Australian Broker magazine Issue 7.10

Smaller lenders throw down the gauntlet

POST APPROVED PP25500306906$495 ISSUE 710

May 2010

Brokerstosupportsmalllendersmore

Rebranding for ALI

Home lending lows

Art of negotiation

Getting brokers to think about mortgage protection as part of their product offering is a key point behind the recent rebranding of Australian Life Insurance

As first-time homebuyers remain absent from the market mortgage brokers are feeling the pain with a 12-month low in new home loan figures

Think you deserve a better deal for your efforts Here are some practical tips for negotiating your salary and perks with your current or prospective employer

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Page14 gtgt

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Smaller lenders have been pulling out all the stops to convince brokers to recommend their products to clients rather than sending them to the major banks

Carrington National has taken an innovative approach to attracting borrowers and brokers to their products by offering to pay for the LMI premium for loans up to 90 LVR where the premium is less than $4380

Carrington MD Gino Marra said non-bank lenders in general are more innovative than the banks in their offerings

ldquoThe pendulum is swinging back towards the non-bank lenders and some sanity is coming back to the marketrdquo Marra said ldquoConsumers have seen banks raising rates outside of the RBA and theyrsquove realised that there is no more risk going with a non-bank lender than there is going with a major bankrdquo

Marra said the offer open until November is for either Genworth or QBE LMI insured clients and

that brokers can earn up to 12 commission on its All-in-One product or up to 08 commission on the Horizon product

Non-bank lender Collins Securities and mortgage manager Iden Group have both promised mortgage brokers higher commissions for loans they originate as they look to gain market share in an environment where the majors dominate

Collins CEO Rob Emmett said the lender was increasing the amount paid on its low-doc refinance product to a maximum of 06 upfront and an ongoing trail of 025 ldquoItrsquos really a reflection of the work that goes into a refinance application from a broker perspective ndash and also wersquove got increased funding for that productrdquo Emmett said

ldquoWhat wersquore finding is that as the banks tighten up and restrict a lot of their parameters and credit policies itrsquos opening the door to the non-banking sectorrdquo Emmett said he is cautiously optimistic going forward and has seen evidence that funding sources have increased in the past 12ndash18 months

While brokers and consumers are still sending the majority of their business to the majors Emmett said there are signs that the third party channel is ready to embrace non-bank lenders once more ldquoItrsquos certainly a challenge but the walls are breaking down before our eyesrdquo he said

Gino Marra

Page18cont gtgt

2

Newswwwbrokernewscomau

wwwbrokernewscomau

Copyright is reserved throughout No part of this publication can be reproduced in whole or part without the express permission of the editor Contributions are invited but copies of work should be kept as Australian Broker can accept no responsibility for loss copy Key Media 2009

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

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Publishing director JustinKennedy

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Production editorsJenniferCross

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Design manager JacquiAlexander

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Australian growth to provide opportunities for brokers

Brokers train for post-GFC world

KPMG demographer Bernard Salt envisions a future Australia very different from the one that brokers work in today At a Genworth function looking at the impact of demographic shift on the mortgage industry Salt said that continued immigration is going to create opportunities for the industry ldquoI think we will see continued strong growth along the eastern corridor from Cairns down to Wollongongrdquo Salt said ldquoPeople will be more comfortable living outside the capital cities but they will always want to live close to the beachrdquo

Genworth chief risk officer Paul Caputo said that continued net migration is going to change the

makeup of the Australian population ldquoImmigrants are going to have different ways of purchasing property and will be looking for different types of propertyrdquo he said ldquoYou could start to see more mortgage products where there are more than one or two borrowers on the loanrdquo

Caputo said that demand for property will continue to grow increasing the likelihood of borrowers receiving support from parents or grandparents ldquoLMI is going to be a very important product to support homeownership within the Australian market Therersquos no doubt home prices in Australia are going to remain robust and strong for some timerdquo

Steve Weston GM of broker platforms and lending for Advantedge said historically immigrants are more likely to use mortgage brokers than other segments of the market largely driven by unfamiliarity with the Australian banking and financial system and language barriers

ldquoI think brokers who can develop a proposition that reflects the needs and habits of migrants will be ideally positioned to capture the growth Word-of-mouth recommendations by family and friends will often start the discussion with prospective clientsrdquo

The National Finance Institute has set up a series of workshops to help new and experienced brokers ldquore-engineer their business to harness the demand for professional brokersrdquo FrontRunner Consulting Grouprsquos Doug Mathlin and National Finance Institutersquos Peter Heinrich will hold workshops nation-wide to help brokers adapt their business to a post-GFC world

ldquoThe signs are good for mortgage brokers as many tell me that lead generation is improving consumer confidence in property is rapidly rising as are property values in

many areas in Australiardquo FrontRunnerrsquos Mathlin said

He added that the new regulation provides opportunities for brokers who can take advantage of the fact that many brokers are leaving the industry before the legislation becomes effective New regulations will force brokers to implement processes in their business

ldquoThis clearly leaves an opportunity for those that remain to grab more market share for themselves and consolidate their business Continuous improvement is an essential element to business

Bernard Salt

growth ndash constantly working on your service proposition client care and personal performancerdquo Mathlin said

Heinrich will lead a session called lsquothe psychology of a loanrsquo designed to help attendees better define and sell their value proposition to clients Mathlin will lead a session on improving profitability and efficiency Attendees will also take part in a conversion workshop conducted by both trainers which helps brokers to turn leads to applications and applications to settlements

Read the latest issue of Australian Broker online wwwbrokernewscomau


4


MFAA seeks clarification from ASIC on volume hurdlesMFAA CEO Phil Naylor has asked ASIC to provide its members with guidance on how to handle volume hurdles in conjunction with the new regulations that will come into effect at the start of July As it stands brokers face the prospect of hefty fines or jail time for not providing consumers with independent guidance on choosing a home loan regardless of any volume hurdles erected by lenders

ldquoA conflict arises where an interest of the licensee conflicts with a legal obligation that the licensee owes to the client including one that arises under the credit legislationrdquo ASIC said in a regulatory guide to the National Consumer Credit Protection Act

Brokers who break those legal obligations face fines of up to $11000 or two years in jail or both If it is a company that is found guilty of breaching those obligations the penalty can be as high as $11m

RBS is currently in the process of selling its hugely successful reverse mortgage business in Australia as part of austerity measures put in place by the bankrsquos owners in the UK

Following a strategic review in February the partially government-owned lender announced it would exit all non-core retail businesses outside of the UK This led to the cessation of new business for its Australian reverse mortgages business

However the head of the division Martin Lynch said that the decision to close new business would not impact existing customers with reverse mortgage loan products There would be no changes to the lenderrsquos terms and conditions while the sale process unfolds ldquoThe intention is that we will just move with [the reverse mortgages division] to the new owners once the sale is resolvedrdquo Lynch told AB ldquoThe expectation is that the product will reopen once a sale is complete since it is a very popular productrdquo

While no timeframe was given for the completion of the sale process brokers who deal with reverse mortgages will hope that it happens sooner rather than later

RBS backs out of reverse mortgages

Greg Reid director of Reid Consultants sells about one reverse mortgage each month He said the exit of RBS leaves just three providers in the marketplace (Bankwest CBA and StGeorge) and hinders his ability to find the best product for his clients

ldquoIt wonrsquot affect my ability to service my clients but it takes away some flexibility because they were the only one offering any sort of income stream or fixed interest loans and they were the last ones to do thatrdquo Reid said ldquoMost of my clients are pensioners who are struggling to make ends meet Maybe they have credit card debt or have little to no superannuation because when they retired it hadnrsquot been instated and theyrsquore looking to increase their incomerdquo

Demand for reverse mortgages has remained steady over the past 12ndash18 months Lynch said but the real growth has been centred around accommodation bond funding ldquoThe biggest shift wersquove been seeing is in funding peoplersquos move into aged care The accommodation bond funding has been the biggest growth areardquo Lynch said

ldquoThe number of people who are over 85 is going to increase by 400 in the next 30 years and as a result the demand for that product is just going to grow significantlyrdquo He said it is in this area that brokers will be able to build their businesses and take advantage of the growth in demand

ldquoWersquore tending to find that brokers deal with the product extremely wellrdquo Lynch said ldquoThe product itself isnrsquot hugely complicated ndash itrsquos just a matter of meeting your clientrsquos needsrdquo

CBA requires that brokers must submit at least four mortgage applications and settle a minimum of three loans within a six-month period while Westpac requires at least one loan to be settled every six months

Naylor said that he had held discussions with the lenders last year but they were adamant that they were working in the best interests of their customers The banks contend that a broker must submit a certain number of loans in order to be suitably knowledgeable about the products they are selling

Last year Refund Home Loans approached the ACCC to complain about the practice but had its complaint dismissed Naylor said that he approached ASIC after the lenders indicated to him that they would not be changing their policies once the new regulations come into effect ldquoAt that time that wasnrsquot possible so we are now talking with ASICrdquo Naylor said adding that the MFAA was waiting for a reply from the regulatorMartin Lynch


6


Westpac pledges to match RBA moves for rest of the year

The US Senate has voted to ban the practice of paying broker commissions based on how much they are able to charge their client The practice has been blamed for putting many borrowers in unsuitable loans

US cracks down on broker bonuses

the RBA for the rest of the year After the central bank increased the cash rate by 25 basis points to 45 at the beginning of May Kelly said that she expected the RBA to pause before resuming its tightening of monetary policy

ldquo[The increase] suggests that there will now be a pause before the next increase some time later this yearrdquo she said ldquoWhen that next increase occurs it will likely be in response to growing inflationary pressuresrdquo

After the RBA lifted its rates all four of the major banks and Australiarsquos fifth-largest mortgage lender ING Direct followed by increasing their mortgage rates by 25 basis points This brought the majority of mortgage rates to what RBA governor Glenn Stevens called ldquohistorically average levelsrdquo

However a number of commentators warned that

Stevensrsquo comments did not signal an end to rate rises in this cycle Continued inflationary pressure resulting from strong employment and another boom in resource prices is likely to mean that the RBA will have to move from neutral to a restrictive setting in the next 18 months

Most analysts believe the cash rate is likely to peak at around 6 some time in 2011

directly led to the Wall Street meltdown and resulted in millions of families losing their homesrdquo said Senator Jeff Merkley a Democrat from Oregon who sponsored the ban on broker bonuses for higher-interest loans The measure passed the Senate with a vote of 63 for 36 against

The bonuses that have been banned were known as yield spread premiums and reflect the fact that the value of mortgages is based on the terms of the loans A study found that these bonuses which technically could have been used to help pay for some of the costs of the loan averaged around US$2000

The study also found that nearly all the brokers surveyed were putting their clients into more expensive loans and pocketed the rebates

The Senate also voted to ban stated-income mortgages These

mortgages rely solely on the borrower to inform the broker and lender what their income is in order to determine whether a particular loan or loan amount is suitable for that borrower They have become known in the US as lsquoliar loansrsquo and are cited as a key reason why the country suffered its housing market collapse

While house prices continued to rise borrowers using these stated-income loans were able to refinance a year or so later taking out the equity in their homes and making a tidy profit Because most mortgages in the US are non-recourse when house prices took a dive many borrowers were able to walk away from the loans simply by handing over the keys to the house to the lenders

This is said to have contributed to the housing downturn that led to the most severe recession seen in almost a century

Westpac CEO Gail Kelly has promised brokers that their clients will not have their mortgage rates increased by more than the increases in the Reserve Bankrsquos cash rate for the rest of 2010 Speaking at the presentation of the bankrsquos first-half results Kelly defended Westpacrsquos record profit which increased 32 to $29bn and pledged to ensure borrowers did not have to pay for the increased cost of funds

ldquoItrsquos not on our agenda to increase our mortgage prices over

and above what the RBA may dordquo Kelly said

Westpac slugged borrowers last year with an additional 20 basis point rise when the RBA lifted the cash rate by 25 basis points in December 2009 The move pushed Westpacrsquos standard variable mortgage rate to the most expensive of the major banks with the rate now at 741

Kelly said that Westpac had moved to lengthen the maturity of its funding and eased its competition for retail deposits allowing it to move in-step with

which resulted in the wave of defaults that preceded the global financial crisis The ban on these bonuses comes from amendments made to financial reform legislation currently making its way through the US Congress

Currently brokers are able to charge their clients different rates for the same product from the same lender Brokers are rewarded by being paid a higher upfront commission for loans that have higher interest rates The lender then packages up the loans selling them onto another lender ndash who will pay more for a bundle of mortgages that contain high-interest loans

However the US Senate is seeking to remove the incentive for brokers to put their clients in high-interest loans by removing the financial incentives for doing so ldquoDeceptive mortgage practices like hidden steering payments

Gail Kelly

8


Rate rise offers opportunity for brokers says MFAA

New group leads broker evolution The recovering mortgage market has spurred the creation of a new group that aims to help brokers become mortgage planners Darryl Benn the principal of The Mortgage Planner Group said he is altering the traditional role of a loan writer

ldquoWhat wersquove created is a product called The Mortgage Plan but we believe wersquore creating a new profession in the industryrdquo he said According to Benn brokers that decide to become planners will develop a huge competitive edge over their competitors ldquoWhen you talk to your customers you identify yourself as a mortgage planner

Of course the first question is lsquowhat is a mortgage planner rsquordquo he said

ldquoThen we explain to you that we do a budget we analyse your affordability we do a fact-find to understand your actual requirements now and in the future we do an annual review and we provide ongoing support for the life of the loan Whereas a mortgage brokersrsquo focus is to write the loan and forget itrdquo

By using the companyrsquos Mortgage Plan a comprehensive 80-page document that looks at a clientrsquos budget their current and future financial needs and a plan on how to achieve those goals Benn said brokers can

gain a life-long relationship with their client that is based on responsible lending and borrowing

Benn said that he realised some time ago that a lot of brokers were facing challenges to survive and grow a viable business with shrinking commissions less loan products to offer and tightened lending regulations ldquoWith the introduction of new legislation I believe it is the right time for brokers to consider their future and how they can further develop their businessrdquo

He added that ldquothis new model will reshape the way brokers will do business with clientsrdquo

The Mortgage Planners Group has hooked up with Intellitrain to provide a new mortgage planning course Intellitrain is the first Registered Training Organisation to present a mortgage planning course to the industry The course will teach brokers about domestic cash-flow management budgets forecasting how to do a fact-find as well as a mortgage plan

Brokers who choose to take the mortgage planning course have no obligation to join The Mortgage Planners Group however those who are looking to utilise the grouprsquos Mortgage Plan will have to complete the course

ldquoThe current level of housing supply in Australia is insufficientrdquo he said ldquoIncreasing interest rates only makes a bad situation worse by negatively impacting on the ability of developers to service loans fuelling the issue of a growing shortage of available housingrdquo

HIA senior economist Ben Phillips has also expressed concern ndash primarily about the impact the rate rises could have further down the line ldquoThe rate increases so far are not showing through yet in the property market as they usually operate with a nine to 12-month lagrdquo said Phillips ldquoWe are concerned the RBA is not fully factoring in this lag and expect that further rate rises will hit households hard later in 2010rdquo

However Phillips believes the housing market will remain robust as long as any increases are not too large ldquoHigher rates will lead to greater stress for mortgagors however we donrsquot expect that small rate rises will

existing borrowers and perhaps encouraging them to carry out a mortgage health checkrdquo he added ldquoIt may be the case that refinancing ndash or even moving to a new lender ndash could see consumers achieve considerable savingsrdquo

Naylorrsquos comments come amidst industry criticism of the central bankrsquos decision to increase the cash rate to 45 earlier this week with Real Estate Institute of Australia president David Airey likening the move to ldquoputting a finger in a leaking damrdquo

Airey made the comparison while arguing that the real issue was lack of supply as demand for available housing increases

Savvy mortgage brokers could stand to benefit from the Reserve Bankrsquos recent rate rise according to MFAA CEO Phil Naylor He said there are untapped opportunities for brokers in the current environment of rate rises particularly in terms of helping existing borrowers

ldquoTherersquos a real opportunity for brokers to demonstrate the value-add they can bring to consumersrdquo said Naylor ldquoWhile competition may not be as fierce as in the past therersquos still a significant discrepancy in the rates offered by the major lenders and smaller second-tier lenders

ldquoBrokers can really strengthen their proposition by contacting

Phil Naylor

lead to higher default rates and the house price collapses that would ensuerdquo he added

ldquoThe economy and the housing market can cope with modest rate increases Large rate increases will lead to bigger problems down the trackrdquo

For all the latest mortgage industry news visit wwwbrokernewscomau

10


ALI re-branding turns focus to mortgage protection

Australian Life Insurance ALI Group has re-branded to make brokers think about mortgage protection as a key part of their product offering

ldquoA mortgage broker is setting someone up with a large amount of debt therefore itrsquos only reasonable for them to help guard against their inability to meet their obligations in the

event that their client were to become seriously ill or dierdquo said ALIrsquos head of sales and distribution Darren Smith ldquoOffering to protect a clientrsquos mortgage provides dignity control and choice in stressful timesrdquo

ALI Grouprsquos repositioning comes as a direct response to mortgage broker feedback

Smith said adding that the complexity typically associated with more traditional life insurance offerings often results in no insurance being taken out ldquoItrsquos now more important than ever for brokers to be providing real value and full service to their clients in order to secure a sustainable futurerdquo he said ldquoIf they donrsquot someone else willrdquo

Smith said that brokers should incorporate into their business process offering mortgage protection to their clients so that it becomes habitual He said that rather than diversifying their business offering what brokers are actually doing is enhancing their service proposition by offering to protect their clientrsquos mortgage ldquoThe deeper a mortgage broker can infiltrate the relationship the more likely a client will remain theirsrdquo Smith said ldquoWider product offerings will also help brokers maintain revenue through all market conditions allowing

them to continue to service their clientsrdquo

He said the GFC has raised the awareness of risk and many homeowners now realise that they are exposed and need protection Brokers should feel an obligation to at least raise the issue of mortgage protection with their clients Research has also shown that most customers would be happy talking about it with their broker at the time of taking out a loan

ldquoMortgage brokers have experienced a downturn in business with the property market dropping off since last yearrsquos boost from first homebuyersrdquo Smith said ldquoALI Grouprsquos repositioning is a direct response to mortgage broker feedback requesting we more closely align the cover we offer to the core mortgage transaction

ldquoItrsquos about integrating with their process and assisting them in fulfilling their obligations to their clientsrdquo he added



12


IFBF says regulation may limit access to loan productsAggregators are placing unworkable conditions on brokers as a result of the new National Consumer Credit Protection Act according to a spokesperson for the Independent Finance Brokers Forum Darryl Benn said that the new legislation could result in borrowers being denied access to a number of lenders by aggregatorsrsquo requirements that brokers meet specific volume targets for specific lenders

ldquoIt is evident from attending a number of presentations on the new National Credit Code that a large number of brokers do not fully comprehend the complexity of the application of the legislation as it will apply to brokers on a day -to-day basisrdquo Benn said ldquoOne of the consequences of the legislation is that it could enable aggregators to restrain brokers to work only with lenders on their panel ndash which could have the effect of denying a brokerrsquos clientrsquos choice in the mortgage marketrdquo

Benn said this would create inconvenience for borrowers in that they may have to consult

more widely to get comparisons on a range of loan products There is also the possibility of aggregators creating operational conditions on brokers which would lead to the aggregator being able to cancel the brokerrsquos accreditation if volume or product distribution conditions were not met he added

The Independent Finance Brokers Forum represents 150 brokers and brokerage firms and was established as a broker information exchange and support group three years ago Benn said that many of its members are uncertain of the approach they should take towards registration ndash and particularly whether they should operate under an aggregator umbrella or seek to have a more independent approach

Benn said that uncertainty around how the aggregators will use the credit representative system is likely to push brokers to the more expensive operating structure of a fully licensed entity

Industry sources are hoping that superannuation funds will take heed of recommendations made in the Cooper Review stating that they use the vast supply of funds at their disposal to develop a range of reverse mortgage products

ldquoI think itrsquos critical that the reverse mortgage market benefit from the competitive tension that exists from major banks and specialist lenders and Irsquom confident that there will be new entrants to the reverse mortgage marketrdquo SEQUAL CEO Kevin Conlon said ldquoIn his superannuation review Jeremy Cooper quite correctly points to there being a category of providers that are likely to emerge in the [reverse mortgage] market from these superannuation companiesrdquo

While Conlon said that no superannuation funds have made any moves to develop a reverse mortgage product yet he thinks that it would be a natural fit for the requirements of the retirement savings of Australians These products should not be confined to major banking groups ldquoTherersquos no reason why people other than commercial banks shouldnrsquot be competing in the reverse mortgage market and I think thatrsquos where the future liesrdquo Conlon said

ldquoCertainly superannuation funds have a natural hedge given their time horizons for their invested funds under management These are not easy products to manufacture and as Cooper said the superannuation funds are uniquely placed to meet the challenges of manufacturing a reverse mortgagerdquo

Demand for reverse mortgage products is expected to grow exponentially once the Baby Boomer generation reaches retirement age ldquoThe average age

of customers for the product is still 74ndash75 so in terms of the Baby Boomer flow-through thatrsquos still a little way offrdquo said Martin Lynch RBS head of reverse mortgages ldquoWersquore still at the pre-Baby Boomer stage so I think the significant demand shift will be over the next two or three yearsrdquo

Demand has not been helped by a booklet that ASIC has produced called Thinking of using equity in your home In it ASIC uses examples that are at the extreme end of the scale when the majority of clients are far more conservative in their use of the products said Reid Consultants director Greg Reid ldquoFrom my point of view the examples they have illustrated are somewhat negative in that they use higher interest rates high loan amounts and full drawdowns whereas in my experience clients just donrsquot go to those extremesrdquo Reid said

Another handbook produced by the National Information Centre on Retirement Investments (NICRI) provides a more balanced view Reid said The booklet called Accessing the equity in your home uses examples that are more in line with the circumstances of his clients he added

Call for super funds to enter reverse mortgage space

Kevin Conlon


13wwwbrokernewscomau

New rules being set by the US Securities and Exchange Commission could stall the recovery in the Australian securitisation market according to an industry body The Australian Securitisation Forum (ASF) has voiced concerns that issuers will face higher costs and legal uncertainties under SEC rules that come into effect at the beginning of June The offending rule is targeted towards the ratings agencies that many have blamed for rating toxic RMBS issues strongly leading investors to take excessive risks The new rule will require any issuer of RMBS securities to make information available to the big three ratings agencies via a secure website ASF said this would ldquogive rise to significant operational issues and will delay transactions in what is already a fragile but recovering marketrdquo

Just when wholesale funding markets were starting to stabilise a debt crisis on the other side of the world threatens to put upwards pressure on Australian mortgage rates Prior to the GFC it was high levels of private debt that spooked the funding markets but this time around it is the debt being carried by countries in the European Union and the UK that has sent shockwaves through the wholesale funding markets When the funding markets spiked as a result of the GFC it signalled an end to the coupling of Australian mortgage rates and the Reserve Bankrsquos cash rate However Australian banks have not veered from the RBArsquos moves since December as wholesale markets started to become more predictable A second round of uncertainty as a result of the European debt crisis could lead to more moves over and above those of the central bank Glenn Stevens and his colleagues are likely to take this into account when they make their decision on the cash rate next month most analysts are expecting them to hold tight and see how the European situation works out before resuming their tightening course

For the second time this month the MFAA ousted a member with Pingkie Ong of Preston West Victoria expelled for misconduct According to the MFAArsquos Disciplinary Tribunal Ong failed to disclose all liabilities on a mortgage application that he submitted to a banking lender as both the mortgage broker and co-borrower ldquoThe tribunal regarded the allegations as blatant and seriousrdquo it said citing clause 42 of the MFAA Code of Practice MFAA CEO Phil Naylor said ldquothe MFAA has a well-defined Code of Practice which demands high standards of behaviour ethics expertise and experience This expulsion is part of policing those standardsrdquo

ASIC has approached its additional consumer credit responsibilities by appointing a new Deputy Chair and a new Commissioner The regulator announced that Belinda Gibson has been made deputy chairperson while the position of commissioner is being filled by Shane Tregillis ldquoThe promotion of Ms Gibson to Deputy Chair and the appointment of Mr Tregillis will ensure that the Commission has the capacity and experience to deal with its increasing responsibilities including market supervision and consumer creditrdquo said The Hon Chris Bowen MP The appointment of a new Commissioner will allow ASIC to increase its focus on retail investor issues and financial literacy

Unveiling the Victorian governmentrsquos budget Treasurer John Lenders increased the boost for first-time buyers who purchase newly built homes From July first-time buyers of new homes in Melbourne will receive an extra $2000 which along with an existing $7000 grant will bring the bonus to $20000 Regional Victorians will receive $26500 towards the cost of a newly constructed home up from the $22500 which is currently availableThe Housing Industry Association said the move would boost supply at a critical time without putting more upwards pressure on house prices ldquoThe extension will help maintain jobs in our industry and provide a much-needed boost to housing supply by helping more first homebuyers build their dream homerdquo said HIA Victorian executive director Gil King

INDUSTRY NEWS IN BRIEF

European debt crisis could pressure mortgage rates

ASIC promotion to deal with regulation

US rules threaten Aussie RMBS issues

MFAA expels member

Victorians receive Budget boost


14



New home lending hits 12-month lowMarch ref lecting a continued decline in demand for housing finance from the owner-occupier segment which had dropped 25 since October

ANZ economist David Cannington said this is led by a continuing exodus of first homebuyers ndash there were 67 less first-time homebuyers in March than there were in October ldquoThe fall in housing finance approvals both in terms of value and number confirms that slowing momentum in housing finance commitments will continue to present concerns for the undersupply issue facing the Australian housing market despite the spike in building approvals for March 2009rdquo Cannington said

ldquoConstruction loan approval numbers fell 71 in March to be down 202 since October 2009rdquo

HIA chief economist Harley Dale said there is a disturbing downward trend in new home

lending which does nothing to instill confidence in the prospects for a recovery in new residential construction that extends beyond this year ldquoThe March ABS Housing Finance result marks the fifth consecutive fall in loans for construction and the sixth consecutive decline in total lendingrdquo Dale said ldquoWe have a debilitating confluence of higher interest rates tight credit availability and obstacles related to land supply planning and infrastructure charges and taxationrdquo

Dale said that the first stage of new home building recovery was clearly driven by first-time buyer-related activity ldquoIn the March 2010 quarter the first homebuyer loan market was nearly 50 down on the same period last year but the non-first homebuyer market was weakening ndash rather than filling the void left by the removal of the First Home Owner Grant Boostrdquo he said

The notable absence of first-time homebuyers is continuing to impact the mortgage broking industry as new home loans hit a 12-month low according to

figures released by the Australian Bureau of Statistics

The number of owner-occupied housing finance commitments fell by 34 in




Pepper adds spice to mortgage market Having bunkered down and weathered the storm during the GFC Pepper Home Loans is now gearing up to take advantage of changing market sentiment by launching two new products The non-bank lender has released its Pepper Flexi Advantage and Pepper Self-Employed Advantage products which are aimed squarely at a market segment that it believes is currently underserviced through traditional channels the self-employed and those borrowers just missing out on a home loan due to their own unique circumstances

Pepper said that the GFC has proven to be one of the most challenging periods for the Australian mortgage industry changing the home lending market probably forever The fallout has directly impacted the level of competition in the Australian home lending market Another by-product of the GFC has been the extensive tightening of credit criteria within the market primarily driven by increased risk aversion from Australiarsquos two largest mortgage insurers Genworth and QBE

This steady tightening has meant that many customers can no longer obtain a home loan from the major banks Mortgage brokers are finding that a large number of loan applications which would have been approved by the mortgage insurers and major banks less than 18 months ago are now being rejected This is where Pepper believes it can capitalise on an opportunity

ldquoWe are committed to providing brokers with a competitive edge by introducing new productsrdquo said Duco Sickinghe head of distribution ldquoAt the end of the day this also means that brokers will be in a better position to build their businesses by being able to close more loansrdquo

In August 2004 Alan Pavisichrsquos baby daughter was diagnosed with infantile leukaemia Eleven months later Pavisich was told that he too had cancer Two cancer battles in two years cost Pavisich 18 months of his working life ndash but it did not cost him his career After thankfully seeing off his daughterrsquos leukaemia and beating cancer himself Pavisich returned to Bankwest where he has worked now for 23 years

His tenacity has recently been rewarded with a promotion to head of corporate and commercial banking ndash a position he never would have dreamed he would be in five years ago ldquoI feel really fortunate to be given this great opportunity and Irsquom looking forward to working with the team to build relationships and increase business lendingrdquo Pavisich said ldquoThis is an exciting time for the booming WA economy with businesses spending money again Itrsquos important we provide the service and attention companies need to expand during this crucial recovery periodrdquo

Pavisich said his top priority is to maintain a strong presence in Bankwestrsquos home state while boosting its presence on the east coast ldquoThe availability of bank funding for businesses has been a hot topic lately so what we want to do is overcome any difficulties faced by companiesrdquo he said

Alan Pavisich

Bankwestrsquos new commercial chief has faced many battles


16





18


Swan looks to boost competition

Budget promotes First Home Saver Accounts

after the GFC enabled some of the majors to acquire the strongest second-tier lenders in StGeorge and Bankwest The Treasurer is hoping that some foreign banks will be able to come in and fill the void ndash but it may be too late

RBS was until recently an active player in Australiarsquos reverse mortgage market In fact it was widely considered to have the strongest product offering in that space However the GFC sent the bank reeling requiring a UK government-funded rescue package in order to remain solvent This has managed to keep the lender from collapsing but has also meant that it has had to change its course

RBS like many other huge financial institutions that had to be bailed out by their respective

Treasurer Wayne Swan is looking to boost competition in the Australian banking sector by cutting the level of withholding tax that banks and other financial institutions pay on the interest they pay in offshore borrowings

The move was announced along with the Budget and is aimed at removing a tax that was seen as imposing an unfair penalty on foreign banks operating in Australia because their local operations often relied on borrowing money from their parent institutions to fund their lending The tax is currently set at 5 but will drop to 25 in 2013ndash14 and be completely eliminated by 2015

Swan hopes that this will help entice international financial institutions to the domestic

banking sector and increase competition for mortgage lending which is currently dominated by the top four banks

The move was hailed by MFAA CEO Phil Naylor as a huge bonus to brokers ldquoWe welcome the announcement that the withholding tax on overseas lenders with branch operations in Australia will be reduced then ultimately eliminatedrdquo he said ldquoThese lenders have the capacity to make considerable funds available for lending to Australian borrowers and in general transact much of their business through brokers This move will be a positive in freeing up competition in the lending marketrdquo

The Treasurer was forced into making Australia a more attractive place for foreign banks

Wayne Swan

Borrowers have largely shunned the First Home Saver Accounts since they were introduced to the market in October 2008 to make home ownership more affordable Buyers said the accounts were overly complicated and had some unfair provisions that made them unattractive investment accounts So the Federal Government has moved to address some of these complaints in the latest Budget

The accounts which have a four-year term work by allowing

borrowers to put aside funds that can be used to purchase their first home The government committed to contributing 17 on the first $5000 of individual contributions made each year but these incentives still did not entice consumers

One of the main problems was the condition that at the end of the four-year term the money needed to be used as a home deposit or else rolled into superannuation to attract tax

concessions This made it risky for people looking to buy their first home but who were not sure about the time it would take them to save the deposit

In his Budget speech Treasurer Swan said that the government would ease the rules for the accounts so that individuals who buy a home will be able to transfer their savings across to their mortgage rather than roll it into their super accounts

MFAA CEO Phil Naylor lauded

the government for making it easier for borrowers to save for a home but questioned the impact these changes would have on brokers ldquolsquoLargely the Budget will not have any direct material impact on MFAA membersrdquo Naylor said ldquoWhile we welcome the moves to discount tax on savings interest and enhance Home Saver accounts they are not seen as having any immediate impact on borrowers entering the mortgage marketrdquo

governments has now been forced to pull its resources from outside the country to focus on providing lending capacity in its home country This withdrawal has decreased the number of foreign banking institutions that are able to take advantage of the cut to the withholding tax

ldquoThe poor service brokers are getting from the banks and the hurdles that some banks have put up for brokers are changing the attitude of the third party towards banksrdquo

Parramatta mortgage manager Iden Group is also looking to attract brokers away from the

contfromcovergtgt majors by offering higher commissions than the top four lenders For loans submitted until the end of June the company is offering a special broker remuneration structure For a select suite of loans Iden will be paying a massive 080 upfront and 015 trailing commission from day one

Outside of this promotion the mortgage manager pays 06 ldquoIf you remain silent yoursquore going nowhere yoursquove got to attempt to raise your profilerdquo director Barrie Gaubert said ldquoUs mortgage managers are minnows in this industry and we donrsquot even pretend to be able to compete with the Big Four banks in terms of

marketing spendrdquo Gaubert said the market has

become more buoyant in the past few months but it is not nearly as frantic as it was prior to the GFC He said that borrowers are coming round to the idea that there is a rightful place for non-bank lenders in the marketplace



Cornish

Mortgage brokers will benefit from a cut in the tax rate for small businesses from 30 to 28 although the tax break will not come into effect until 2012-2013Small businesses with less than $2m in revenue will see their company tax rate fall under announcements the Rudd Government formalised in its Budget

The concessions were first made in the Henry Review although Ken Henry proposed that the tax rate for small businesses be cut by 5 to 25 Treasurer Swan has said however that the proposed cuts will only be possible if the government is able to pass its 40 ldquosuper profitsrdquo tax on mining companies

Opposition Leader Tony Abbott has firmly opposed the mining tax and said that it will be repealed if he wins the election That would also leave other measures announced by the Rudd Government out in the cold ndash including the ability for brokers and other small businesses to depreciate assets in a single pool at 30 and to take advantage of the instant small business asset write-offs which are worth up to $5000

Those broker groups that just miss out on the benefits because they earn more than $2m have reason to moan Ken Henry recommended that the definition of a small business be changed from one that has $2m in revenue to one that has $5m Yet this was just one of the 134 recommendations from the tax review that the Rudd Government saw fit to ignore

Employers however will be slugged with larger superannuation expenses from 2013 with the government intending to gradually increase the superannuation rate until it finally reaches 12

Brokersrsquo tax rate set to fall

BUDGET LIKELY TO PUSH RATES UP TypicalforapoliticianinanelectionyearTreasurerWayneSwanpromiseditallinhisBudgetndashareturntosurplussurgingbusinessinvestmentfallingunemploymentandfallinginflationUnfortunatelyforanyonewhoselivelihoodislargelyimpactedbydecisionsmadebytheReserveBankofAustraliaatleastoneofthosethingscannotpossiblybetrue

MostofthepromisesmadebySwanwhenannouncinghisBudgetwerebasedonanimprovedeconomicoutlookwhichisfairenoughsinceconditionshavecertainlychangedinthepast12monthsHoweveritisunlikelythatAustraliawillbeabletodefymacroeconomiclawsinsistingthathighlevelsofinvestmentandlowlevelsofunemploymentleadtoincreasedinflation

SincemosteconomistsbelievethattheexpectationsareprettyaccurateitseemsthatinflationarypressureswillalmostinevitablyresultldquoDespitestrongrealandnominalgrowthintheeconomyandanunemploymentrateheadingbelow5onceagaininflationisprojectedtostayinthemiddleoftheRBArsquostargetbandforthenextfouryearsrdquosaidANZchiefeconomistWarrenHoganldquoWedonrsquotbelieveitUnlesstheAustraliandollarrisesanother30(possible)orwagesremainremarkablycontained(unlikelyandnotthegovernmentrsquosforecast)wejustcanrsquotseeinflationholdingatthisraterdquo

TheonlywaythatinflationwouldbeabletobecontainedgiventheforwardprojectionsbytheRBAtheFederalGovernmentandeconomistsaroundthecountrywouldbeifthegovernmenthaddeliveredaBudgetthatslashedspendingandthusactedasacounterweighttoprivatesectorinvestmentgoingforwardSincethisdidnothappenitwillbelefttotheRBAtocontaininterestratesusingitsfavouriteleverndashthecashrate

ANZsenioreconomistKatieDeansaidthatthemodestfiscaltighteningisappropriategivenAustraliarsquossolidgrowthoutlookndashbutthatitwouldnotbeenoughtomitigateupsideriskstoinflationldquoWethereforestillexpecttheburdenofkeepingAustralianinflationcontainedwillstillfallheavilyontheRBArdquoDeansaidldquoWethereforewouldstillexpectfurthermonetarytighteningtobedeliveredintheupswingofthiseconomiccycleandmaintainourforecastforinterestratestoriseto525byend-2010rdquo

GiventhatitisanelectionyeartheRuddGovernmentoughttobecommendedforpresentingarelativelyaustereBudgetthatwillnotaddinflationarypressurestoaneconomythatisalreadyfeelingtheimpactsofsuccessiveraterises

HoweverasonecommentatorpointedoutaftertheBudgetannouncementthegovernmenthasleftplentyofwriggleroomforspendingpromisesdowntheroadBylimitingitselftojust2ofrealgrowthinspendingthegovernmentstillhasbillionsupitssleevetosweetenvotersastheelectionnears

Ifitendsupusingthismoneytobuyvotestheninflation(andcorrespondinglyinterestrates)mayclimbhigherthaniscurrentlypredicted

CORNISH COLUMN


20


Technology helps lender cut costs

Harcourts estate agents have duty to refer business

As part of a real estate professionalrsquos duty of care to clients all clientele should have a satisfactory arrangement in place for organising financial approval for their potential property purchase according to Harcourts Financial Services CEO Andy Graham

Graham said it is part of the service that should be provided to ensure the client receives the best treatment as part of their duty of care ldquoA recent independent survey indicated that on up to 65 of occasions finance was not discussed as part of the real estate transactionrdquo Graham said

ldquoI found this a staggering statistic given that finance consultants are an integral part of a property transaction to ensure the sale is completed and that some real value is added to the customer experiencerdquo

Brokers have long known the value of what a good relationship with an estate agent can bring but Graham says that real estate professionals ought to be concerned with knowing how their client can secure financial

arrangements as part of their overall service proposition

There has been recent discussion on whether any conflict of interest occurs with a potential lsquoreferral-basedrsquo relationship between a real estate agent and a finance consultant ndash but Graham does not believe there is one

ldquoI firmly believe that this is not an issue Standard privacy requirements and close monitoring of all compliance procedures ensures the finance transaction is always completed at lsquoarms lengthrsquordquo he said ldquoThis means there is never a conflict of interest or any form of distrust by the clientrdquo

This is standard practice for any funding transaction regardless of whether the client has been referred to a broker or if they approached the broker or lender direct

Graham said that given that there is no conflict of interest the referral relationship then has a number of advantages for both the real estate agent and the finance consultant ndash such as a potential strong gateway for referrals for the finance consultant via the real estate professionals to enable them to build their business

However Graham warns that referrals will only occur if the real estate professional has full confidence that the finance consultant will look after their client perfectly and that they have the knowledge and experience to complete the transaction in an efficient and professional manner

Customers of FirstMac will be able to meet their lender face-to-face no matter where they live in the country if the trial of video communications technology proves to be successful

The non-bank lender is preparing to expand its use of video and voice communications technology by establishing higher-tech external links with customers managing director Kim Cannon said

ldquoWe are constantly expanding how we use innovations such as videoconferencing and office communicator technology to streamline the way we do businessrdquo he said ldquoThe use of more advanced communications technology is not just for large national and international groups but for any organisation wanting to improve servicerdquo

FirstMac has used the Polycom Video Conferencing service internally for many

years and Cannon has seen cost savings and improved productivity as a result The service allows employees from its Queensland NSW and Victoria offices to lsquomeetrsquo face-to-face without having to spend the time and money related to business travel

ldquoNow we want to take the next step and improve our communications capabilities furtherrdquo Cannon said

ldquoSince the GFC the lending market has become even more competitive and focused on service and efficiency We want to do everything we can to make our services as fast and efficient as possiblerdquo

FirstMac is now trialling the external features of Microsoftrsquos videoconferencing software ndashOffice Communicator ndash to see if it can be used by those customers who are looking to contact the lender

ColumnFor all the latest mortgage industry news visit wwwbrokernewscomau


AsabrokeryouarenotacreditproviderYetyoumustcomplywiththeresponsiblelendingconductobligationsoutlinedintheNational Consumer Credit Protection Act 2009 (Cth)Sowhatdoyouhavetodoyouask

When do I have to comply with the responsible lending conduct obligationsFrom1July2010(exceptADIsandRFCs)ndashevenifyouareonlyaregisteredpersonandnotyetanAustralianCreditLicensee(ACL)orCreditRepresentative(CR)

What are the responsible lending conduct obligationsThekeyconceptisthatyoumustnotsuggestacreditcontracttoaconsumerorassistaconsumertoapplyforacreditcontractifitisunsuitablefortheconsumer

How do I fulfil my responsible lending conduct obligationsAsprovidersofacreditservice(asopposedtocreditproviders)brokersmustmakeapreliminaryassessmentastowhetherthecreditcontractisldquonotunsuitablerdquofortheconsumer

TheunsuitabilityofacreditcontractmustbeassessedbeforeyouprovideacreditservicetotheconsumerThatisbeforeyoueithera)providecreditassistancebybull suggesting(proposetheideaorintroduceit)bull assistingaconsumertobull applyforaparticularcreditcontractorleasebull applyforincreaseincreditlimitbull remainincurrentcontractorb) actasanintermediarybybull recommendingaparticularcreditcontract

arrangethecreditwithacreditproviderbull arrangingthecreditbull actasaconduitbetweenabrokerandacredit

providerinarrangingthecredit

How do you determine unsuitability1 Make reasonable enquiries about a consumerrsquos requirements and objectives youcandecidewhatinquiriesarereasonabletomakeintherelevantcircumstancesAtaminimumyoumustunderstandthepurposeforwhichthecreditissoughtSuchenquiriescouldincludebull thepurposeforwhichtheconsumerseeksthe

credit

WARDROBE

bull theamountofcreditwhichissoughtbytheconsumer

bull thebenefitofthecredittotheconsumerbull thetimeframeforwhichtheconsumerseeks

thecreditbull ifthereareanyparticularfeaturesrequired2 Make reasonable enquiries about a consumerrsquos financial situation againthelevelofenquirywilldependonthecircumstancesandyoucandecidewhatlevelofenquiryitisappropriateYoushouldhoweverascertainareasonableunderstandingoftheconsumerrsquosabilitytomeetallrepaymentsfeeschargesandtransactioncostsofcomplyingwiththeproposedcreditcontractSuchenquiriescouldincludebull theconsumerrsquoscurrentamountofincomebull thesourceoftheconsumerrsquosincome(eg

part-timeorcasualemploymentgovernmentassistance)

bull theconsumerrsquosfixedexpenses(egrent)bull theconsumerrsquosvariableexpensesbull theconsumerrsquoscredithistorybull othercircumstancesabouttheconsumer(eg

agenumberofdependants)bull consumerrsquosassetsincludingnatureandvaluebull anysignificantchangestotheconsumerrsquos

financialcircumstancesthatarereasonablyforeseeable

bull existingdebtsIfyouengageinswitchingandrefinancingactivitiesyourlevelofenquiryshouldincreaseYoumusthavedocumentedprocessesinplacetoensurereasonableenquiriesaboutaconsumerrsquosrequirementsandobjectivesandfinancialsituationaremade 3 Take steps to verify the information obtained from reasonable enquiriesWhatamountstoreasonableverificationisscaleableanddependsontheinformationandresourcesthatyouhaveaccessto

ItisacknowledgedthatascreditprovidersofacreditservicebrokersmaynothaveaccesstoaswidearangeofinformationaslendersThetypeofinformationthatcouldbeusedtoverifyaconsumerrsquosfinancialsituationincludesbull payslipsbull confirmationofemploymentbull recentincometaxreturnsbull creditreportbull bankaccountrecordsAnyinconsistenciesininformationreceivedfromtheconsumerwillrequireadditionalverification

HOW TO LEND RESPONSIBLY WHEN YOU DONrsquoT LEND AT ALL

Kathryn Wardrobe isalawyerwithHolleyNethercoteand

can be contacted at Kathrynholleynethercotecomau or

(03) 9670-8200

tobeconsideredreasonableYoumusthavewrittenprocessesinplacetoensureinformationisverified

Is the credit contract unsuitableUsingalloftheinformationobtainedfromyourreasonableenquiriesandverificationyoumustthenmakeapreliminaryassessmentastowhetherthecreditcontractwillbeldquonotunsuitablerdquofortheconsumer

Theproposedcreditcontractisdeemedunsuitableifitdoesnotmeettheconsumerrsquosrequirementsandobjectivesandiftheconsumerdoesnothavethecapacitytorepaywithoutsufferinghardship

Whenconsideringwhetheracreditcontractwillcausesubstantialhardshipyoumustconsiderbull themoneytheconsumerislikelytohave

remainingaftertheirlivingexpenseshavebeendeductedfromtheirafter-taxincome

bull howconsistentandreliabletheconsumerrsquosincomeis

bull thesizeoftheloanrelativetotheirincomelevelbull whethertheconsumerrsquosexpensesarelikely

tobesignificantlyhigherthanaverage(egbecausetheyliveinaremotearea)

bull theconsumerrsquosotherdebtrepaymentobligationsandsimilarcommitments(egchildsupport)

bull howmuchofabufferthereisbetweentheconsumerrsquosdisposableincomeandtherepayments

bull whethertheconsumerislikelytohavetoselltheirassetssuchasacartorepaytheloan

Youmusthavewrittenprocessesinplacetoensurethattheproperassessmentismade

What documents do I need to provide to the consumerNonefornow

Howeverfrom1January2011youwillbeobligatedtoprovideconsumerswithdisclosuredocumentationsuchasacreditguidequoteforprovidingcreditassistanceandawrittenunsuitabilityassessment(onlyuponrequest)

What nowYoumustcomplywithyourresponsiblelendingconductobligationsfrom1July2010SoyoumusthaveyourdocumentedprocessesinplacefromthatdateIfyoudonrsquotitwillbedifficulttoshowthatyouarecomplyingwithyourobligations

22

Featurewwwbrokernewscomau

Though negotiation is something that we all naturally do in our lives ndash and have done since we were children (ie negotiating with our parents to stay up late by agreeing to eat all our dinner) for some reason many of us

find it difficult to negotiate when it comes to our salaries The truth of the matter is that the responsibility rests

with you to negotiate your salary according to your worth in the marketplace It is not up to your existing boss or your potential new employer to take action as they are more than happy to continue paying you the salary you are on or hire you as cost-effectively as they can

If you donrsquot feel the skills education experience and personal qualities that you bring are of value then it is unfair to expect others to It is also up to you to draw attention to the value and contribution that you are making to an organisation or can make if you are hired

How we become better pay negotiators Donrsquot wait to be offered To their detriment many people are still too polite when it comes to negotiating their salary They wait for the current or prospective employer to offer them a salary or a pay increase or bonus and then (in most instances) accept what is given even if they donrsquot agree with it

Not speaking up if you donrsquot feel what has been offered is fair is foolish Nor is negotiating only on what has been presented ndash if there is the opportunity to bring in new elements to the negotiation such as asking for a sign-on bonus or for additional benefits such as further education or even a golden parachute then why not Remember there does not have to be a set time to raise the subject such as the annual salary review You can raise it at any time ndash every quarter if you feel it is warranted

Talk yourself up Women in particular tend to fail miserably at talking up their achievements with their current employers Doing a great job and achieving great things at work can go unnoticed Chances are that those around you are also working hard and so as long as things are getting done they are not overly concerned with how ndash or who ndash is doing them

Though for most it does not come naturally it is important to learn to lsquotoot your own hornrsquo to avoid your achievements going unnoticed by your boss Where possible if you can debrief your boss on your success or provide written confirmation then this additional information can be invaluable to your negotiations

The art of negotiation Learn about salary negotiation Though negotiation is something that we all do naturally in our lives for some reason many of us find it difficult to negotiate when it comes to our salaries Itrsquos not a case of not possessing good negotiation skills more an issue of the negotiation context and subject matter

For some reason we are uncomfortable discussing our salaries and what we are worth with current or prospective employers We need to learn more about salary negotiation in order to become more comfortable and effective with negotiating our salaries Read books on the subject attend workshops talk about salary negotiation with your colleagues family and friends and use whatever communication channels you prefer to learn more about the subject

The language you use sets the scene In the salary negotiation context you are there to achieve a result for you ndash therefore using powerful and active language is crucial Passive sentences such as those below are to be avoided bull ldquoWould you mind ifrdquo bull ldquoSorry however I was wonderingrdquobull ldquoIf you have a moment would it be okayrdquo

Use active sentences like the ones below to raise the topic set the meeting time and enter into the salary negotiation discussion bull ldquoI would like to discuss X with you todayrdquobull ldquoLetrsquos make a time now to helliprdquobull ldquoI require 30 minutes of your time when are you freerdquo

Importance of researchpreparation Prepare an agenda Whether you are looking to negotiate a salary increase with your boss or with a potential employer ensure firstly that you are realistic and secondly that you have an agenda prepared List all the key points you want to cover in the discussion

Where possible make this a face-to-face meeting with the relevant parties as negotiations are best done this way The reason being that by being there you are better positioned to raise and support your key points and to really sell yourself It is far easier to refuse someone over the phone or via mail than it is face-to-face

Research the job market The advance of technology has made it simple and easy for us to access the abundance of free salary information out there Search on Google and you will be provided with countless salary surveys broken down by industry profession and even state and country Alternatively you can search on job sites to get an up-to-date feel for what the market is paying for someone in your profession with your years of experience and so on Another way is to talk to people direct such as recruitment consultants or contact HR professionals within similar organisations

Prepare your business case Regardless of the economic market current or new employers are not going to hand over money to you without some sort of justification Having a viable business case as to why you deserve a certain salary or why your salary should be increased is still required such as showing what you have done to go above and beyond your existing role or where you have added additional value to the organisation A pay increase generally has to be performance-based to be justified Length of service or simply because someone is being paid more than you in the same role are not considered to be valid reasons

ThinkyoudeserveabetterdealforyoureffortsKelly Magowan providessomepracticaltipsfornegotiatingyoursalarywithcurrentandnewemployers


this is something available If you can prepare a list of lsquowhat ifrsquo questions before you enter the negotiation

Signs of a successful negotiator Positive body language Your body language can often send a stronger message than your words Having positive body language is critical in all business situations including salary negotiation Your entrance handshake and eye contact all make an impression hence the reason for the face-to-face negotiation wherever possible bull Make a confident entrance bull Where possible initiate the handshakebull Be conscious of your posturebull Hold your head up highbull Have a positive attitudebull Make eye contactbull Smile

Maintaining eye contact is incredibly important when meeting to discuss salary as it is generally interpreted as a gesture of trust and confidence Nodding is another powerful gesture indicating support and agreement If you can before the meeting takes place practise your body language with someone you feel comfortable with and who can provide constructive feedback

Negative body language Bodylanguage CommoninterpretationAvoiding eye contact Evasive indifferent insecure

passive nervousScratching the head Bewildered Biting the lip Nervous fearful anxiousTapping feet Nervous Folding arms Angry disagreeing defensive

disapproving Raising eyebrows Disbelieving surprised Narrowing eyes Resentful angryWringing hands Anxious nervousShifting in seat Restless bored apprehensive

Handling salary questions If you are asked your salary range or expectations and do not want to disclose the information below are a few appropriate responses bull ldquoI would prefer to find out more about the position the

responsibilities and expectations before getting into any salary discussionsrdquo

bull ldquoI am sure that your company offers a fair compensation scale and if we both decide that this is a worthwhile match I am confident we will be able to agree on a salaryrdquo

bull ldquoI have researched the salaries for this position with market value for the total compensation package being within X rangerdquoIt is your decision whether or not you want to disclose

your salary information during the early stages of the interview process If you can it is best to avoid entering into this conversation too early in the process as it can limit your opportunity to negotiate further on There is nothing to stop you from asking the interviewer a few questions before an offer is made to arm yourself with some negotiation power If you are the only person they are interviewing you can assume your negotiating power is good Ask questions like bull ldquoCan you tell me where you are in the hiring processrdquo bull ldquoHow many people are you interviewing for this rolerdquo bull ldquoHow long have you been recruiting for this positionrdquo

Achieving a win-win outcome A negotiation requires all parties to agree on an acceptable solution to the problem in this instance your salary Each party must have their needs met Being realistic prepared and professional throughout the negotiation process will increase your chances of securing your next salary increase be that with your existing employer or your new employer

Assumptions We can sometimes be guilty of making assumptions about people organisations and situations which are not always correct Ensure any assumptions you may have are checked out and justified before you enter into a negotiation with your current or prospective employer

Common assumptions range from benefits you believe to be offered to staff at the company to salaries of other staff members or perks they are receiving

Alternatives Having an alternatives is essential in any salary negotiation process It is important to have high aspirations however this needs to also be balanced against the reality of the situation Indeed in the salary negotiation process all your requirements may be met none may be met or some may be met It is important to know at which point you are willing to walk away from a negotiation andor to have alternatives in place

If you are working with an existing employer and requesting a salary increase have you thought about your alternatives should this be unsuccessful In these situations people generally leave fairly quickly so have you already started speaking with other potential employers before the meeting is arranged rather than being left hanging And in the instance of being offered a new job should the salary package not meet your requirements do you have other offers available to you Is this such a great opportunity with a long-term financial gain that you should reconsider that the shorter term salary package is not exactly what you were after

Remember that lsquono deal is better than a bad dealrsquo and you must always be willing to say no

Other items to consider Some organisations are limited by salary bands or structures which prevent them from offering new or existing employees dramatic increases However this does not mean that they are unable to offer alternatives to straight cash These alternatives include bull Professional memberships bull Sign-on bonus bull Incentive pay bull Bonus or commission bull Annual Incentive bull Professional clubs bull Equityshares bull Stock options bull Discounted stock options bull Extra superannuation bull Loan to purchase home bull Car bull Parking bull Legal planning services bull Mobile telephone bull Laptop bull Termination provisions bull Flexible working hours bull Golden parachute provisions bull Health insurancebull Decreased work hoursdays bull Gym memberships bull Financial planning services bull Educational assistance bull Relocation expenses bull Endashtagbull Loan to purchase restricted stock bull Future salary increases (timing and percentages) bull Private school fees for children bull First classbusiness class air travel

Anticipate any problems or objections There is a lot to be said for being positive and optimistic however it is also important to be realistic When entering into any salary negotiation process be sure to look at your best- and worst-case scenarios and prepare for how to respond to any objections or problems you can see arising In the current market some organisations may not be in a position to provide significant salary increases at this point in time However there are many industries and organisations that are going strong and are in a position to pay top dollar

If you think yoursquore long overdue for a salary increase yet your current employer is not in a strong financial position at present (and you want to stay with them) you still have negotiation power You could ask for the same pay and shorter working hours or for a salary increase to be effective when the company goes back to X amount of profit Alternatively you may look at options or equity if

1 Confidence 2 Powerful active language3 Research4 Practise practise

practise

Four essential steps for salary negotiation success

bull Surveys suggest that 85ndash90 of hiring managers do not make their best offer first

bull Counter-offers are generally 10ndash15 above the original offer

Key facts to remember

Further informationThis article is condensed from a comprehensive guide to salary negotiations found at wwwsixfigurescomau Author Kelly Magowan is CEO of SixFigures For more information phone 1300 780 177

Doing a great job

and achieving great things at work can go unnoticed

24

Columnwwwbrokernewscomau

The thrill of the chaseEmotionsarehighestandtheadrenalinpumpsfastestinthepursuitofstrivingtoachieveagoalThatupliftingsentimentisinfectiouslooknofurtherthannaturewithasuddenflightofbirdsoraflockofwildebeestinthesavannahsofanAfricangameparkItisaclearmanifestationofthelsquofightorflightrsquophenomenon

InbusinessmarketingandsalesthesameprinciplesapplyandthelessonslearnedareparallelItsimplytakesaleaderandleadershipforasenseofpurposefocusexcitementandurgencytobeinculcatedthroughouttheranksofanentityandnetworkofanintegratedmarketingsellingfranchisingorbuyinggroup

ToooftenndashinthefaceofrevenuedownturnincreasedcompetitionoreconomicvolatilityndashmanynotablebusinessleaderslooktoexternallyorientedfactorstostimulateinterestenquiriesdemandandsalesReviewsareconductedandamendmentsaremadetoadvertisingpromotionsmerchandisingpricingstrategiesandtacticsEachinvolvesconsiderableinvestmentsoftimemoneycerebralenergyandresources

SadlyoftenthereturnsareshorttermmarginalandspasmodicHoweverthereisanalternative(orpossiblyapre-emptive)setofhigh-achievingactionsavailable

Rekindle the flameEntrepreneursinnovatorscreatorsandgrowth-orientedbusinessownersaretypicallycharacterisedbyreferencestopassionenthusiasmexcitementandprideAllarecommendablevirtueswhichinspirecommitmentpersistenceresiliencendashandsuccessitselfYetthemeasureworthandvalueofsucharedifficulttoquantifyIndeedthequantificationofconsumertrafficflowssalesconversionsrepeatandreferralbusinessissubjective

WhatexactlyisthelifetimevalueofalongtermsatisfiedcustomerOverwhattimeframeisthemeasurementtakenandwhatisthebestmeasurementmethodologyTorevisitrefineandtorecommittothecorporatecultureisanupliftingexperienceforstaffmembersandallofthoseinthesupplychainTheexerciseprovidesforanupgradinginself-worthwhichissustainable

AsanexternalchangeagentandinteractiveworkshopfacilitatorIwelcomewitnessingteammembersaddressverbaliseandextendaspectsofthesevenpillarsofacorporatecultureAsenseofprideblossomsandvalueisrecognisedinthetotalpackagewhichisofferedtothemarketplaceApositivespiritisexperiencedandthetemptationtowardspricediscountingandothershort-termtacticsquicklywanes

URQUHART

ConfidenceispromotedandKPIsaresoonattainedndashandexceeded

Sell the storyWhatisconspicuousinthecurrentmarketplaceiswidespreadevidenceofinertiamentaltirednessapprehensionandexasperationProcessesarefollowedndashbutwithoutconvictionNoonegetsexcitedparticularlycustomersThereisageneralsenseofshallowness

ThatisreflectedbackinthebankbalanceAquantumleapisneededfromthosewholsquotellthestoryrsquo(inrotefashion)tothosewholsquosellthestoryrsquoNoonepersonorbusinesssectorisexcludedfromorimmunetothatrealityForexamplewaitstaffatrestaurantshavethecapacitythroughtheirenthusiasmtoinfluencemealandrefreshmentselectionsandtosubstantiallyincreasethatbusinessesrsquoreceiptsTherewardsandreturnsfromtheeffortsextendedarealmostinfinite

Teammembersappreciateandtypicallyrespondpositivelytotheattentionbeingturnedontheminpreferenceto(orpriorto)theusualincreasedoutlaysonadvertisingpromotionsmerchandisingandpricediscountingThereisacertainconsistencywithandcredibilitytostatementsaboutlsquopeoplearethemostimportantassettoacompanyrsquo

LetmecuttothechaseFormanybusinessleaderswhoareseekingtoaddressandredressmarketcircumstanceswhicharelessthanbuoyanttheprospectsforimmediateandsubstantialupturnsinsalesprofitscustomersatisfactionandrepeatbusinessliewithinanorganisationArekindlingofthefirethepassionandprideforndashandaboutndashacompanyitsproductservicesandpeoplecanbeuniversallyrewarding

SeeminglyattendantissueslikerecruitmentretentionandthedevelopmentofpeoplearequicklyandfavourablyresolvedForthosewhodoubtthecurrencyofthesepropositionsandtheunderlyingphilosophybeingespousedIsayldquohavefaithrdquoThedirecttangibleandconspicuousactivitiesofadvertisingpromotionsmerchandisingandpricingreviewsshouldnotbeignoredtheyshouldsimplybetemperedandsequenced

USPresidentBarackObamainspiredanationndashandtoalesserextenttheworldndashwiththestatementldquoyeswecanrdquoHemobilisedasenseofadventureandspiritforlsquothepossiblersquoTheemotionswerehighestandtheadrenalinpumpedfastestbeforeelectiondayinNovember2008

ThetasksconfrontingsomanybusinessleadersarenotsogargantuanThespiritisthesameSogoaheadTakeupthechallengeEnjoythethrillofthechase

TO GET BUSINESS GET PUMPED Marketing Focus managing director Barry Urquhart takes a look at how business leaders can best employ their smart tactics and strategies to maximise the utility of their marketing plans

A quantum

leap is needed from those who lsquotell the storyrsquo in rote fashion to those who lsquosell the storyrsquo

Organised byOfficial publicationsOfficial event partner Award sponsors

September 24 2010The Westin Hotel Sydney

wwwaustralianmortgageawardscomau

ldquoWinning this award has given our whole team a great sense of achievement and satisfaction as well as positioning us as market leaders in the eyes of our clients and importantly our referral partners It has also been a lsquogood newsrsquo focus point for marketing to our clientsrdquo

CHOICE HOME LOANS - BERWICK WINNER BROKERAGE OF THE YEAR - MORE THAN SIX STAFF AMA09

26


Ask brokers to put up their hands if theyrsquove heard enough news of doom and gloom and yoursquoll probably have a room full of people who look like theyrsquore doing the YMCA With the landscape changing drastically and

bringing commission cuts new regulation a shrinking marketplace and interest rates as erratic as a drunk driver itrsquos understandable that brokers are swamped

But where therersquos chaos there are also opportunities If you look around yoursquoll notice that the industry is in the midst of a revolution The very shape and role of mortgage broking is changing and brokers are increasingly assessing the role they will play in the future Diversification has become a hot topic

Letrsquos break it downDiversification is the process by which a business in this case a mortgage broker looks to extend its service offering in order to add value and increase income So where traditionally mortgage brokers concerned themselves with home and investment property loans and only took a passing interest in other sectors of finance increasingly other financial products are catching their eye

Heated conversations are being held at broker offices aggregator meetings industry conferences and in the media concerning a brokerrsquos involvement in other areas the level of that involvement along with its implications benefits challenges and ethics ndash and how all of that can form a new revolutionised mortgage professional

The big fourDonrsquot worry this doesnrsquot concern the banks As it happens four major diversification streams have been gaining particular favour with brokers These are

1 Equipment finance and leasing2 Risk insurance3 Financial planning4 Real estate

InvolvementEach of these areas offers a range of products and allows brokers to select their level of involvement This can range from a lsquospot and referrsquo basis (in which a broker identifies a clientrsquos needs and refers that client onto the proper specialist in return for a fee or commission) to gaining full qualifications (which allows the broker to

Diversification revolution

provide the service themselves and reap more significant rewards) There are also all sorts of levels in between Ultimately a brokerrsquos involvement will come down to personal choice their business model ndash and time

According to the director of Develop amp Invest Andrew Brumby it is important for brokers to cater for as many customer requirements as possible ldquo[Whether] that [means] doing the associated business yourself or referring to the right people is an individual callrdquo he says However the majority of the brokers AB spoke with favoured the referral method

ldquoI prefer to concentrate on my core business [home loans] and would rather have a designated professional looking after other areas such as risk insurancerdquo says 1st Streetrsquos Jeremy Fisher Oxygen Home Loansrsquo Peter Ellis and Smartlinersquos Karen Le Comte agree adding that designated professionals are experts in their fields and provide the right quality of service for customers ldquoI do not have the time to keep up the training that is required to maintain licensing requirements (in these other areas)rdquo Le Comte adds

The optionsEqually individual are brokersrsquo reasons for offering one or more of the diversification streams For Better Choice finance broker Vic Giannakis risk insurance is a natural partner to mortgage broking ldquoIt is standard practice to raise the question of risk insurance hellip so that [clients] are given the opportunity to accept or decline to speak to someone regarding services of this kindrdquo he says ldquoBrokers need to ensure that if their clientsrsquo circumstances change for the worse that they have offered insurance at the time of loan application to hopefully cover them at this timerdquo Ellis adds

Equipment finance on the other hand is a good option for brokers who count business-people among their clientele ldquoIf [brokers] have self-employed clients these clients would also normally require finance for any plant equipment machinery or commercial vehicle that they need to run their businessrdquo says national manager of Macquarie Leasing Stephen Light

Real estate is an area which is naturally well aligned with mortgage finance and has rocketed into popularity as it can provide clients with a more comprehensive service while bringing some good returns (if done properly) to the broker ldquo[Investment property groups] have started to realise mortgage brokers make the perfect referral partners given that in most cases we see clients in the first instancerdquo explains AMB principal mortgage consultant Stewart Noble ldquoSo on a spot-and-refer basis I simply put my investment property clients in touch with these groups If they buy a property I get a fee of anywhere from $3000 to 1 of the sale price and everything in betweenrdquo

Financial planners and mortgage brokers have worked closely for quite some time There are many services that these professionals can offer clients to create a holistic experience while keeping customers out

CanyouhearthechantingSeetheactionandabrightnewfutureAgnes Gajewska spokewithtopbrokersandindustrypunditstofindoutaboutthediversificationrevolution


of the clutches of the big banksldquoYou are much more likely to keep your client if you

refer them to a financial planner ndash rather than letting the lender have a crack at themrdquo says Zobel chief executive officer Ben Hall

Talking numbersMost brokers that AB spoke to say it is best to diversify into more than one field ldquoI honestly believe that as a broker you should be able to offer the same products that are available to a client [when] they walk into any branch of a major bankrdquo says Loan Management Services director Lisa Sanders

ldquoAs the banks are only able to offer their own limited products brokers can diversify and offer various

Two diversified strategies a breakdownName Risk insurance

Summary Covers areas such as income protection trauma cover life cover It is standard practice for a broker to introduce insurance when organising home loans Level of involvement ranges from referral to joint venture to full qualifications

Main products Income protection trauma cover life insurance

Players in the field ALI NABHomeside (Vivid program) MLC

Qualifications Nil to Diploma in Financial Services

Remuneration This depends on the modellevel of involvement by brokers

Pros bull Part of the loan process alreadybull Provides client with added servicebull Additional revenue stream

Cons bull Getting fully qualified takes time

Name Real estate

Summary Ranges in options from a referral partnership with a real estate agency to more specified investment property sales These can be lsquospot-and-referrsquo fee based to real estate certification

Main product Real estate sales investment property sales

Players in the field Real estate agents and (for investment property sales) APS Growth Blue Wealth McCarthy Group OzInvest

Qualifications Nil to Certificate IV in Property Services

Remuneration Spot and refer $3000ndash1 of property value Sale up to 50 of the total commission paid to investment property company

Pros bull Can be lucrative for broker

bull An involved broker has to learn new sector which can be complex

bull At involved level can be time consuming

products from different sources The client benefits from better value for money while a [bank] client limits themselves to the product offering of one bank onlyrdquo

Smartlinersquos Le Comte adds that in a reduced commission environment with major banks gaining more market share and control over the industry itrsquos important for brokers to brace themselves against possible further commission cuts

Money mattersBefore dollar bills start spinning in front of your eyes letrsquos make something very clear If yoursquore just in it for the money yoursquove come to the wrong place Most of the brokers that AB spoke to say that only 1ndash5 of their total revenue could be attributed to diversification

ldquoThe remuneration is not significantrdquo says Loan Management Servicesrsquo Sanders ldquoThe reason we choose to [diversify] is to add more value to clients which leads to customer satisfaction and referral business which is key to any successful businessrdquo

ldquoIt is not always about the moneyrdquo Le Comte agrees ldquoFor me it is more about providing my clients with the best possible financial solution and working with experienced highly-ethical business partnersrdquo

However brokers are also confident that the revenue from this sector will increase to make up a larger part of business in the future ldquoStudies from the UK and US confirm that some brokers will actually earn more insurance and financial planning referral income than they do from lender commissionsrdquo Hall adds Some like director and founder of Econ Financial Services Paul Shahinian already attribute 50 of their revenue to diversification

Is it worth itIn short yes While there are some professionals who prefer to keep all of their attention firmly and unwaveringly fixed on mortgages most leading brokers and industry hot-shots believe diversification is the way of the future

ldquoGiven the reduced commissions in the traditional mortgage market most brokers realise the need for diversification in their service proposition as well as their own income streams to counter thisrdquo Light says ldquoIf you donrsquot [diversify] you are not going to survive long term With ever-reducing home loan commissions you need to be able to offer more than just home loans to keep your clients coming backrdquo adds Brad Smart a manager from ZobelNil accreditation assumes a broker has completed the minimum industry qualifications for mortgage broking

Diversification is the process by which a business looks to extend its service offering

28

Caught on camerawwwbrokernewscomau

Brokers and industry leaders enjoyed an evening of culture at Resirsquos presentation of lsquoThe Archibald Wynne and Sulman Prizes 2010rsquo at the Art Gallery of New South Wales in Sydney

Photography by Simon Kerslake

2

1

3

54


PHOTO 1 Art Gallery of New South Wales

PHOTO 2 (LndashR) Kate Vickers (Davenport amp Campbell) Sorrel Fielding (Davenport amp Campbell)

PHOTO 3 (LndashR) Rob Kennedy (IMB) Liz Kenn (IMB) Mark Workman (IMB)

PHOTO 4 Crowd shot

PHOTO 5 (LndashR) Kylie MacFarlane (AMP Capital Investors) Brad Barr (AMP Capital Investors) Skye Barr (AMP Capital Investors) Simon Cary (AMP Capital Investors)

PHOTO 6 (LndashR) Kylie Merritt (Sky Business Channel) Lisa Montgomery (Resi Mortgage Corporation)

PHOTO 7 (LndashR) Peter James (Resi Mortgage Corporation) Drew Dickson (Drew Dickson Architects)

PHOTO 8 Edmund Capon (Art Gallery of NSW)

PHOTO 9 (LndashR) Shara Evans (Market Clarity) Detta Donde (Market Clarity)

PHOTO 10 (LndashR) Marissa Johnston (Belgiovane Williams Mackay) Megan Rukstele (Belgiovane Williams Mackay) Nathan Milner (Belgiovane Williams Mackay) Margot Lloyd (Belgiovane Williams Mackay)

7

98

6

10

30 wwwbrokernewscomau

Feature

One year onWhatadifference12monthscanmakehellipormaybenotAustralian Brokerreflectsonthestoriesthatmadeheadlinesinthemagazineoneyearago

Headline ldquoBrokers2ndashWhittingham0rdquo(coverpage)

What we reportedBroker claims against lead generation services provided by Mark Whittingham are set to start pouring in after a campaign for refunds initiated by Australian Broker and BrokerNews resulted in victories for two claimants Amid a continuing flood of complaints one broker has managed to recover his funds from lead service provider Home Loan Selection Services (HLSS) and another broker is on the verge of getting a refund NSW-based broker Michael Badger had to phone into a Victorian Consumer Advocacy Tribunal (VCAT) hearing to defend the $4400 he recovered from his credit card company after HLSS managing director Mark Whittingham failed to deliver leads Badger managed to recover the money after presenting an e-mail he received from Whittingham prior to signing up with HLSS In the e-mail Whittingham assured Badger that all unused credits would be refunded if he decided to end the arrangement after 30 days Another broker Stan Marinis also won a case against HLSS after Whittingham failed to show up to their VCAT mediation on 8 May

What has happened since In June last year Mark Whittingham sent an e-mail round to his lsquocustomersrsquo saying that his company was being wound up by the Supreme Court for unpaid advertising accounts In the e-mail Whittingham blamed ldquothe constant attacks on the business from a small number of brokers The Australian Broker magazine amp BrokerNewsrdquo for his companyrsquos collapse However since that e-mail was written Australian Broker has been contacted by dozens of brokers who claim to be owed money by Whittingham or one of his myriad

companies The latest broker who wished to remain unnamed until he sought legal advice contacted AB at the end of April He had read about the refunds for missing leads and asked if AB had heard from anyone who had lost money after trying to buy a loan book from a third party as arranged by Whittingham The broker claimed to have paid Whittingham a $10000 deposit but when the third party pulled out Whittingham refused to repay the brokerrsquos deposit and refused to return his phone calls

Headline ldquoBrokersfacingnewlenderfeesrdquo(frontpage)

What we reportedHaving only recently suffered through commission cuts brokers are going to see further likely decreases to their pay cheques after two major banks flagged new accreditation fees Following the introduction of its new mandatory accreditation requirements which require brokers to settle at least one loan with the bank every six months Westpac has announced it will also be introducing a broker ldquore-accreditation feerdquo While the initial accreditation with the lender will be free of charge any broker who has had this cancelled will have to complete a re-accreditation session which will incur an associated fee At the time of going to press the ldquoappropriaterdquo amount of the charge was being discussed between Westpac and its ldquokey business partnersrdquo and stakeholders Following in a similar vein CBA said it was currently in the process of making changes to its accreditation requirements and that these would be introduced in the second half of the year ldquoA fee will not be charged for accreditation but where brokers are required to attend an lsquoupskilling workshoprsquo because they have not maintained their product policy and process skills a fee to cover retraining costs will applyrdquo said CBArsquos executive general manager of third party Kathy Cummings

What has happened since The industry still rankles at what has since been dubbed volume hurdles that pressure brokers to submit loans to the lenders regardless of the quality of their products at any given time The FBAA and MFAA have both sought to reverse the lendersrsquo position on this matter but to no avail and a challenge of the practice brought by Refund Home Loans to the ACCC was dismissed last year ASIC which will be taking over broker regulation in just over a month said that brokers were obligated to give clients the best possible products regardless of these volume hurdles It warned that brokers who submitted loans that were inappropriate for their clients risked hefty fines ndash and even the possibility of jail time

Issue Australian Broker issue 610

Kathy Cummings

Kevin Conlon

Headline ldquoReversemortgageindustryseeksgovernmenthelprdquo(page12)

What we reportedHaving been left on the sideline when the government announced its $8bn RMBS initiative under the Australian Office of Financial Management (AOFM) industry body SEQUAL is asking for its share of the stimulus package According to the latest Deloitte SEQUAL Reverse Mortgage Study the reverse mortgage market grew by 23 over the year to 31 December 2008 However the dynamics within the sector have changed with more market share going to fewer players hurting competition SEQUAL CEO Kevin Conlon said that while traditionally reverse mortgage providers have been able to readily access funding through bank-provided credit facilities the global credit crisis had tightened ndash and not closed off ndash access to this funding

What has happened since Twelve months on and the recent withdrawal of the top player in the reverse mortgage market (RBS) has left the spoils for just three providers ndash Bankwest CBA and StGeorge SEQUAL was unsuccessful in its attempts to have competition in the reverse mortgage industry bolstered by government support CEO Kevin Conlon has now turned his sights to another source of funding for the capital-intensive reverse mortgage market ndash superannuation funds ldquoTherersquos no reason why people other than commercial banks shouldnrsquot be competing in the reverse mortgage market and I think thatrsquos where the future liesrdquo Conlon said ldquoThese are not easy products to manufacture andhellip the superannuation funds are uniquely placed to meet the challenges of manufacturing a reverse mortgagerdquo


AGGREGATOR WHOLESALE BROKERChoice Aggregation1300 135 389wwwchoiceaggregationservicescomaupage 19

Mortgage House Aggregation Services133 144wwwmortgagehousecomausavemortgagehousecomaupages 16 amp 17

PLAN Australia1300 78 78 14wwwplanaustraliacomaumailplanaustraliacomau page 5

Vow Financial Pty Ltd1300 730 050wwwvowcomau page 18

COMMERCIALBanksia Financial Group1800 333 114wwwbanksiagroupcomaupage 9

Think Tank Property Finance1300 781 043wwwthinktanknetaudealthinktanknetau page 31

DEBTOR FINANCEOxford Funding Pty Ltd1800 850 509wwwoxfordfundingcomauinfooxfordfundingcomau page 13

LENDEREurofinance 02 9252 8311 wwweurofinancecomau page 15

Homeloans Ltd1300 787 866wwwhomeloanscomau page 14

Liberty Financial13 11 80wwwlibertycomaupage 3

MKM Capital 1300 762 151 wwwmkmcapitalcomau page 8

Vanilla Loans 1300 710729 wwwvanillaloanscomau page 20

MORTGAGE MANAGER NON-BANKMango Media02 9555 7073wwwmangomediacomaupage 1

Royal Guardian Home Loans133 455wwwroyalguardiancomauinforoyalguardiancomau

Vault Mortgage Corporation1300 798 697wwwvaultmortgagecomaupage 21

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

NON-BANK LENDERMortgage Ezy1800 TOO EZY (866 399) wwwmezycomauezyquitmezycomau page 32

NON-CONFORMINGPepper Homeloans1800 737 737wwwpepperonlinecomau page 7

OTHER SERVICESResidex1300 139 775wwwresidexcomaupage 24

Trailerhomes0417 392 132page 26

SHORT TERM LENDERCrown amp Gleeson1800 735 626wwwcrownandgleesoncomaupage 2

Interim Finance02 9971 6650wwwinterimfinancecomau page 4

NCF Financial Services Pty Ltd 1300 550 707wwwncf1comaupage 10

Rapid Capital 07 5562 2485wwwrapidcapitalcomaupage 6

wwwresidexcomau

The House Price Information People

2


wwwbrokernewscomau

Copyright is reserved throughout No part of this publication can be reproduced in whole or part without the express permission of the editor Contributions are invited but copies of work should be kept as Australian Broker can accept no responsibility for loss copy Key Media 2009

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

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

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

Publishing director JustinKennedy

Managing editorGeorgeWalmsley

EditorLukeCornish

Production editorsJenniferCross

CarolinWun

Design manager JacquiAlexander

DesignerLucilaLamas

HR manager JuliaBookallil

Marketing coordinatorAnnaKeane

Traffic manager StaceyRudd

Advertising salesSimon Kerslaket0284374786 f0294394599simonkerslakekeymediacomau

Rajan Khatakt0284374772 f0294394599rajankhatakkeymediacomau

Editorial enquiriesLuke Cornisht0284374773 f0294394599lukecornishkeymediacomau

DistributionAustralianBrokerisavailablebysubscriptionE-mailallsubscriptionsandmailingenquiriestosubscriptionskeymediacomaut0284374731 f0284374753

Australian growth to provide opportunities for brokers

Brokers train for post-GFC world

KPMG demographer Bernard Salt envisions a future Australia very different from the one that brokers work in today At a Genworth function looking at the impact of demographic shift on the mortgage industry Salt said that continued immigration is going to create opportunities for the industry ldquoI think we will see continued strong growth along the eastern corridor from Cairns down to Wollongongrdquo Salt said ldquoPeople will be more comfortable living outside the capital cities but they will always want to live close to the beachrdquo

Genworth chief risk officer Paul Caputo said that continued net migration is going to change the

makeup of the Australian population ldquoImmigrants are going to have different ways of purchasing property and will be looking for different types of propertyrdquo he said ldquoYou could start to see more mortgage products where there are more than one or two borrowers on the loanrdquo

Caputo said that demand for property will continue to grow increasing the likelihood of borrowers receiving support from parents or grandparents ldquoLMI is going to be a very important product to support homeownership within the Australian market Therersquos no doubt home prices in Australia are going to remain robust and strong for some timerdquo

Steve Weston GM of broker platforms and lending for Advantedge said historically immigrants are more likely to use mortgage brokers than other segments of the market largely driven by unfamiliarity with the Australian banking and financial system and language barriers

ldquoI think brokers who can develop a proposition that reflects the needs and habits of migrants will be ideally positioned to capture the growth Word-of-mouth recommendations by family and friends will often start the discussion with prospective clientsrdquo

The National Finance Institute has set up a series of workshops to help new and experienced brokers ldquore-engineer their business to harness the demand for professional brokersrdquo FrontRunner Consulting Grouprsquos Doug Mathlin and National Finance Institutersquos Peter Heinrich will hold workshops nation-wide to help brokers adapt their business to a post-GFC world

ldquoThe signs are good for mortgage brokers as many tell me that lead generation is improving consumer confidence in property is rapidly rising as are property values in

many areas in Australiardquo FrontRunnerrsquos Mathlin said

He added that the new regulation provides opportunities for brokers who can take advantage of the fact that many brokers are leaving the industry before the legislation becomes effective New regulations will force brokers to implement processes in their business

ldquoThis clearly leaves an opportunity for those that remain to grab more market share for themselves and consolidate their business Continuous improvement is an essential element to business

Bernard Salt

growth ndash constantly working on your service proposition client care and personal performancerdquo Mathlin said

Heinrich will lead a session called lsquothe psychology of a loanrsquo designed to help attendees better define and sell their value proposition to clients Mathlin will lead a session on improving profitability and efficiency Attendees will also take part in a conversion workshop conducted by both trainers which helps brokers to turn leads to applications and applications to settlements



4



















6


























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8






















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10















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Kevin Conlon












MFAA expels member



14






















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16





18













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20
































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Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau




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Kevin Conlon












MFAA expels member



14






















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16





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Cornish















CORNISH COLUMN


20
































credit

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24









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28




2

1

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PHOTO 4 Crowd shot







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6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



4



















6


























Gail Kelly

8






















Phil Naylor




10















12

















Kevin Conlon












MFAA expels member



14






















Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



6


























Gail Kelly

8






















Phil Naylor




10















12

















Kevin Conlon












MFAA expels member



14






















Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau


6


























Gail Kelly

8






















Phil Naylor




10















12

















Kevin Conlon












MFAA expels member



14






















Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau


8






















Phil Naylor




10















12

















Kevin Conlon












MFAA expels member



14






















Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



10















12

















Kevin Conlon












MFAA expels member



14






















Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau




12

















Kevin Conlon












MFAA expels member



14






















Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



12

















Kevin Conlon












MFAA expels member



14






















Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau













MFAA expels member



14






















Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



14






















Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau












Alan Pavisich



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



16





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































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Doing a great job


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URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau





18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



18













Wayne Swan


















Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau




Cornish















CORNISH COLUMN


20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



20
































credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau












credit

WARDROBE













(03) 9670-8200
















22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau


22









































practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau
























practise






Doing a great job


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau


24









URQUHART










A quantum







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau







26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau


26
































Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau















Name Real estate


















28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau


28




2

1

3

54





PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau






PHOTO 4 Crowd shot







7

98

6

10


Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



Feature










Kathy Cummings

Kevin Conlon





























wwwresidexcomau



























wwwresidexcomau


Documents

Australian Broker magazine Issue 7.10