed to slower turnaround times over the last year, and lenders have been introducing new technology to make this process digital. Brokers views on non-bank lenders’ BDMs and credit assessors seem to have improved over the last year, as the proportion of those who think they need to be improved has dropped drastically. Fifteen per cent of brokers listed other areas that non-banks could improve in. For example, they said non-banks could improve their interest rates and flexibility beyond service calculators.
HOW COULD NON-BANKS IMPROVE THEIR SERVICE LEVELS?
26% Better technology
22
24%
16%
10%
9%
15%
Simpler income verification process
More BDMs/ credit assessors
Better-trained BDMs/credit assessors
Better communication
Other
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WHAT YOU’RE SAYING Over a tumultuous two years in lending, have the non-banks done enough to compete with the banks? YES “I think so. We definitely need them. There are a lot of deals that don't fit standard lending criteria of the banks, and they give us an alternative.” “Yes, they have and will continue to grow due to the poor appetite of major banks and little interest shown by major banks.” “They fill a critical gap in the marketplace given the credit tightening by the majors and their lack of flexibility when it comes to 'non-conforming’ scenarios. I think the non-banks will continue to grow market share, and we will respect their credit appetite and rules that are necessary to build their strength and brand in the marketplace.” “In this environment and COVID, everyone is absolutely doing their best, as lenders, brokers and in assisting clients to the absolute best of their ability.” “Yes, the non-bank lenders each have their own strengths, which are more competitive than the big four’s. It gives a bit more appetite than in previous years to the market.” “Yes. They have kept up with remote working, better systems and better turnaround from the banks.” “Yes. Non-banks have proven they are still open to looking at loan options in the current environment, with minimal changes to policy to cope with COVID-19.” “Yes. Far better service and easier to deal with as they offer a better personalised service.” “Yes. Non-banks appear not to have panicked over BID and HEM verification when most banks have gone overboard with more processes, more forms, electronic solutions or simply more supporting documents.” “Yes. More flexibility and want to understand the client’s position better on an individual basis, not a flat black and white system.”
NO “Not really – they’re still seen as an alternative to the banks. Their products would need to be priced in the same region as prime to directly compete – but it also depends on whether they want to compete or be an option for loans that may not directly fit the banks’.” “No way. Most customers have fled to majors as non-banks demonstrate lack of strength and knee-jerk policy changes with little or no notice.” “Probably not – some have priced themselves out of the market, and their communication hasn’t stepped up to take more business from the banks.” “No. The non-banks could use more initiative in product development.” “No, they need more options and greater policy discretion. More common-sense decisions are required to compete with the majors.” “No, big banks are still winning. Non-banks are good for short-term lending solutions, but they do not have a strategy to retain the customer.” “Not enough. Some assessors still think they work for the four majors.” “Non-bank lenders need to have more specific products to match the different requirements of clients. For example, short employment, casual, commission-based income, short ABN.” “No, they need to move on to merits, history and strength of deals and not rely on heavily weighted service calculators.” “Banks are winning the price battle. Regulation makes it difficult for non-banks to compete on the fringe.” “No. They are trying to base BDMs on the east coast and expect them to work AEST rather than local times.”
“It’s simple – they think outside the box when main lenders are withdrawing to well within the box.” “Yes, absolutely. I don't know where us brokers would be without the non-banks.”
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21/09/2020 1:06:12 PM
SPECIAL REPORT
BROKERS ON NON-BANKS 2020
FINAL RESULTS There have been several changes to the ranking of top lenders this year, and the gold medallist from the past two years has dropped to third place OVERALL RESULTS
BROKERS’ PREFERRED LENDERS We asked brokers to pick a preferred lender for each key category of borrower. The lender with the most mentions in each category won the medal.
Specialist lending
First-time homebuyers
Property investors
Liberty
Liberty
Firstmac and Resimac
Commercial
Alt-doc
SMSF
La Trobe Financial
Liberty and Resimac
Liberty
Foreign non-residents
La Trobe Financial
24
Non-bank
Overall score
1st
Liberty
3.66
2nd
Resimac
3.65
3rd
Pepper Money
3.63
4th
La Trobe Financial
3.49
5th
Firstmac
3.48
6th
Mortgage Ezy
3.16
7th
Better Choice
3.11
8th
Thinktank
3.00
9th
Bluestone
2.96
10th
Australian First Mortgage (including NMC)
2.87
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RESIMAC
2nd
PEPPER MONEY MPA: You have jumped from seventh place to second place this year, why do you think you’ve done so well with brokers?
Daniel Carde, general manager, distribution: We invest a lot of resources into making sure we meet the needs of our broker partners. This is an ongoing process of continual improvement that ensures we stay relevant in a time of significant change. Our commitment to the broker channel permeates all aspects of our business operations, from the breadth of our product suite and competitive interest rates through to our industry-leading SLAs of one to two days and our end-to-end digital loan origination process. It is also manifested in the comprehensive support ecosystem we have built for our brokers, which includes our BDMs, dedicated relationship management team, and online ‘BrokerZone’ portal. We keep brokers regularly informed about company news, rate changes, products, promotions, appointments, and any other relevant updates in real time through our LinkedIn page and through email updates. In FY20, we sent 43 broker email communications, totalling 369,964 emails. Our measured response to the COVID-19 crisis no doubt helped our standing with brokers as well. While many of our competitors responded with rate increases and reactive policy changes, we did neither. Instead, we decided to support our brokers by continuing to pay trailing commissions for loans on a payment moratorium, as well as provide additional support for financial hardship applications. We are always on the lookout for ways to improve the experience for our broker partners and help set them up for success, and we’re pleased to see that our efforts are hitting the mark.
3rd
MPA: You retained the gold medal this year for BDM support. What do you think accounts for that?
Aaron Milburn, general manager, mortgages and commercial lending: Pepper Money aims to build solid relationships with brokers through regular BDM visits, phone (and now video) communication, being proactive, consistent and reliable. The team’s strong focus on education shows brokers how they can grow their businesses through alternative lending. Our goal is to help as many borrowers as possible, and our BDMs spend a significant amount of time workshopping scenarios with brokers. Whether or not Pepper can help a broker’s customer, the team are quick to respond with a “Yes” or a “No, and here’s why”. At its peak, many BDMs were seconded to our operations team to help answer the queries from customers impacted by COVID. That experience has led to the team gaining greater empathy and a deeper understanding of customers’ needs. Through this, they also continued to check in with brokers and keep them updated on how we were supporting their customers. The fact that we have two Pepper Money BDMs as finalists in the Australian Mortgage Awards is testament to our strategy underpinning BDM support.
LA TROBE FINANCIAL
4th
MPA: Brokers said the best way non-banks could improve was with better technology, and you won the gold medal for your online platforms and services. What do you offer brokers and why are they so happy with it?
Cory Bannister, chief lending officer: Brokers come to us for instantaneous personal service and direct access to the decision-makers in our 150-strong team of credit analysts – the largest and most experienced of any non-bank in the country. To complement our personalised service model and deliver a seamless experience, we are constantly innovating our online loan delivery platforms and services, as we have done for the past seven decades. We have offered digital VOI using IDyou and ZipID for many years, DocuSign for loan documents and DigiDocs for mortgage documents in the last 12 months. Our ApplyOnline loan lodgement portal enables brokers to lodge loan applications and supporting loan documentation with one touch through one platform. Our Valuation Hub also enables online valuation ordering to reduce wait times and verification of valuations prior to full lodgement of the loan. And finally, we have partnered with Valocity, becoming the first lender in Australia to access its custom-built Commercial Property Valuation Platform
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21/09/2020 1:07:11 PM
SPECIAL REPORT
BROKERS ON NON-BANKS 2020
1st
LIBERTY TAKES THE GOLD
Leapfrogging into first place in 2020, Liberty has won five out of eight medals. Group sales manager John Mohnacheff says the non-bank has worked hard with brokers over the past year MPA: You came top in this year’s Brokers on Non-Banks survey. What do you think helped you achieve this? John Mohnacheff, group sales manager: Our hope is that brokers have appreciated Liberty’s unwavering and consistent support, even during exceptionally difficult times. We’ve remained open for business, grown our team of BDMs and expanded our product lines to help brokers assist even more customers. In uncertain times, we’ve focused on providing certainty about the level of service and turnaround times that brokers can expect. And they’ve responded well to the evidence of our commitment to the broker channel as we continue to write home, car, commercial, business and personal loans. To receive this industry recognition direct from the brokers themselves is a testament to the dedication of the entire Liberty team. From our BDMs to our operations teams, underwriters and support staff, every department has come together during this time to ensure we can provide the same excellent service to brokers that they have come to expect – even in challenging circumstances. This survey result reaffirms that our free-thinking approach to lending and broker support resonates with and is
26
acknowledged by brokers, helping them to better serve customers. Liberty is a trusted business partner they can rely on. MPA: You came out on top for brand recognition. What have you been doing here, and why is that important to brokers? JM: We’ve continued to demonstrate that Liberty is a brand that brokers can depend on. While continuing to write business, we’ve actively promoted all the ways we can help customers during difficult times so that brokers know they are not alone. Plus, our consistent communication with brokers through trade publications, social media and digital advertising has reiterated our dedication to the broker channel. By expanding our product offering in recent months, we’ve shown that Liberty is even more relevant to more people. In challenging times, brokers need lenders to step up and provide the finance solutions that customers need. Liberty delivers on its promise of excellent service and quick turnaround times when finding free-thinking solutions for brokers, helping us to build a good brand reputation.
team of BDMs who are passionate about supporting brokers to diversify into new areas of lending. As a business, we quickly discovered the value of diversification and have expanded our product offering exponentially since we launched with home loans in 1997. We have long touted the benefits of diversification, and it is more important than ever in this climate. We continue to encourage brokers to look beyond home loans and expand their ability to help more customers across commercial, motor, SMSF, personal loans and business finance. We have developed a training program to give brokers the tools they need to successfully diversify. Over the years, we have continued to refine our ‘Do More’ program to help equip brokers to handle the challenges they may face in their careers.
MPA: You achieved gold for product diversification opportunities too. What do you offer brokers in this area? JM: At Liberty, we have an incredibly strong
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© 20
21/09/2020 1:07:26 PM
THE BANK BEHIND THE BROKER behind Alfie’s new playground
When it comes to helping families find their happy place, our BDMs are with you every step of the way. We give you unrivalled support, education, news and tools to help you do your best by your clients. Contact a NAB BDM or visit nabbroker.com.au
© 2020 National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. A155167-0320
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FEATURES
FIRST HOME BUYERS
New buyers snapping up opportunities Despite market uncertainties and financial worries, the number of first home buyers has risen this year as they take advantage of record-low interest rates and government schemes
WHILE HOME loan lending is down compared to pre-COVID levels, the figures jumped back up in July as social distancing restrictions were eased. The section of the market that saw the biggest surge in new commitments was first home buyers. The number of new loans to owneroccupier FHBs grew by 14.4% in July, accounting for around a third of all new owner-occupier loans that month. Of all loans to FHBs, 4.9% were for the purpose of property investment. Pepper Money’s general manager, mortgages and commercial lending, Aaron Milburn, says that while some prospective FHBs have been forced to dip into their savings just to cover everyday living expenses, others are managing to get into the property market. “Those who haven’t been directly impacted by the pandemic are taking advantage of the low interest rates, the current housing market and any government bene-
28
fits to get on the property ladder,” he says. “Additionally, many lenders now accept rental ledgers as evidence of genuine savings, which has helped these customers with the challenge of trying to save a deposit while paying rent.” With the role of the broker being particularly crucial at this time, Milburn says brokers may even need to have conversations with their customers about whether a mortgage is the best option. “If there is a level of uncertainty, brokers may need to have a conversation with their customer as to whether it’s the right time to be seeking a mortgage,” he says. “Alternative solutions, such as debt consolidation, may be better suited to them as that may put them in a better position to face any challenges ahead. “In this environment, brokers and lenders alike must continue to ensure that borrowers’ needs remain at the forefront and appropriate credit decisions are made
“Through the [FHLDS], NAB has helped a diverse range of customers purchase their first home sooner than they expected” Steve Kane, NAB
that not only support borrowers now but into the foreseeable future.”
Government initiative leading FHB resurgence NAB has reported a “resurgence” of first home buyers over the last 12 months and, according to its most recent Residential Property Survey, this segment is the most active in the market for new property and accounts for 45% of all sales. The report shows that, in the second quarter of the year, the market share of FHB owner-occupiers reached a survey high of 36.5%. This high demand is supported by the
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federal government’s First Home Loan Deposit Scheme (FHLDS), which started in January 2020 and allows borrowers to purchase a property with as little as a 5% deposit. As one of two major banks participating in the FHLDS, NAB’s general manager, broker distribution, Steve Kane, says the lender has helped thousands of FHBs into their first home since the scheme’s launch, and has seen continued strong growth in the second phase of the scheme, which kicked off in July. “Through the scheme, NAB has helped a diverse range of customers purchase their first home sooner than they expected, even at a time when the crisis has disrupted certain segments of the housing market – from young home buyers in their 20s or 30s to customers in their 50s buying their first property,” Kane explains. “Of course, our broker channel is a significant component of our successful participation in the scheme, with the majority of property purchases financed with NAB through the scheme’s second round coming through brokers.” The FHLDS has also been praised by 86 400’s home loan lending lead, Melissa Christy, who points out that saving for a deposit has always been the biggest challenge for anyone looking to buy their first home, regardless of the presence of a pandemic. “[The scheme] is great to help first home buyers get their foot in the door,” she says. “Saving for a deposit can be one of the hardest parts of buying your first home, and then potentially having to pay LMI on top of that can make it difficult. This scheme gives buyers and borrowers the boost they need to help them enter the market in a really trying time.” She adds that brokers are playing a really important role as they work in the best interests of their customers and help them understand all the different options.
“There are lots of different schemes and government grants out there which can really benefit first home buyers, and it is the role of the broker to help their customers through it all and to also help find their customers the best lender for their situation and the best deal available,” Christy says.
FHBs making the most of new opportunities Mortgage Choice also praised the government support that is helping Australians buy their first property sooner and access historically low interest rates. Beyond the FHLDS, CEO Susan Mitchell pointed to the NSW state government’s announcement that it would temporarily axe stamp duty for FHBs purchasing newly built homes from 1 August. Not only has the government provided support for this buyer segment but banks and lenders have responded as well by changing their approach to various income types. Mitchell explains that many FHBs work in the gig economy, in industries affected by the pandemic, and receive payments like bonuses, overtime and commission. “Australians in the market to buy their first home in 2020 have faced substantial change,” she says. “First home buyers are entering a market suffering from an economic downturn and a pandemic which has fundamentally changed the way buyers can view properties. Lenders have made significant changes to policy and process, all while federal and state governments have increased the support available to first time buyers and interest rates are sitting at historic lows.” Something else FHBs have been taking advantage of is the government’s early release of superannuation for those who need it. With $10,000 allowed to be withdrawn in the 2019/20 financial year and a further $10,000 in 2020/21, buyers have been able to use the money to qualify for the FHLDS.
“Getting homebuying-ready can be a steep learning curve, and brokers are in a good position to help educate these buyers” Susan Mitchell, Mortgage Choice
Others have put it into their savings accounts for three months so it counts as genuine savings. While the short-term benefit of withdrawing from their superannuation funds may have seemed worth it to these FHBs at the time, the finance industry has issued some warnings. Mitchell raises concerns about the number of people who withdrew from their super without consulting a financial adviser who could explain the longerterm consequences of doing so. “There are many risks associated that could impact their retirement outcomes if these borrowers do not make volun-
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21/09/2020 11:46:53 AM
FEATURES
FIRST HOME BUYERS
FIRST HOME BUYER MARKET SHARE, JULY 2020 Owner-occupier first home buyer loan commitments as a percentage of total owner-occupier loan commitments (excluding refinances)
50
47.3%
45
41.1%
40 35
“Bankwest is very much open for business with first home buyers and we’ve experienced a significant increase in demand” Ian Rakhit, Bankwest
36.2% 32.5%
31.4%
31.3%
29.3%
30
26.6% 23.2%
25 20 15 10 5 0
Aus
NSW
Vic
Qld
SA
WA
Tas
NT
ACT Source: ABS Lending Indicators, July 2020
tary super contributions down the track,” Mitchell explains. “For example, for many people, their super includes life and total and permanent disability insurance policies which are contingent on a minimum super balance. The early withdrawal of super means they could be left uninsured.”
Open for business with FHBs Another scheme that has been helping FHBs is the First Home Super Saver Scheme, which was established a few years ago. Bankwest’s general manager, third party, Ian Rakhit, says the bank had seen
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a doubling of applications since February, thanks to this scheme as well as the low interest rates and various other government stimulus initiatives introduced to support new-build applications. “Bankwest is very much open for business with first home buyers, and we’ve experienced a significant increase in demand over the past year due to the development of favourable conditions for many first-time buyers,” he says. Not only are new borrowers faced with all these changing lending conditions and schemes, but the home loan process and contractual details can already require a lot of
“hand-holding” to navigate, Rakhit explains. “Many brokers have real expertise in this area and can be a wonderful conduit between vendor, solicitor and lender. The costs involved, from loan repayments to legal and survey costs through to lenders mortgage insurance, are critical in importance,” he says. Rakhit reminds brokers that it is not just owner-occupier loans that first home buyers might be interested in. “Bankwest remains a ‘go-to’ lender for construction loans, and this sector has reached heights of up to 20% of new flow in recent months,” he says.
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FEATURES
FIRST HOME BUYERS
“We’ll continue to listen to and work closely with brokers so we can help them deliver brilliant service to customers across Australia who own, or aspire to own, a home.” The CEO of lenders mortgage insurance provider Genworth, Pauline BlightJohnston, says she understands why first home buyers are becoming more active this year, and agrees with others in the industry that brokers can really help these borrowers. According to Genworth’s recent research, which compares prospective FHBs with recent FHBs, more than a third of prospective FHBs have secured a loan pre-approval and
two thirds have determined their borrowing capacity in preparation for buying. Of those who had recently bought their first home, half said they had contacted a broker to get an understanding of loan providers, and cited brokers as their top source of information about borrowing capacity. “Many first home buyers are seeing the current economic environment as an opportunity to get their foot on the property ladder,” Blight-Johnston says. “House prices have fallen, and interest rates are at historic lows. They don’t want to miss the boat, so they have secured pre-approvals and are ready to buy.
“Mortgage brokers play an important role in providing guidance to first home buyers who are looking to buy a home or investment property and don’t have the 20% deposit that lenders usually require.”
Helping borrowers understand the jargon Milburn agrees that, as first-time borrowers have a limited understanding of the process, brokers play a pivotal role in helping them understand the application forms and the jargon, the timelines, legal requirements, additional costs, credit ratings, and more. He says Pepper has a “real-life approach”
BARRIERS TO SAVING A DEPOSIT Prospective (2020)
Prospective (2019) 48.3%
Meeting living expenses
58.0%
Making/adapting to the behavioural changes in how I spend/save my money
“Many first home buyers are seeing the current economic environment as an opportunity to get their foot on the property ladder” Pauline Blight-Johnston, Genworth
44.5% 40.5%
42.3%
Making/adapting to the lifestyle changes
37.0%
29.4%
Meeting other financial commitments
29.9%
27.0%
Earning a variable/irregular income
Other
26.5%
3.8% 3.3% 0 10 20 30 40 50 60
Source: Genworth First Home Buyers Report
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to lending, which means it can help customers from all walks of life – and this is where the knowledge and experience of a broker can really help too. “Not only do brokers have the ability to make sure the process is as simple and streamlined as possible for the customer, but they also have a deep understanding of the market and access to an array of lenders, meaning they can present customers with the options they need before they decide to enter this long-term financial commitment,” Milburn says. Kane points to the high proportion of home loans already written through brokers, adding that the third party channel is valuable not just for FHBs but for previous borrowers as well, and this is why NAB continues to support brokers with its team of BDMs and its digital offering. “Through our long-standing commitment to the broker channel, it is our role to ensure mortgage brokers are well placed to continue to deliver the unwavering support that first home buyers need throughout their lending journey,” Kane says. “In parallel to rising customer behaviours and confidence in using digital tools to search, purchase and apply for services, brokers are also increasingly integrating digital tools within their business processes. These include using electronic interviews, e-signatures and digital documentation to drive more efficient customer service and enable remote working. “NAB is also on a continual journey to digitise the home lending process, enabling a smoother and more efficient experience for not only first home buyers but all brokerintroduced customers.”
Brokers best placed to guide first-time buyers Mitchell encourages brokers to “become an expert” in what government support is available to first home buyers, as well as all
TIME IT TAKES TO SAVE A 20% DEPOSIT Median house price*
Median unit price*
Years to save for house deposit
Years to save for unit deposit
Sydney
$992,414
$754,717
15.3
11.7
Melbourne
$784,247
$576,800
12.1
8.9
Brisbane
$559,501
$379,090
8.6
5.9
Adelaide
$474,672
$329,624
7.3
5.1
Perth
$446,748
$337,928
6.9
5.2
Note: The estimated number of years it takes to save a deposit is calculated based on a prospective FHB (earning the average income) saving 20% of their after-tax income towards a 20% deposit for a median-priced house or unit. Source: *CoreLogic, ABS
the changes to lenders’ policies and processes. In some cases, borrowers may be eligible for more than one incentive, but brokers are best placed to understand all the details and help buyers take advantage of them. “As we know, the home loan process can be overwhelming for first-time buyers as they may not understand what they need to do to put their best foot forward when applying for a home loan,” Mitchell says. “Getting homebuying-ready can be a steep learning curve, and brokers are in a good position to help educate these buyers. Brokers should take the opportunity to nurture prospective buyers in their customer database by sharing educational content that will help these buyers on their journey to applying for their first home loan.” In terms of how the FHB market might develop, 86 400’s Christy says that while the pandemic has meant that people are much more nervous about their financial situation, there are positive signs for this buyer segment. “Anyone looking to get into their first home will have lower repayments and better borrowing power, which is one of the biggest challenges that first home buyers face,” she says.
“Brokers have the ability to make sure that the process is as simple and streamlined as possible for the customer” Aaron Milburn, Pepper Money
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FEATURES
FIRST HOME BUYERS
“I think things like the FHLDS will be a great way to get more first home buyers to auctions and hopefully into new houses. There has also been recent stamp duty reform which again is another step in the right direction to support first home buyers.” Helping FHBs achieve their dreams with a lower deposit, Bankwest offers loans of up to 98% LVR with lenders mortgage insurance and has improved its ‘genuine savings policy’ to allow rent payment history for the previous six months to be used as genuine savings evidence. Rakhit says it’s important that brokers are clear on all the different lender policies
regarding what is a suitable deposit and what evidence is required. “Property values may also be impacted due to the economic impacts of COVID-19, so a good-quality upfront valuation will offer the customer some certainty, particularly if buying at an auction,” he says. “Brokers also need to be clear on employment criteria, and on income haircuts, and I recommend this is a really important time to keep across recent changes to lender policies and to use your BDM for scenarios if you are unfamiliar.” The benefits of taking out lenders mortgage insurance is something first home
buyers have become more aware of. Research from Genworth shows that more prospective FHBs were ‘very’ or ‘somewhat’ likely to use LMI than last year. “With more first home buyers now understanding that they can buy a home or investment property with less than a 20% deposit, it’s no surprise that the perceived value of lenders mortgage insurance is rising,” says Blight-Johnston. “Genworth works closely with our broker network so they can advise their clients when lenders mortgage insurance may be appropriate for them to discuss with their lender.”
FIRST HOME LOAN DEPOSIT SCHEME: TYPICAL BUYER
Profile of the median couple buyer under the FHLDS
Profile of the median single buyer under the FHLDS
“There are lots of different schemes and government grants out there which can really benefit first home buyers” Melissa Christy, 86 400
$370,000
Purchase price
$425,000
25–34
Age bracket
25–34
$60k–$80k
Household income
$90k–$125k
95%
LVR
95% Source: National Housing Finance and Investment Corporation
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FEATURES
EXPERT SPOTLIGHT
A spotlight on specialist women In a year in which Specialist Finance Group has attracted some impressive names in the broking industry and a number of leading ladies of finance, MPA spoke to five of the women who are making waves at the independent aggregator
MPA: Can you tell me about your business? How did you start your business model? Deanna Ezzy, founder, More Than Mortgages: Having moved back to Australia in 2005, I began my journey working in property with a keen eye on an investment portfolio. Some years later, by chance, I saw an ad for a role at a local mortgage broker’s office. This turned out to be one of the most important meetings of my life, where I met new mentors and fell in love with the broker offering. When I had bought a home previously, I anticipated that the process would be scary and quite difficult, but my broker made the whole experience an excellent one. I wanted
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to offer this same excellent service and care to anyone who needed it, so my journey as a broker began. A few years later, More Than Mortgages was born, and I surrounded myself with an excellent and like-minded team that would continually improve and help more clients. The model is consumer-experience centric and the goal is to cater to more and more needs of ever-evolving consumers in a manner that is efficient, friendly and professional, with leading results. Having spent the last five years in the MPA Top 100 and three of those in the top 50 nationally, we think that at More Than Mortgages we have an excellent model and are extremely proud of it.
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“What drives and inspires me is the feeling of satisfaction that I get from not only helping customers but also growing my team” MPA: Who and what has inspired you in your business? Karlie Scharfenberg, founder and managing director, The Loans Suite: Having worked in consumer and corporate banking for the best part of 15 years, I knew I had more to give people who needed lending advice, but I also wanted to design the way I spent my time for a better work-life balance. I could also see a really great opportunity in my area of Western Sydney to create a brand that resonated with people and made them feel comfortable with a bespoke
Karlie Scharfenberg, The Loans Suite business that had their needs at the core of its offering. We created The Loans Suite and have never looked back. What drives and inspires me is the feeling of satisfaction I get from not only helping customers but also growing my team so we can help even more people. Having the flexibility to pick the kids up from school or do activities during the day whilst maintaining a high-volume brokerage is achievable, and for me is having the best of both worlds.
MPA: What is your greatest business challenge? Jo Attard, founder and advisor, Jo Attard & Co Pty Ltd: I enjoy a challenge, and in this business we are never short of them. However, it’s the way you view and then act on those challenges that defines your success. Systems (technology) and productivity has been one of those big challenges we’ve faced and was a large motivation for me to move to Specialist Finance Group. This move has provided a smooth and efficient client journey experience, and the time efficiencies from initial enquiry to settlement have increased our business’s productivity by 20%.
A FOUNDATION OF TRUST Blake Buchanan, head of aggregation at Specialist Finance Group, says, “The most important ingredient for a great business is great people, and I am certainly privileged to work amongst some of the best in the industry. “Relationships, be they business or personal, are built on trust and respect, and it has always been our whole team’s philosophy that, whilst we provide the integral system and services to our broker network, we also need to foster deep and great relationships to ensure we maximise the benefits of these relationships for all parties. “Our brokers are not simply our customers; they are our friends, our family and our partners.”
It has also assisted us in servicing our clients’ best needs so they can come out the other side of COVID with a better understanding of how to manage their money and have a plan B. Whilst we are facing challenging times today (particularly being in Melbourne), when you have built a business over 20 years based on the strong foundations of honesty, integrity and genuine love and care for your clients, you know that you can overcome any challenge (or pandemic) as long as you continue to live and work by your values. Your successes will continue, and you’ll have a greater appreciation of the genuine relationships you have with the people that really matter.
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FEATURES
EXPERT SPOTLIGHT
finance industry for more than 20 years, and my passion is commercial and fast-moving asset finance.
Astute Ability Group is always about staying in our lane and letting the experts do what they do best in their respective fields. That’s why we have set up three individual channels within my business catering to consumer personal loans, asset and commercial finance, and residential finance. This way our office can cater to most financial needs with comfort, convenience and confidence. This model is high-reward but can come with higher risks. As an example, if we lose a customer’s car finance deal, we lose their home loan too, and this is why we pride ourselves on being at the top of our field, and really back ourselves by offering the unique Astute experience. We are truly invested in our clients’ success, and we want to ensure it is not only our current clients that we help but the future generations. That’s why Astute invests so much time and money to ensure the next generation are financially aware and best positioned with education to use finance to their advantage.
MPA: What is your ultimate business goal? Hannah Carter, NSW state manager, Specialist Finance Group: I really think
MPA: What changes, if any, you would like to see the industry embrace? HC: If the year 2020 has taught us anything,
that I have been able to do so well in this field as my goals are closely aligned to the many brokers I have the privilege of working with and alongside. The best brokers I have met are genuinely in it to help people achieve their hopes and dreams, and by extension I get to help them help their clients. As the state manager of an amazing aggregator my goal is to do well in my job and gain the experience and results required to grow to more senior levels and have a better understanding of the complex environments within our industry. My ultimate goal in business is to be recognised as having made positive and quantitative improvements to this wonderful industry and the people and their businesses within it.
it’s that reliable and efficient technology is paramount to successful business continuance and growth. I am incredibly grateful to be working for an aggregator that has completely embraced modern technology and promotes it to its brokers. I would like to see more acceptance from lenders around digital processes from loan submission through to settlement, providing efficiencies and better outcomes for the end consumer. I believe these changes will enable brokers to provide more choice to their customers without concern about long turnaround times and unnecessary delays, and they will also create a more even playing field in the third party space.
MPA: What makes your business model unique? Mhairi MacLeod, managing director, Astute Ability Group: I have been in the
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BEST-KEPT SECRET Specialist Finance Group has recently welcomed many notable newcomers to its business. Astute Ability Group founder Mhairi MacLeod explains to MPA why she made the move to the aggregator. “I have known of Blake Buchanan through the industry over the years and decided to listen to what he had to say about Specialist Finance Group, which I didn’t know a great deal about,” she says. “It became quickly apparent that they just might have been one of the industry’s best-kept secrets. Their deep understanding of our industry, governance, connections, opportunities and processes, and ability to understand a diversified business such as mine was pleasantly surprising. “SFGconnect is so good that my reliance on aggregator support has reduced. Many of its benefits have saved me money and given me more time to help more consumers.”
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FEATURES
LENDERS MORTGAGE INSURANCE
The guide of choice for homebuyers New research from lenders mortgage insurance provider Genworth shows just how mortgage brokers can help first home buyers who are jumping on opportunities arising this year
MANY FIRST HOME BUYERS are actively house-hunting, and many are preparing to buy their first home, according to new research commissioned by Genworth and undertaken by CoreData. Brokers can help FHBs who find the buying experience challenging, as applying for a loan is still the most daunting part of the
process and to embed their position as their ‘guide of choice’. Genworth’s research shows that, even in these uncertain times, FHBs are still keen to enter the property market, and in fact they feel a sense of urgency about buying soon. Amid more favourable purchasing conditions, FHBs remain active: more than seven
“The experience of buying a first home can be challenging, with obtaining the right loan and reviewing the contract being key concerns. This highlights the value … that mortgage brokers provide” Pauline Blight-Johnston, Genworth process and borrowers are turning primarily to family and friends for advice. Recent purchasers, however, clearly recognise the value of using a broker, rating them as their top source of information on loan options and suitability. This presents an opportunity for brokers to demonstrate their value to FHBs earlier in the buying
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in 10 having now been house-hunting for three months or more, and four in five think it’s a good time to buy.
FHBs are better prepared to buy Australian FHBs are adopting a new mindset and taking significant steps to accelerate their homeownership plans. In an effort to be
better prepared to take advantage of a buyers’ market, many FHBs are cutting back on lifestyle expenses or working overtime to fasttrack their savings, and a growing number are now comfortable about purchasing their first property with a deposit of less than 20%. One in three FHBs is now contributing more than 30% of their income towards a deposit, while two thirds now expect to buy their first home with less than a 20% deposit in hand, up 11% from this time last year. FHBs are also making adjustments to expedite deposit savings, including working more and cutting back on discretionary spending. Reducing lifestyle expenses is the top-rated behavioural change, followed by one in three FHBs working or planning to work overtime. One in five is even delaying starting or growing their family to achieve their homeownership goals. In an effort to be better prepared for when the right property comes along, there has been an uplift in loan pre-approvals, which now stand at almost 38%, up from 30% a year ago. Most have also established their borrowing capacity. Brokers can assist FHBs in setting them up for borrowing before they find their property, so that when they do find
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the one they want, they can go ahead and make an offer.
Support during the buying process Many first home buyers aren’t confident about getting a loan. For prospective FHBs, applying for a loan (44.3%), reviewing the contract and any legal paperwork (44.3%), and determining the right loan for their needs (41.3%) are the top three areas in which some support would be valued. Similarly, for recent FHBs, reviewing the contract and any legal paperwork (47.3%), applying for a loan (42.0%), and determining their borrowing capacity (33.9%) are the top three areas in which they would value some support. Research shows that applying for a loan is still the aspect of the homebuying process that FHBs find the most uncomfortable – equal to reviewing the legal paperwork and followed by finding a loan that suits their needs. Close behind that is negotiating the sale (41.1%), so broker support is needed at all stages of the buying journey. Brokers can support their clients early in the buying process where there is a need for guidance on the loan process and the loan most suited to their individual circumstances – in addition to having the support of a solicitor or a conveyancer in working together to assist the buyer.
FIRST HOME BUYERS’ SOURCES OF INFORMATION Talking to family/partner
50.5%
Meeting with a mortgage broker
48.7%
Browsing real estate websites
47.6%
Talking to a real estate agent
34.2%
Talking to a friend or colleague
31.7%
Meeting with a lender at a branch of my main financial institution
22.1%
Talking to a financial adviser or accountant Browsing comparison websites Browsing lender websites Meeting with a lender at a branch of another financial institution
20.6%
20.2%
18.0%
15.7% n = 1,036 recent FHBs Source: Genworth First Home Buyers report
Information gathering for FHBs First home buyers want the process of finding information to be easier. Almost seven in 10 (69.4% of ) prospective FHBs find it ‘very’ or ‘somewhat’ difficult to do research on who to see for a loan and which loan to obtain for their first property. Family and friends are a top source of loan information for FHBs. When prospective FHBs are looking for information on the homebuying process, their first stop is real estate websites (52.4%), followed by talking to family (47.2%), talking to a real estate
agent (39.8%), and, lastly, meeting with a mortgage broker (35.5%). The opportunity therefore presents itself for the mortgage broker to position themselves earlier in the information-gathering stage. When it comes to finding out who to see about a loan and which loan to obtain, 38.4% of prospective FHBs said they would talk to family or a partner, slightly more than the 34.6% who said they would meet with a broker; whereas 47% of recent FHBs said they would speak to their mortgage
broker, followed by a significantly lower 33.4% who would talk to family about the loan. “The experience of buying a first home or investment property can be challenging, with obtaining the right loan and reviewing the contract being key concerns among first home buyers. These concerns highlight the value of support that mortgage brokers can provide throughout the buying process,” said Pauline Blight-Johnston, CEO and managing director of Genworth.
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FEATURES
LENDERS MORTGAGE INSURANCE
WHERE FIRST HOME BUYERS NEED SUPPORT Stages of buying process that FHBs may be uncomfortable about and need support with 44.3%
Applying for a loan Determining the right loan for my needs
41.3%
Negotiating the purchase with the vendor
41.1%
Getting pre-approval for a loan
37.0% 35.7%
Determining how much/what I can afford to buy
35.3%
Determining my borrowing capacity 32.0%
Settling the property
28.9%
Auctions Inspecting properties
25.0%
Note: Top 10 answers only; multiple answers allowed
Getting the best advice Prospective FHBs indicate that they are shopping around, with almost one in three contacting three lenders or brokers before making a decision. This is to ensure they make an informed decision by getting the best advice, and find the best deal by having a variety of options. Of recent FHBs, nearly two thirds went only to their lender and broker. Those who contacted alternative lenders and brokers wanted to be certain they were getting the best deal and to be flexible in their choice. Recent FHBs weren’t looking further afield; nearly 60% contacted only one alternative lender or broker before deciding which one to choose, and a further 23.2% contacted two. For recent buyers, mortgage brokers were the top-ranked source of support. One in two recent FHBs said they saw a broker to get an understanding of loan providers and
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n = 2,193 prospective FHBs
options, though more have gone to their bank directly compared to last year. Interest rates are still the top factor that FHBs consider when deciding on a home loan,
mortgage insurance as well as application intention. Recognising the value of LMI, more than four in five (82.7%) prospective FHBs proposing to pay less than a 20% deposit were ‘very’ or ‘somewhat’ likely to use LMI to buy their first property, compared to 80.8% last year. The value of LMI is evident to those who have used it. Almost three in five (55.7%) recent FHBs with less than a 20% deposit using LMI and more than two in three (67.2%) LMI users said it had been valuable for them. The most common reasons for using LMI are ‘I wanted to buy my first property as soon as possible’ and ‘It would have taken me too long to save a 20% deposit’ (47.7% and 47.5%, respectively), further highlighting the prevailing sense of urgency among prospective and recent FHBs alike.
Value of brokers to FHBs Although prospective FHBs are proactive and ready to buy, the experience of buying a first home can be challenging for both prospective and recent FHBs, who may find elements of the process are unfamiliar and may need support from others, including brokers and conveyancers.
Brokers can support their clients early in the buying process where there is a need for guidance on the loan process but less so than in 2019. Ongoing fees and loan flexibility round out the top three factors driving their choice. However, the majority are determined to get into the property market regardless of the mortgage rate, as 77.7% of prospective FHBs would still be looking for their first property.
Value of lenders mortgage insurance The research shows an increase in levels of awareness and understanding of lenders
Obtaining the right loan appears to be a particular area of need for FHBs, especially given job security worries on the back of the ongoing COVID-19 pandemic. These areas of importance highlight the value of borrowers having support from a mortgage broker early in the homebuying process, and their role as ‘guide of choice’ for buyers. Their personal service and understanding of the individual’s situation is important to FHBs.
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FEATURES
LEADERSHIP
How leadership is like parenting Now that the lines separating our work and home lives have been blurred, it is easier to see the similarities between raising children and leading a team, writes leadership specialist Wendy Born
THE WORLD has changed so much in the last few months that it’s barely recognisable. We are no longer able to keep our worlds of work and family separate, having had the two smashed together in the most unorthodox way. We are now leading our organisations from the comfort of our couch, managing
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Bring love
At the foundation of any family is love – and so, too, must this exist at the foundation of teams. Through connection, understanding and forgiveness you can build a strong, cohesive team of staff who understand and value each other. A longitudinal study completed in 2014
Attitudes such as commitment to the organisation, job satisfaction and overall engagement are all positively influenced by a leader’s actions organisational financials while marking maths homework, having team meetings while our 11-year-old sits beside us doing her homework, and wondering if we could perhaps put our 14-year-old son on a performance improvement plan. While we have typically worked hard to keep these two worlds separated, there are five key similarities between them.
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by Barsade and O’Neill concluded that organisations with a culture of companionate love among employees have significantly higher levels of engagement and lower levels of withdrawal (emotional exhaustion and absenteeism). This then permeates out to their clients, customers and stakeholders. You can build connections with your people by sharing
stories with them about your past, finding things in common, and forgiving people when they make mistakes.
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Build your environment
In all good homes, creating an environment in which children can grow and thrive is essential to setting them up for success. At work, creating a safe psychological environment in which your people feel free to express themselves in whatever way they require will help foster creativity, innovation, productivity and engagement. This is supported by Harvard Business School research which found that organisations that create psychologically safe environments for their people increase innovation and employees’ desire to improve their teams or business. Building trust, being curious and promoting constructive conflict are great ways to ensure psychological safety in teams.
3
Promote health
We want our children to be able to thrive in a world that is increasingly demanding and in which stress is at an all-time high. When they are healthy and happy, both physically and mentally, they develop the skills and resilience to meet these demands. The same applies to the people who work for you. By supporting your people to live healthy lives through diet and exercise and to approach their work and challenges with a positive mindset that gives them the resilience they need, you help them
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manage stress, reduce illness and increase engagement. Research suggests that health-focused cultures encourage healthy relationships with our peers, stakeholders and customers, increase our ability to assess risk and make better decisions, and improve productivity while reducing errors. Leading by example by switching off early from work some days, taking time for exercise and eating healthy are all great ways to promote health at work.
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Watch your language
It’s confronting when your child repeats back to you the same words, phrases or slang that you know you use every day. As parents, we are constantly on show, being watched and observed, listened to (even though it appears otherwise) as we teach our children how to behave. Our employees also watch, observe and take in all our words, actions, behaviours and values, good and bad. Attitudes such as commitment to the organisation, job satisfaction and overall engagement are all positively influenced by a
they choose to do, be happy with their lives, partners, jobs, dreams and aspirations. As a leader, you also want your people to thrive, develop, learn and succeed. It’s important to
As parents, we are constantly on show, being watched and observed, [just as] our employees take in all our words, actions, behaviours and values, good and bad leader’s actions. A great way to build awareness of your language is through daily reflection on what went well, what didn’t and what you can change in the future.
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Show your vision
We all have hopes and dreams for our children – usually for them to grow up and be successful at whatever
have a vision of the future and a strategy to get there so your people can make the link between what they do on a daily basis and the goals of the team and organisation. Yet in a 2016 study it was found that a mere 12% of organisations were actually able to implement their strategy successfully, about 70% of strategic initiatives failed, and less than 20% of employees were able to
articulate what their organisational strategy actually was. Get sharp with your strategy by using clear and plain English, talk about it often and make clear links back to it with everything you say. As working from home is becoming the new normal, we can identify comparisons between leading teams and raising children and use the principles of parenting to help create work families that deliver now and into the future.
Wendy Born is the author of Raising Leaders and helps leaders maximise their talent and strengths to achieve extraordinary results. As an engaging facilitator, coach and speaker, she works with executives, senior leaders and leadership teams to create high-performance organisations.
www.mpamagazine.com.au
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PEOPLE
BROKERAGE INSIGHT
Broker’s recipe for small-town success Mortgage Choice broker Marvin Coleman talks to MPA about how he got started in the industry and later overcame burnout to realise even greater success
IT WAS serendipity that led Marvin Coleman into the world of mortgage broking about 14 years ago after he moved to Australia from London. And when he first started out in the business he experienced some major challenges. Despite that, the Mortgage Choice Oakleigh broker persevered over the long term, rising to number 29 in the Top 100 Brokers list in 2019 with more than $93m loans written in the year to selection. Coleman explains that he and his wife decided to leave London for down under after the 2005 London bombings pushed them to a turning point. Not long after moving, they purchased an investment property and started looking for finance. “I googled ‘mortgages’ and up popped Mortgage Choice. The broker came around to my house and was ever such a nice guy,” Coleman says. “He was Aussie through and through, and [for me], having come from the UK, he exemplified what an Australian was: easygoing, intelligent, professional and easy to connect with.” About two thirds of the way through the conversation, the broker asked Coleman if he would consider joining the profession. As a chartered accountant, Coleman gave a somewhat curt response to the contrary. But a couple of weeks later, after a discussion with
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his wife, he called him to apologise and explain that he had reconsidered. “Four months later I’d bought a Mortgage Choice franchise in the same area as him, and we’ve been sharing an office since March 2007,” he says. “We’re best friends, and he’s solely responsible for getting me into the industry. I’m very, very grateful for that.” The biggest challenge Coleman faced in his early days was the need to persevere in the business in order to push on and build traction. He says getting through the first two to four years are critical for a broker, but then
after that the possibilities are almost endless. “If you can make it through that, then you’ve got a really great chance of unlimited success; however, you choose to define that,” Coleman says. The second challenge he faced was burnout, the result of years of hard work without any support staff. After working on his own for so many years, Coleman says he wore it as a sort of “badge of honour” that exemplified his success. But he soon realised that he couldn’t continue working on his own and should have stood back years earlier and
DEALING WITH BURNOUT After working as a sole operator for a number of years, Mortgage Choice Oakleigh broker Marvin Coleman burned himself out and realised he needed to invest in more resources. “You’re running and running for years and years, and you’re taking on a hell of a lot of responsibility and looking after people’s lives,” he explains. “I got burned out, and I realised that I simply couldn’t continue working on my own.” Coleman says he realised he was an “idiot” and should have backed himself and his business years earlier by investing in more staff – so that’s what he did. “Transitioning from a single operator to running a team is your next key challenge for people in this industry,” Coleman says. “There you have to accept that you must think beyond short-term profit because you’re building a robust infrastructure which has value beyond just you. You end up developing a much stronger business as a consequence – and a better service for your clients.”
www.mpamagazine.com.au
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FAST FACTS Company: Mortgage Choice Oakleigh Manager: Marvin Coleman Location: Oakleigh, Victoria Year founded: 2006 Number of staff: 7 Services offered: Residential, owner-occupier and investor loans Featured in: MPA’s Top 100 Brokers 2017, 2018 and 2019
“I googled ‘mortgages’ and up popped Mortgage Choice. The broker came around to my house and was ever such a nice guy” invested in more resources and people. He took on his first recruit in 2017, and now the business is made up of seven people: Coleman is the sole broker, supported by four client care managers, a loan administrator, and his wife as business operations manager. The brokerage also has an adjacent financial planning business, FinChoice.
Looking back over his years as a broker, Coleman says he has seen “vast change” in the industry, including the increase in NCCP requirements and the introduction of helpful technology, and in terms of what clients expect. “I’d say clients expect a lot more from any service provider now, including brokers,” he says. “That said, they show extra apprecia-
tion and are very loyal when you do a great job for them. Being local seems to be less of a factor in clients’ evaluation of you; it’s much more about being great for them, solving their problems from wherever you are.” Coleman says he hopes to expand his team even further in the year ahead. As the only broker currently in his business, he would like to bring another on board to help him achieve his goal of working four days a week instead of six. “This would be a critical role in the business, as this broker may become a part business owner over time,” he says. “It’s part of my long-term strategy to keep the business growing but work in it less over time.” Other than that, Coleman says his everyday focus is on supporting his team to continue delivering excellent client service and education, and adapting and refining the brokerage’s processes to support that, not to mention adapting to the COVID-19 environment.
www.mpamagazine.com.au
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PEOPLE
OTHER LIFE
TELL US WHAT YOU GET UP TO Email rebecca.pike@keymedia.com
Todd O’ Brien’s current race car, the Ginetta G50 GT4, won Bathurst in 2016
200km/h Speed at which Todd O’Brien races
3
Number of times he’s raced at Gold Coast 600 Supercars
10
Number of years he has been car racing
IN THE DRIVER’S SEAT For 10 years, mortgage broker Todd O’Brien has been competing in some of Australia’s top car races WHILE SOME mortgage brokers might choose to unwind after a hard day of compliance and loan applications by uncorking a bottle of wine or sitting in front of the TV, Financial Destiny director Todd O’Brien prefers to race cars at 200km/h in front of thousands of people. After starting out racing motorcycles, O'Brien began car racing around 10 years ago. His favourite events are the Clipsal
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500 Supercars in Adelaide and the Gold Coast 600 Supercars, both of which he's taken part in. He has raced in the latter three times, including in the 2019 Australian GT Championship races. Last year at one of the Gold Coast events, O’Brien ended up needing IV fluids for two hours after a race on a particularly hot October day when his driver cool suit system failed, as did his
in-car drink system, with temperatures inside the car reaching 70 degrees centigrade. But he still enjoys jumping in the driver’s seat. “The huge crowds are so close to the track, the noise inside the race car is phenomenal, and we race at such a high speed with concrete walls all around us; it is a very challenging and exciting racetrack,” he says.
www.mpamagazine.com.au
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