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Banks outside the four major lenders are holding their own in an intensifying war for bank customers based on service and satisfaction.

ING Direct executive director of delivery Lisa Claes has said non-major lenders were beginning to claw back the ground they lost during the global financial crisis.

“I think in the last 12 months we have seen a slight kick-up in our share of new business but the

happy; they are fighting just as hard and they are big engines.”

Claes said in such an environment, the focus on service and satisfaction by all lenders will continue, and some non-major lenders had a distinct advantage. For example, ING Direct can demonstrate among the highest bank customer net promoter scores and satisfaction ratings.

ING Direct has declared it will grow its mortgage book responsibly.

“We are a branchless bank so we are not beleaguered by channel conflict, we don’t have to worry about product and price differentiation, and we don’t have the legacy of the bricks and mortar system. Our focus can be squarely on brokers who are our branches.”

ISSUE 9.13

July 2012

Back on timeSt.George reverses turnaround blowout

Page 2

EZY with PLANNew panel lender to add diversity

Page 4

Aged overhaulBroker calls for older borrowing fairness

Page 8

Inside this issueViewpoint 19Positives amid market negativeOpinion 20The segmentation choice is yoursInsight 22Prospecting for successForum 23Brokers on conversion criticsMarket talk 26The census and your businessPeople 28CEOs and the homelessInsider 30Comparison rates, apples and oranges

Major banks have been put on notice to watch for invigorated competition rising from the second tier

Non-majors declare themselves ‘fit to play’

sector certainly hasn’t regained the ground or the place it had pre the GFC,” she said.

However, Claes said the drastic increase in concentration among major lenders had stopped increasing, and the market was now seeing other banks and non-banks increase share.

The result is an intense ‘war for the customer’, amid conditions that include a slowing credit market, a growing reliance on deposit funding and pressure on net interest margins.

“The category outside the majors is a healthy one but you need to be fit to play, because it is a highly competitive one. Of course, the majors aren’t sitting back saying we have got the scale so we are

Lisa Claes

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Broker magazine can accept no responsibility for loss

Australian Broker is the most-often read industry publication, according to independent research carried out by the Ehrenberg-Bass Institute for

Marketing Science at the University of South Australia in December 2008.

The research also found that brokers rate Australian Broker as the best for both news content and feature articles, followed by sister publication MPA.

Overall, on all categories, Australian Broker ranks top followed by MPA. The results were based on a sample of 405 respondents who were the

subject of telephone interviews.

St.George speeds up turnaround timesSt.George Bank has managed to drastically reduce its turnaround times after special pricing offers caused its response times to increase earlier this year.

St.George told brokers attending its Sydney road show in June that its turnaround times were back in the black after competitive fixed and SVR rate offers caused a surge in applications earlier this year.

Applications being submitted to St.George by brokers increased by 1000 per month during the period, while calls to its Mortgage Central call centre experienced waiting times up to 13 minutes.

The surge caused conditional approvals to increase from a targeted one to two day turnaround time, to up to four days.

General manager of mortgage broking, Clive Kirkpatrick, said

although the upsurge had caught the bank ‘flat-footed’ initially, the hiring of 80 back-office staff had mitigated the turnaround problem.

Mortgage Central call waiting times are also back down within a targeted one minute waiting time.

Kirkpatrick said St.George was now well positioned to cope with any future upsurge in demand, promising that it would continue to roll out innovative products and pricing offers.

The bank announced that it had appointed a new NSW state manager to oversee its NSW BDMs, and brokers nationwide could now all access BDMs regardless of their segment.

St.George now has 25 BDMs nationwide, and nine in NSW.

Kirkpatrick said the bank was

continuing to innovate with technological improvements such as its newly released broker iPad app, which includes a serviceability and LMI calculators.

As a result of the spike early in the year, St.George has also implemented a minimum requirements checklist, which ensures brokers have the basic documentation in place after an application is made and before it is passed on to loan assessor.

St.George said 35% of deals are still missing key information, and this was partly because the bank had increased its accredited broker numbers who were still becoming familiar with its policies.

Homeloans has labelled its acquisition of Refund as a major win for its branded distribution.

The company has completed its purchase of the embattled Refund Home Loans business, more than eight months after the business entered administration. The deal sees Homeloans expand its branded distribution by adding 54 former Refund brokers to its current stable of around 20 branded brokers.

Homeloans general manager of funding and investments, Scott McWilliam, said the deal would “massively expand” the company’s branded distribution.

“We issued 135 broker agreements, and 54 of those came across. We’re very pleased with those that have. The 54 that came across represent a large proportion of the settlements and book of the Refund business,” he said.

McWilliam said the acquisition represented a positive step for

Refund brokers who had struggled through a protracted period in administration.

“It’s a good win for those guys. They’ve been through a pretty rough time over the last nine months. If we can help them grow their volumes and grow their business, that works for them and it works for us,” he said.

McWilliam said the Refund brokers who had aligned with Homeloans as part of the deal were already operating as Homeloans brokers, and receiving marketing and BDM support.

“We’ve been in communication with them throughout the whole process leading up to completion. They’re out there carrying our brand, and we will continue to provide them with marketing support to help grow their

business in the local community,” he said.

The acquisition is part of a strategy implemented by Homeloans to grow its broker distribution network, McWilliam said.

This transaction fits perfectly with Homeloans’ strategy to expand through organic growth and acquisitions. From our perspective it was a mutually beneficial match and fit. They needed a home and brand to broker underneath, and we’re out there looking for ways to grow our distribution either organically or via acquisitions.

Non-bank heralds ‘massive expansion’

Clive Kirkpatrick

http://www.liberty.com.au

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PLAN expands panel through Mortgage EzyA leading aggregator has expanded its panel with the addition of a non-bank lender.

PLAN Australia has announced it will add Mortgage Ezy to its panel. Chief executive Trevor Scott said a diverse lending panel was becoming increasingly important to brokers.

“Today brokers face a challenging and highly competitive mortgage market where access to a diverse and extensive product range and

diversity is crucial to success. We understand these challenges and strive to provide our members with a full range of products to ensure they can meet the needs of every borrower,” he said.

Scott said the addition of the lender to PLAN’s panel would help its members boost their proposition to clients. He praised Mortgage Ezy for its “aggressive” pricing and product range, and its commitment to third party distribution. Scott underscored

the fact that the lender distributed exclusively through brokers, a fact he said “mirrors the goals and objectives of PLAN Australia”.

“Our main objective is to support our members and provide them with the right tools to drive business growth and development. Mortgage Ezy is dedicated to brokers and our commitment to this industry means a partnership focused on the success of our members,” Scott said.

The aggregator made moves late last year to expand its panel with the addition of credit unions, through a partnership with Phoenix Mortgage Management and credit union association CUSCAL.

Mortgage Ezy chief executive

Garry Driscoll said the move would help the company have a greater impact in the broker market.

“Mortgage Ezy prides itself on being a true alternative to the major banks and we are excited to offer PLAN Australia brokers a new range of competitive products. This partnership is also an important step for Mortgage Ezy as we look to increase our footprint in the third party distribution sector. We remain exclusively dedicated to third party distribution and our relationship with PLAN Australia bears testament to that,” Driscoll said.

capital cities as well as two of the most expensive, it’s no surprise to see that they also have the longest tenure,” Kusher said.

“Home owners are increasingly likely to keep their current properties rather than upgrade due to the cost,” Kusher said.

RP Data suggested that increases in median home values over the period, leading to declines in affordability, were having a marked impact on the period clients held on to their assets.

Brokers won’t be the only sector affected by the buy and hold trend. RP Data said there would be less stamp duty collected by governments, real estate agents would also be hit by commission decreases, and financial institutions would see less new business.

Broking businesses will come under increasing pressure on commission income as national hold periods for housing stretch out longer in coming years, according to RP Data.

The property research firm released figures yesterday which show that housing hold periods have stretched out to nine years for a house, and 7.7 years for units.

This is significantly higher than in the years 2000–2005, with hold periods having steadily increased from 2006 in a trend that sees them still increasing in 2012.

RP Data said that this inclination from buyers would only increase over time, and this would impact mortgage brokers who

relied on transactional commission income to make a living.

“The average hold period is likely to increase over the coming years as private sector demand for credit remains below historic levels and sales volumes remain below their peaks,” research analyst Cameron Kusher said.

Melbourne brokers are likely to be hardest hit by buy and hold clients, recording the longest average hold period at 10.4 years for houses and 8.3 years for units.

Sydney brokers will come a close second, with a current hold period of 9.8 years for houses and 7.8 years for units.

“Given that Sydney and Melbourne are the most populous

Commissions to shrink as clients buy and hold

Trevor Scott

Flashback: PLAN opens up credit unionsPLAN Australia last year opened credit unions to its members with the addition of Phoenix Mortgage Management to its lender panel. Phoenix acts as a conduit for distribution for mutuals, with chief executive Allan Willoughby saying at the time that credit unions and building societies had a renewed appetite for third-party distribution

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

Read the latest issue of Australian Broker online brokernews.com.au

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Broker calls for age discrimination overhaul

SEQUAL axes CEO

A WA broker wants legislative change to prevent discrimination against older borrowers.

Finance Solutions’ Ray Weir has written to Treasurer Wayne Swan bringing attention to the fact that older borrowers over 55 are still being neglected due to the introduction of NCCP.

Weir said that borrowers in this age bracket applying for 30-year loans are finding difficulty due to lender interpretations of NCCP requirements, which prevent them from granting a loan if it is likely to cause financial hardship at any time in the future.

“For example, retirement when there is insufficient superannuation – at today’s date – to fully repay the proposed home loan – at a future date,” he explained.

Weir said that lenders were not accepting details which could verify a borrower’s ability to repay. “A borrower’s written declaration that they will sell the property if ever they retire and can’t otherwise repay the loan is unacceptable to lenders,” Weir said.

Weir told the Treasurer that this age discrimination should be overturned at a legislative level.

The recommendation was just one of a series of changes which Weir said the government could make to increase affordability in the housing market.

Weir also called on the Treasurer to force banks to take into account the approximate $10,000pa subsidy that investors receive from the Federal and State Governments when buying new properties under the National Rental Affordability Scheme (NRAS).

The NRAS was developed to encourage investors to purchase newly-built residential homes and units and rent them at 20% below the current market rental, with

the government supplying investors $10,000 for the first 10 years to offset the discount.

“However, because the rent is discounted by 20% and the incentive is only paid for 10 years, banks won’t take this subsidy income into account,” Weir said.

Likewise, Weir said if the government is serious about increasing affordability, it should extend tax deductibility of interest payments from investments to owner-occupied properties.

“The challenge of course is not to foster another boom in the real estate market, further worsening housing affordability, or to encourage over-borrowing, leading to a splurge similar to the housing and credit boom during the 10-year period prior to the GFC,” he said.

Weir suggested the Treasurer consider a tax deductibility on loans up to $300,000, indexed annually, and that interest deductions on residential investment loans not exceed the net rental income, preventing wealthy investors from using them to minimise their tax burden.

“The proposal should not impact on the activity in the housing market, as the increased demand by owner occupiers should be offset by reduced demand by investors,” he said.

Poor equity release market conditions have forced the SEQUAL board to end the tenure of long-time CEO Kevin Conlon.

As part of a restructure of the equity release representative association’s management resources, the board has said it will no longer maintain a full time CEO after the end of June.

Former chairman of the board, John Thomas, has stepped into an executive chairman role that will see him take on more day-to-day management, supported by administrator Pauline Negline.

Thomas has been the chairman and managing director of Australian Seniors Finance, a non-bank lender established in 2003 that still participates in the equity release market.

Thomas praised the contribution of Kevin Conlon, including his work with regulators and other stakeholders in shaping legislation of the sector which recently went before parliament.

“We were comfortable with that [legislation], and having achieved such a good result, we decided to look at the structure and purpose of SEQUAL, and what it will deliver in the future,” Thomas said.

“There is no mystery around the fact that the number of active

participants in the market has reduced; a lot of non-bank providers of past days had difficulty maintaining funding because of the GFC. So membership numbers are down,” he said.

Thomas said the association would continue to represent the equity release industry to regulators and other stakeholders, but no longer required the services of a full time CEO.

Speaking with Australian Broker, Kevin Conlon said the current equity release market situation is a “great disappointment”, but he would continue to advocate on equity release issues.

“I’ve considered serving as CEO a great opportunity to influence outcomes on very significant issues. And our job is not finished,” he said.

“I still want to be involved on the market side or regulatory side of the equity release sector, as I’m committed to ensuring senior Australians are able to access equity in their homes.”

Conlon said this was ‘increasingly important’ for Australia, and that he is hoping an opportunity will arise that will allow him to continue to work in the sector.

John Thomas to take over executive responsibilities

Kevin Conlon departs as full time CEO role axed

Ray Weir

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Resi targeted by ASIC for rate ads

Deluge of cuts to spur borrower interest

Resi is the latest lender to cop a reprimand from ASIC over advertising for its home loans.

The credit regulator took aim at Resi in June, with Resi agreeing to change online home loan advertising following concerns it was not adequately disclosing home loan comparison rates.

ASIC said Resi’s comparison rate wasn’t prominent enough. In one part of its website Resi included a table of other home loan products with interest rates but not comparison rates.

ASIC also said although Resi did include a required statutory warning about the accuracy of comparison rates, there was no clear reference to that warning for online consumers.

The regulator has recently been cracking down on lender advertising, having slapped BankWest on the wrist only recently for advertising the nation’s ‘cheapest’ credit card.

Westpac and CBA also fell afoul of ASIC earlier in the year, with the watchdog taking issue with the banks soliciting credit limit increases from customers in a misleading way.

ASIC stated other credit providers and brokers should carefully review advertising practices and promotional materials to ensure NCCP compliance.

“Consistent disclosure of comparison rates in marketing material is a key tool

for consumers trying to shop around,” ASIC commissioner Peter Kell said. “ASIC will act when advertisements don’t comply with the law,” Kell added.

ASIC said Resi has been cooperative in responding to ASIC’s concerns about its comparison rate advertising and promptly corrected its website.

The regulator’s concern over lender comparison rates recently came to light in a letter to the FBAA obtained by Australian Broker.

A raft of rate cuts has come through as lenders ramp up promotions to stir consumer interest.

Westpac subsidiaries Bank of Melbourne, St.George and BankSA have all made cuts to their fixed rate products. The banks shaved their three-year fixed rate products to 5.79% under the Advantage Package. The regional banks also launched a promotion to pay up to $700 towards switching costs on the Advantage Package if customers switch a loan of $250,000 or more from another lender by 31 July.

Bank of Melbourne chief executive Scott Tanner said, in spite of numerous RBA cuts, fixed rates remained popular.

“People are looking for clarity at the moment. More customers are talking to us about fixing all or part of their home loan to help manage their finances and gain greater certainty in these times,” he said.

The brands also offered new life-of-loan discounts on their Advantage Package products, with St.George and BankSA offering discounts up to 85bps and Bank of Melbourne discounting up to 90bps.

Mortgage manager Australian First

Mortgage also announced rate cuts, dropping rates on its Alternate Funding Programme loan. The mortgage manager cut between 51bps and 156bps for its low doc product.

The previous rate on the product for LVRs up to 65% was 9.75%. AFM said it would reduce the product’s rate to 8.19%.

The move comes after AFM cut rates on its commercial Smart Suite products, dropping its five-year fixed rates 55bps and its one-year rates by 35bps.

Liberty Financial has also announced rate cuts, dropping its variable rates by 20bps. The move brings its Liberty Sharp basic variable product to 5.99%. The lender also made cuts to fixed rates, dropping rates by up to 25bps.

Liberty national sales manager John Mohnacheff said the lender offered a compelling proposition for brokers, citing service levels and “nationwide network of business development managers”.

The rate cuts were effective from 19 June.

John Mohnacheff

ASIC’s comparison rate concerns• Lenders not consistently advertising

comparison rates along with annual percentage rates

• Lenders not advertising the rates prominently enough

• Lenders failing to include an NCCP prescribed disclaimer about the accuracy of comparison rates

• Lenders failing to properly calculate comparison rates

Source: ASIC

8

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Brokers have expressed concern that first homebuyer stimulus changes undertaken by state governments on June 30 will further chill housing markets in those states.

A range of state governments including Victoria and the ACT are retiring stimulus initiatives that have propped up first homebuyer demand in those states.

For example in Victoria, a $13,000 first home bonus and a $6,500 regional bonus is being axed, in favour of stamp duty concessions.

A survey conducted by 1300 Home Loan of its broker network, which it told Australian Broker now numbers almost 100, found that 52% of brokers feel that cuts to subsidies would significantly weaken demand for homes as they were a key incentive to buy.

A further 39% said the upcoming changes on June 30 would weaken demand only slightly, because the original effect of the subsidies had only been marginal.

Meanwhile, 6% of brokers said they expected no difference because the changes were likely to

be offset by the RBA’s recent rate cuts, while 4% said they would actually stimulate demand through confidence.

Managing director John Kolenda said most brokers believed government subsidies were a key plank underpinning the property market, which was being removed at the wrong time.

Brokers on the Australian Broker online forum felt that governments should maintain reasonable stimulus measures. Country Broker said, coming from Victoria, he believed it was essential some stimulus stay. “This may not be as high as it was, but there is no way stamp duty reductions will keep the FHB in the construction market – the maths don’t add up.”

Warwick said that for many first homebuyers, this is the only way they can get into the market, while another broker said negative gearing gives established property

owners a distinct advantage over FHBs.

“What’s wrong with a scheme that charges no stamp duty to first homebuyers and a single rate to owner occupiers and double to investors? The investor can still claim a tax deduction on the doubled stamp duty but the field is much more level.”

Firstfolio has named its new CEO after the role was made vacant with the forced resignation of former head Mark Forsyth.

David Hancock, an experienced banking executive who was

previously a consultant to the company, will now pilot the group as it seeks to steady its trajectory.

Hancock’s résumé includes a stint as executive general manager of the Commonwealth Bank from 2007 until 2012, and previous roles at institutions Shinsei Bank, JP Morgan and Citigroup/Salamon Smith Barney.

Chairman of Firstfolio, Eric Dodd, said that Hancock has a solid understanding of the business as a result of his consulting engagement and an “excellent and proven track record”.

Hancock said he was looking forward to delivering a business strategy that would enhance value for all shareholders.

“Firstfolio has acquired several assets in recent years and my

focus will be to execute on a growth plan that leverages off those assets,” Hancock said.

“The immediate focus will be on improved client services and ensuring that the company keeps pace with the changing landscape in financial services,” he said.

Hancock took over from acting CEO Mark Flack, who announced that he would step down as a director.

Firstfolio previously defended the forced resignation of chief executive Mark Forsyth, and lamented the company’s poor stock performance.

Eric Dodd has told News Ltd at the time of the departure that Forsyth did not have the necessary skills to oversee the day-to-day operations of the finance company.

“The skill set of the CEO was

not right. His was an not an industry background,” Dodd said.

Forsyth oversaw a period of rapid expansion via acquisitions, with the company buying Calibre Financial Services, Club Financial Services and Apple Home Loans. Firstfolio has said it now has to look to the day-to-day operations of its purchases.

“The key thing now is for the company to execute on what it has bought. We have all the pieces we need,” he said.

The rapid mergers and acquisitions saw Firstfolio shed profits, with its half-year net profit falling by 86% for the six months ending 31 December. The company’s share price has also suffered, down from more than 11 cents in 2003 to just over two cents as last month.

Brokers fear impact of withdrawn incentives

Firstfolio finds new CEO in consultant

Gen Y need low rate carrot lureInterest rate relief needs to go deeper if it is to sway Gen Y towards property, a survey has found. Fifty per cent of 813 Gen Y respondents to a Loan Market survey have said that two consecutive monthly reductions in the cash rate had not made a difference to them in any way. Another 32% said they had just been boosting their savings and more RBA rate cuts were needed. Loan Market said the pressure was on the RBA to further reduce rates.

John Kolenda

David Hancock

http://www.quantumcredit.com.au

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Iden Group throws open NRAS option

Brokers invest ahead of property recovery

Sydney-based mortgage manager Iden Group will now accept finance applications as part of the National Rental Affordability Scheme, which is proving popular with property investors.

Iden Group has announced that effective the beginning of July, it will accept loan applications under a new lending policy designed to capitalise on the government’s NRAS initiative, which aims to provide affordable rentals to low and moderate income households.

Brokers will be able to provide loans to clients who will be eligible to receive an incentive from the government for each approved dwelling rented to eligible families. The scheme has proved popular with investor clients, because of the government incentive available.

Iden said additional criteria applied to the new product on top of its usual residential criteria, with lending up to 90% LVR (plus capitalised LMI), low-doc being unavailable, vacant land being unacceptable, and apartments and units unacceptable under its newly-minted policy.

Iden Group said that construction is available with the NRAS-friendly loan, though the property must be leased or

managed by an affordable housing consortium approved by the funder. Iden has also released an approved list of housing consortiums.

Only accredited Iden mortgage brokers will be allowed to provide funding to clients via the new NRAS loan.

Director of the Parramatta-based mortgage manager, Barrie Gaubert, said the loan was ideal for investor clients.

“This provides brokers with a fully featured loan, complete with offset facility,” he said.

“The loans are underwritten via an Australian bank, and Iden is able to provide accredited brokers with exceptional service. We take care of the approval in-house, we undertake the valuations, and progress valuations for construction loans.”

Gaubert said Iden also issues the approval letter and instructs solicitors in-house.

NRAS is a government initiative to stimulate the supply of 50,000 new affordable rental dwellings, though they must be rented at 20% below the market rate.

Mortgage brokers located in states where property markets are expected to recover are already investing in their businesses in preparation for the coming upturn.

Following BIS Shrapnel predictions the property market is set to see an upturn due to more favorable market conditions, the MFAA said brokers are already positioning for the change.

“There are signs of greater activity, recruitment and investment by mortgage brokers in the recovery states,” CEO Phil Naylor said.

The MFAA said the best growth for brokers will likely come in NSW, Western Australia, Queensland and the Northern Territory, states where BIS Shrapnel expects the strongest property recovery.

“Growth is expected to return to NSW, which continues to experience a dwelling supply shortage, while the other states are experiencing accelerating populations on the back of resources investment,” Naylor said. “Continuing interest rate falls have seen affordability in their capital cities improve dramatically and we support BIS Shrapnel’s view that a property recovery will gain traction from 2013, as growth in resource investment spending eventually flows through to other sectors of the economy,” he said.

The MFAA said that it

expects “hundreds of jobs” to be added in the mortgage broking sector.

BIS Shrapnel forecast that purchasers will wade back into the market in greater numbers, translating to greater sales volumes and a pick-up in price growth over 2013 to 2015.

Naylor said increased confidence is likely to see more first homebuyers emerge and existing owner-occupiers upgrade. He said brokers writing 42% of loans would benefit.

MFAA continues education driveThe MFAA has launched an online learning platform. The MFAA said its MFAA Pathways platform is a web-based educational tool with more than 120 professional and personal development courses. The association said the courses included free instruction on basic PC desktop skills, management and leadership techniques focusing on personal development, decision making and sector specific subjects such as equipment and commercial finance.

Product specifications• Up to 90% LVR subject to LMI ( plus capitalised LMI)• Low-doc not available• Vacant land is not acceptable• Construction is available• Apartments/units are not acceptable• Must be leased or managed to an affordable housing consortium

approved by the funder and which permits purchaser to not participate in NRAS and for security property to be unencumbered by the NRAS

• Government Tax Offset (paid annually in arrears) is allowable at 80% of Government NRAS tax offset at the funder’s discretion

• Refinance of other NRAS schemes only available on a dollar for dollar basis.

Source: Iden Group

Barrie Gaubert

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

Women change shape of Australian housingThe return of women to the workplace, and immigration have been the key drivers changing the face of home ownership in Australia in the latter half of the 20th Century.

Research commissioned by Commonwealth Bank to celebrate its centenary of banking found that immense social change experienced by Australia since the Second World War has driven both the growth of home ownership and changed the traditional form of the Australian home.

Demographer Bernard Salt, who worked alongside the bank to prepare the study, said that prior to WWII a middle class did not exist in Australia.

“It was only with the arrival of the Baby Boomer generation that things began to change and the purchase of property was a key indicator of a boom in wealth. What you start to see in this post-war period is the emergence of a more aspirational Australia which used property as a means of generating wealth and a superior lifestyle,” Salt said.

The report indicates that in the immediate period post Second World War, the majority of Australians either rented (45%) or owned their property outright (47%).

This was an indication of a society that was divided between the wealthy, who had no requirement for a home loan, and the working class, who had no option to buy due to financial limitations and no national home loan scheme.

Since 1946, when the first home loans were granted, these percentages have shifted dramatically.

In 2006, the percentage of tenants was at 30% and those who own homes with no mortgage was 35%.

The major change has been the number of homeowners with a mortgage, which has risen from 8% in 1946 to 35% in 2006, reflecting the middle class that now exists in Australia.

The rise of the Australian middle class can be greatly attributed to women, according to

the report. Women joining the local workforce meant that men were no longer sole breadwinners. Household incomes rose significantly and with greater disposable income came greater aspiration.

“Women’s emancipation has probably had the biggest impact on Australian society.

With the advent of the contraceptive pill in the 1970s, women started to reduce their family sizes and returned to or

joined the workforce en masse,” Bernard Salt said.

“Household incomes effectively doubled and allowed Australians to get on the property ladder in greater numbers.

With household incomes increasing, Australian homes got bigger but at the same time, we were having fewer children. Women returning to the workforce has made us all richer and this has all led us to where we are now,” he said.

A century of housing

Source: The Commonwealth Bank

House sizes have grown, with 36% of respondents buying

four-bedroom homes in 2007/2008, vs only

13% in 1971

Backyards have shrunk, with houses taking up the places

that used to be reserved for the

veggie patch and the incinerator.

Immigration added to property owning Aussies, with loan

applications from 1980 –2009 increasing from 2.9m (1980–1989) to 6.4m (2000-2009)

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Accountants get green light for AFSLs

Adelaide and REIA sign data deal

Builders spooked by carbon tax

The government has finally detailed a plan to alter a licensing regime that prevented accountants from providing a broader range of financial advice.

The minister for financial services and superannuation Bill Shorten has said a new limited Australian Financial Services Licence (AFSL) is expected to see up to 10,000 accountants become licensed and able to increase the range of financial advice they offer.

Labelling the move as creating “a new form of financial advice licence that will significantly increase the availability of financial advice for all Australians”, Shorten announced that – in addition to being able to advise on self-managed superannuation funds (SMSFs) and superannuation generally – licence holders will also be able to give “class of product advice” on basic deposit products, general and life insurance, securities, and managed investment schemes.

“This new licence will extend the consumer protection provisions of the Corporations Act, such as the best interests duty in the recently passed Future of Financial Advice reforms, to financial advice provided by accountants,” said Shorten.

The new licence won’t allow accountants to recommend specific products, but a statement from Shorten has claimed that it will allow accountants – and any financial advisors who may hold this licence – to provide more strategic and low-cost forms of financial advice “which will greatly assist Australians to manage their finances effectively”.

Shorten has also claimed that the reform will create a significant opportunity for accountants and financial advisors who wish to grow and diversify their business by tapping into the small business market.

“This replacement to the current accountants’ licensing exemption

is a major step forward and will help to facilitate a significant expansion in the provision of financial advice,” he said.

“As accountants begin operating within the AFSL regime, there will be more options for consumers to access low-cost financial advice on important issues including insurance and superannuation needs.”

The draft regulations will go through a public consultation period before coming into effect during the second half of the year.

The Financial Planning Association has urged planners to see the move as a business opportunity – and a means to forge stronger ties with accountants based on mutual respect.

FPA general manager of policy and government relations Dante De Gori said accountants now being able to gain limited AFSL licences should create greater cooperation and alliances between accounting and advising practices.

“I think you’ll find advisors will be more comfortable, confident and accepting to refer to accountants, in respect to self-managed super fund clients as an example, because they know their accounting counterparts are licensed and have to comply by the same rules. And vice versa the accountants will have a greater respect and understanding of the obligations that the advisors have to go through,” he said.

Bendigo and Adelaide has inked a deal to sponsor the REIA’s flagship reports. The REIA has announced the regional bank will become the exclusive sponsor of its Real Estate Market Facts Report and the Housing Affordability Report. The group’s Housing Affordability Report had previously been sponsored by Deposit Power.

REIA chief executive Amanda Lynch said the two publications are the group’s flagship reports, and said the bank’s sponsorship will allow them to continue.

“Support like this is critical to enable us to do the number-crunching work our members expect of us. We’re very excited to have such a partner on board to ensure the continuation of these publications,” Lynch said.

Executive of wealth for Bendigo John Billington said the reports serve as a valuable asset for mortgage brokers. He said data on the state of the property market

and housing affordability will provide tangible benefits to brokers, planners and consumers.

“Nobody understands the real estate industry like the Institute and its members and this partnership will help give us additional insights that we can use for the benefit of customers,” Billington said.

The partnership will take effect in time for the REIA’s June quarter releases of both the Market Facts Report and Housing Affordability Report. The results of both publications will be released in September. Adelaide general manager of third party lending Damian Percy said the Housing Affordability Report is of particular importance, with the nation still facing high barriers to entry in the housing market.

Builders are expecting to take a hit from the carbon tax as it comes into effect.

A survey by Master Builders has found 88% of builders believe the carbon tax will hurt their business over the coming 12 months. Master Builders CEO Wilhelm Harnisch said the introduction of the levy is ill-timed for the industry.

“The timing for the carbon tax’s introduction on 1 July 2012 could not come at a worse time for the building industry. Industry is trying to come to terms with a host of unknown factors.

“This includes how to deal with supply cost increases and how they can be recovered in new and existing building contracts,” Harnisch said.

Harnisch also blamed the introduction of the tax for ongoing consumer wariness.

“New homebuyers are delaying their decisions as they assess the impact of the carbon tax.

“This confirms other surveys that show consumers are already exercising even greater caution over fears of increased cost of living.

“The increased cost of home ownership and of living flowing from the carbon tax will only make matters worse,” he said.

Master Builders claimed the tax would result in cost increases to the building industry, which Harnisch said builders would not have the capacity to absorb. He warned that added costs could be passed on to homebuyers.

“Housing is already highly unaffordable in many parts of Australia – not just capital cities, but also many major regional areas.

“The last thing homebuyers need is the cost of new home ownership, and of living, to increase,” he said.

The tax comes into play as recent ABS figures showed a 12.6% decline for dwelling commencements in the March quarter.

Master Builders chief economist Peter Jones called the decline “devastating” for the home building industry.

“The figures are a major setback for an industry that has now fallen to lows experienced during the global financial crisis. This puts at risk the viability of many building and construction operations,” he said.

Jones claimed the figures would serve to “increase industry’s nervousness, particularly in the lead up to the introduction of the carbon tax”.

Damian Percy

Median prices on the mend?The REIA’s most recent Real Estate Market Facts Report, released in June, found national median house prices saw a slight increase for the March quarter. “There is no argument that the boom times are behind us and we have gone through a period of correction, but the bust has not happened in the way pessimists predicted. We’re now seeing the first signs of a return to natural and sustainable growth,” REIA president Pamela Bennett said.

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Supply meets demand in Victorian state Clients should not expect capital growth rates in the Victorian property market to ramp up anytime soon, if the latest supply and demand figures are anything to go by.

Pointing to the latest National Housing Supply Council report, the Real Estate Institute of Victoria (REIV) has noted that over the last two years the estimated gap between underlying supply and demand has reduced significantly from 18,000 in 2009 to just 10,000 in 2011.

What this means, said REIV CEO Enzo Raimondo, is that supply and demand is very close to balance in Victoria, and this is one reason why the pressure on house prices has eased.

“Whilst the market is also affected by a range of other factors if there is a shortage of stock, this also results in pressure on prices,” he said. “The strong price growth between 2005 and 2010 was in part due to high levels of population growth and a shortage of supply.

“This report now shows that the gap between the underlying demand and supply has eased, primarily because the number of new homes being constructed has increased. Dwelling completion data from the ABS shows that in the two years to the 2011 December quarter, 30% more homes had been built than in the preceding two years.

Raimondo said that on current projections, it does not appear that Victoria will face a critical undersupply of housing stock in the medium term. He added that the report also highlighted the lack of affordable housing, particularly in the rental market, as rents continue to increase at a time when there is very little growth in overall house prices.

Queensland government to slug investorsThe Queensland government has earmarked property investors as one of its key targets to squeeze for income as part of its efforts to salvage the state’s fiscal woes.

According to the Real Estate Institute of Queensland (REIQ), the state government’s financial audit has outlined potential revenue-raising measures including the following:• imposinga$100levyonallpropertyowners;• reducingorremovingtheconcessiononlandtax;•applyingapremiumtransferdutyrate;•andincreasingthelandholderacquisitiondutyrate.

In a commentary on the government’s plans, the REIQ stated any further financial imposts on property investors is likely to see them pull up stumps and sell their rental properties. In short, property owners are sick and tired of having to bail out the government.

“Property owners – and investors specifically – seem to forever be targeted by all levels of government when they are short of cash, whether it is through higher council rates, one-off levies or higher rates of stamp duty,” said acting REIQ CEO Antonia Mercorella.

“The additional legislative and compliance obligations on property investors over recent years, coupled with weaker returns on investment, has resulted in many opting to sell their rental properties.”

According to the REIQ, Australian Bureau of Statistics data shows the number of investors active in the Queensland property market has halved in the last five years. Mercorella believes this number is likely to decline even further if investors are slugged again.

“We are currently starting to see the impact of this reduced investor activity with vacancy rates tightening and rents increasing across the state. If more investors left the rental market, then this situation would undoubtedly worsen,” she said. “If land tax thresholds are reduced or removed, the added costs would put an end to the glimmers of renewed investor activity we have seen in recent months and would also likely be passed onto tenants via increased rents.”

INVESTOR NEWS

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A tough post-GFC credit market is driving more brokers than in prior years to do the wrong thing when it comes to getting loans approved, according to the MFAA.

The peak industry body has expelled a total of eight brokers from its membership in the 2011/2012 financial year, a record and a number double that of the previous financial year.

The MFAA said the record number of expelled members were found by its Disciplinary Tribunal

to have engaged in ‘serious misconduct’ by submitting fraudulent loan applications to lenders. The majority of the expulsions [see table] covered loan applications where income and savings data of the applicant was dishonestly reported.

MFAA CEO Phil Naylor said there was no material change in the number of complaints about its brokers, but the post-GFC market was having an impact.

“The driving factor is that as

business slows down a very small number of brokers are tempted to do the wrong thing in order to get loans approved,” he said.

“There is an old saying that ‘when the tide goes out, the rocks appear’ and I think that’s apt for the experience over the past year.”

Naylor said that greater scrutiny in the face of the NCCP has also played a part in lenders and aggregators identifying fraudulent and dishonest activity.

MFAA statistics show that all

bar one of the expelled members had been members for five years or less. The exception had been a member for 7 years.

Naylor said that disciplinary action shows the association’s determination to ensure the highest professional standards and high education standards.

“We expect that the mortgage broker share of the market will expand further this year and the MFAA will continue to be vigilant.”

Business slowdown drives bad behaviour

MFAA disciplinary action in 2012Driss Doukari of West End, Qld

Suspended pending further investigation, after it was alleged Doukari created a letter that purported to be from a firm of accountants concerning a company of which he (Doukari) was associated with incorrectly stating that there were no outstanding liabilities linked to the company, and that he forged documents.

Daman Sarna, Victorian Home Loans & Financial Services, Vic

Expelled following a finding that he failed to act with appropriate skill, care and diligence by submitting several mortgage applications to BankWest which included ATO Notices of Assessment to evidence income, of which he only sourced copies. The documents have since been identified as being fraudulent.

Ashley Sandhu of Ottoway, SA

Expelled for engaging in unethical conduct and conduct unbecoming of a member by forging the signatures of three individuals on a facilities agreement and by committing a dishonest act by lying on a membership renewal application.

Edward George, of Mudgee, NSW

Suspended for two years after he engaged in fraudulent and dishonest conduct by altering and issuing three approval letters to Deposit Power on behalf of himself and two clients.

R Prasad, Rav’s Home Loans, Vic

Expelled after he did not comply with conditions of reinstatement which the MFAA set when it suspended him in 2009. Prasad was originally suspended until such time as Prasad satisfied the association he met its education and competence standards.

National Lending Group of Carlton, NSW

Suspended for a period of two months until the business met MFAA conditions, after it breached the MFAA Code of Practice and failed to comply with COSL, Consumer Trader & Tenancy Tribunal and eventually the MFAA Tribunal.

Chia Min (Chris) Shen, NSW

Suspended for a period of 12 months from 1 July 2011, after she engaged in misconduct by failing to act with all due skill, care and diligence by submitting five loan applications to AMP Banking which turned out to be copies of fraudulent documents.

Eric Chu of Subiaco, WA Expelled after engaging in a fraudulent and dishonest act by manufacturing and then issuing a letter to an Agent detailing that CBA had supplied formal finance approval, knowing that no such approval had been given prior to a loan being submitted.

Canadian model better for smaller lenders

Clients feel poor, as mortgages just too rich

An industry leader has claimed adopting a Canadian securitisation model would provide a better go for small lenders, even if major banks benefit as well.

MFAA chief executive Phil Naylor has commented that the association is not looking to see the Canadian mortgage system adopted “holus-bolus” in Australia, but wants to see aspects of the system introduced to increase competition among lenders.

“The Canadian Mortgage and Housing Corporation has three roles: a mortgage insurer, a securitiser and the third being a general advice body. We weren’t suggesting that it function as either the first or third, but we’re suggesting our government take a look at what they do in the second part of their role,” Naylor said.

Industry commentator Kym Dalton has argued that the adoption of the Canadian system could actually see major banks grab even more market share. With accesss to another, cheaper source of funding, Dalton said

large lenders would gain a further advantage.

While Naylor conceded that major banks in Canada typically account for 80% of the funding through the country’s securitisation model, he argued that the 20% of funding accessed by small lenders would still be a substantial improvement.

“That’s a heck of a lot more than we’ve got in Australia,” he said.

“Our securitised lenders in Australia have been reduced to 1–2% of the market, and anything is better than that,” Naylor added.

Naylor said smaller lenders in Canada were happy with the proportion of funding available to them, because it provided enough access to funding to give them a competitive position in the marketplace. He argued that the MFAA would not advocate simply mirroring the Canadian system, but would like to see aspects of its securitisation model adopted.

National household savings might be at a 20-year high as Aussies stash cash under the mattress, but Australians still feel financially ill-equipped.

A lack of personal savings has six in 10 Australians concerned about their current financial situation, according to Dun & Bradstreet’s latest Consumer Credit Expectations Survey.

In fact, one in three respondents to its survey say they would be unable to cover basic expenses for longer than a few weeks if they were faced with a sudden job loss.

The survey was bad news for credit providers and mortgage brokers, with 36% of consumers saying they are less likely to apply for a mortgage than 12 months ago. Only 5% of consumers say they are now more likely to approach a broker or bank for a loan.

Low income earners and older Australians are particularly grim when it comes to their current financial situation, with 69% of those earning less than $50,000 annually and 62% of consumers

aged 50–54 worried about their personal financial health.

According to Dun & Bradstreet, one in four low-income households and one in five older Australians admits to having no savings.

“Ten to 15 years ago consumers were more comfortable living with a lower savings to debt ratio,” said Dun & Bradstreet director Adam Siddique. “However, continued global economic uncertainty is weighing on Australian households and dissuading discretionary spending, credit usage and significant investments such as buying a property.”

Phil Naylor

The Key Findings• 36% of consumers less likely

to apply for a mortgage than 12 months ago

• Only 5% of consumers more likely to apply for a mortgage

• One in three unable to cover basic expenses if jobs lostesolution scheme

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INDUSTRY NEWS IN BRIEF

Connective hopes for awardAggregator Connective has been picked as a Victorian finalist in the Telstra Business Awards.

Entering the medium business category which applies to companies with between 20 and 200 employees, Connective is a contender for the state award announced in late July.

If Connective wins in Victoria, it will be among the national finalists to be announced in August.

Connective’s Murray Lees said the achievement was a “feather in our cap”.

“To be named finalists along with the best companies in Victoria says a lot about Connective, our dedication to the mortgage industry, and the tireless work of our entire team,” he said.

Intellitrain ups self-study anteA trainer has released a self-study program that reduces the time brokers take to finish qualifications.

Intellitrain says it has overhauled its self-study model to make courses more engaging, simpler to use and closer to a real classroom experience, after feedback from brokers.

The new self-study program will include interactive eLearning modules, downloadable PDFs of course units, downloadable copies of support material, and individual self-assessing quizzes.

Students will also be able to download all assessment materials and submit responses online.

Intellitrain says brokers who sit through 3-day training programs will be able to use the system when they get back to their day-to-day business to recall the content at a later time.

Resimac expands in New ZealandResimac has made a push into the New Zealand market with a new pilot program.

The non-bank announced it will soon launch a pilot program to bring some of its mortgage offerings to the New Zealand market. The program will see New Zealand borrowers gain access to the lender’s standard home loan, non-resident loan and low-doc product.

The move comes after Resimac acquired a majority stake in NZF Home Loans in December 2011. The company continues to service the NZF mortgage book.

Resimac chief operating officer Allan Savins said the pilot program will precipitate a full launch of the lenders products in New Zealand later in the year.

Tax time could boost referralsMortgage brokers could be making more out of their referral relationships at tax time, according to one brokerage.

With the end of financial year having just passed, Mortgage Choice has said tax time is a chance for brokers to support their referral network, building and reinforcing their existing relationships.

“Mortgage brokers can utilise their referral partner relationships at timely

intervals throughout the year. Tax time may be one such occasion,” said company spokesperson Belinda Williamson. “This will help to ensure referral partners are keeping the broker top of mind,” she said.

“The end of the financial year presents an opportunity to communicate with existing or potential customers about a broker’s relationship with experts who may be able to further assist locals in achieving a range of financial goals,” she explained.

Aggregator inks deal with builderA large aggregator has signed a deal to open its panel to a major home builder.

WA-based Redlink Homes has launched a new finance arm, SPG Finance, and has announced that it has signed a deal with AFG.

AFG state manager for WA, Alan Walker, praised the deal, saying Redlink was establishing itself as “a significant home builder in the WA market”. SPG Finance managing director Scott Park said the decision to sub-aggregate under AFG would allow the home builder to provide seamless service to customers.

“We are focused on the integration of our finance arm with our building sales teams to achieve our core objective of customer service and satisfaction. This will assist us to create customers that will become our advocates,” Park said.

Brokers tip best 2012 bankMPA’s Brokers on Banks survey has revealed Australia’s top bank as chosen by mortgage brokers, with one major bank making a surprise move up the leader boards.

MPA’s Brokers on Banks found Commonwealth Bank took the top spot for the second year in a row. Commonwealth Bank took the top spot in six of the 10 categories, and was scored as the best overall lender by brokers.

“It’s really pleasing to have this kind of support from the broker community and to know that our broker partners appreciate what we can do for them and what we can achieve together for customers,” CBA executive general manager of third party and mobile banking Kathy Cummings said.

Citi chops variable rateA second tier has lopped its variable rate down to 5.89% as it seeks a spot on brokers’ shopping lists. Citibank said the 5.89% rate is available on loans greater than $150,000 with an LVR of less than 80%, as part of its rate for risk policy which prices different loan risks at different rates. The rate complements its recent Mortgage Plus expansion which gives borrowers access to credit cards.

Head of mortgages strategy, marketing and product Belen Lopez Denis said the changes meant the lender was now one of the most competitive in the market.

“At the end of the day, you need to be competitive on price because if we are not, we will not be on the shopping list for many brokers and their customers.”

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Aussie banks the world’s most profitableAn international body has found Australian banks are the most profitable in the world, but Aussie banks have claimed higher corporate taxes mean they are not as profitable as they appear.

The Bank for International Settlements has released data showing Australia’s banking system tops the list for pre-tax profitability. Pre-tax profits for Australian banks in 2011 were 1.19% of total assets, up from 1.14% in 2010 and 0.93% in 2009.

But the Australian Bankers’ Association has cautioned that the data should be taken with a grain of salt.

“One important note in assessing the data is that the profitability is assessed on a “pre-tax” basis. This can have effect of making Australian banks look relatively more profitable because taxation in Australia is higher than many other countries. For example, the corporate tax

rate in Canada is 26% compared to 30% in Australia,” the ABA said.

However, the Australian banking system bested a variety of countries with higher corporate taxes. France, Italy, Japan and the United States all pay higher corporate taxes than Australia, while Spain pays the same rate.

Nevertheless, Australian banks far outstripped other countries in terms of profitability. While pre-tax profits of the big four accounted for 1.19% of assets, the next closest banking system in terms of profitability, Canada, saw 1.08% pre-tax profits, while the United States ranked third with 0.93% pre-tax profits.

The BIS data did shore up the claim of the majors that net interest margins have fallen. The big four’s net interest margin declined from 1.89% in 2010 to 1.83% in 2011, putting Australia’s banks behind those of Austria,

Spain and the US.“Even though banks have taken

steps to pass on higher funding costs, the data shows margins were lower in 2011 compared to 2009 and 2010,” the ABA said.

Overall, the ABA pointed to the results as proff of the strength of the Australian banking sector.

“In 2011, Australian banks have performed well across a range of performance indicators, helping to maintain confidence in Australia’s economy and wider financial system. This is critical, given the ongoing economic uncertainty in Europe and the US,” acting CEO Nicholas Hossack said.

Educating borrowers ‘fundamental’

Pepper eyes Ireland with GE buy

Educating borrowers is set to become a ‘fundamental part of the mortgage process’ according to one industry consultant.

Industry commentator Kym Dalton has again claimed that many borrowers have limited knowledge the meaning of mortgage products and terms, and that merely satisfying NCCP disclosure requirements may not be enough to keep brokers safe.

“Disclosure and comprehension are not the same,” he said. “Borrowers are frequently nervous about asking questions when applying for a loan, in case it jeopardises their application.”

With this in mind, Dalton has launched an online learning program for borrowers he said will help ensure comprehension and protect brokers and lenders. Dalton said the program, CreditED, will be delivered online in a series of seven animated episodes, each with a mini quiz to ensure comprehension. While the entire program takes around one hour to complete, Dalton said consumers would have the option to attempt the quizzes without watching the animated episodes.

“CreditED is like the road rules for borrowing. It would be unusual to sell a consumer a high powered car without first making sure they knew their road rules or had a

driver’s licence,” he said.

“The major feature of CreditED is the measurement of comprehension. CreditED provides an objective measure of comprehension.

“CreditED is in the business of providing measured comprehension. It doesn’t recommend, provide or advise on any financial services product,” he said.

This measurement of comprehension, Dalton predicted, would eventually become a regular part of the mortgage process.

“Like verifying income or checking credit history, confirming comprehension will become an essential part of responsible lending practices,” he said.

Dalton claimed the program would serve to enhance the disclosure and advice already offered by brokers.

“It will build trust, enabling borrowers to approach credit with increased confidence. Via measured comprehension, credit professionals can have the confidence that their customers understand the responsibilities that come with taking out mortgage loans.

An Australian non-bank has taken a foothold in the embattled Irish housing market.

Pepper Home Loans has announced that it will acquire the Irish residential mortgage business of GE Capital. GE Capital has a 600m book in Ireland, but ceased writing business in 2008. Pepper chief executive Patrick Tuttle said the deal would give the lender a toehold in the European market.

“We have been looking for opportunities to expand our successful business model from Australia and New Zealand into Europe, and see Ireland as an ideal base. In the medium-term, market conditions permitting, we will also consider originating new mortgage business in Ireland, thereby helping to rebuild a competitive marketplace and broaden the choice of home lending options for Irish consumers,” Tuttle said.

Following the acquisition, Pepper said most of GE Capital’s 192 employees in the Irish mortgage business will transfer to Pepper, where they will continue to service existing mortgages for the lender’s 3,500 customers in Ireland.

Pepper executive chairman Mike Culhane said the buy would allow the company to look for

future acquisition targets in Ireland and across Europe.

The acquisition is the latest in a string of grabs for Pepper as it moves toward prime lending. The lender recently acquired a $150m auto and equipment finance portfolio from Suncorp, with the eventual goal of originating vehicle and equipment finance. Pepper last year acquired a $5bn mortgage portfolio from GE Capital in Australia, allowing it to introduce a near-prime product range, an alternative documentation loan geared toward self-employed borrowers with at least three years of clean credit history.

Pepper also announced it will cut rates across its product suite by up to 65bps. The move takes rates on its Pepper Flexi Advantage product to 7.89% with an LVR up to 55%.

Pepper director of sales and distribution Mario Rehayem said the lender’s rate cuts will provide a more compelling proposition for brokers.

“Pepper always looks to provide solutions for brokers and their clients, and reduced interest rates will help ensure our products stay competitive,” he said.

Kym Dalton Patrick Tuttle

Where do Aussie bank incomes go?

Source: ABA

Interest to depositors and bondholders

Employee Costs

Occupancy, IT and other

Tax office

Shareholders

Reinvested in business

55%

12%

16%

5%10%

3%

17brokernews.com.au

WORLD

Canadian brokers rocked by mortgage rule changesA suite of changes to mortgage rules by the Canadian government rocked the country’s broking market in late June, with fears it could severely curtail their mortgage business.

Designed to cool the housing market, the changes reduce maximum amortization of loans from 30 years to 25 years, and reduce equity that can be used for refinancing to 80% LVR.

Mortgage industry leaders were quick to respond. “I find it quite intriguing that we have a federal government that continues to impose limitations on Canadians as it relates to home ownership in a housing market that has been a benchmark for most other countries for the past 5–10 years,” Independent Mortgage Broker Association president Albert Collu told MortgageBrokerNews.ca.

“While I respect the government’s role to keep a close watch on economic conditions this is the type of change that is unnecessary and unjustified. Reducing an amortization for a $300K mortgage at 3.29% from 30 years to 25 years is a difference of approximately $156. Perhaps the government should find ways of increasing the liquidity of consumers by changing tax policies, which are imposing taxes on Canadians at every turn,” Collu said.

Mortgage broker association CAAMP also registered concerns about the effects of a double whammy for consumers, considering the OSFI changes in the pipeline.

“Taken together, the Minster’s ... announcement Thursday and the OSFI final guidelines may have an effect of precipitating the housing downturn that the government desperately wants to avoid,” CEO Jim Murphy told MortgageBrokerNews.ca. “Research shows people are paying down the mortgages, CMHC stats show refinancing are down 22 per cent overall. Borrowers were getting the message. The government may be doing too much tinkering with the market.”

Economists predicted the changes could impact the overall GDP of the economy. A study released by Toronoto-Dominion Bank said that the impact on construction and consumer spending could ultimately shave between 0.1 and 0.2 of a per cent off economic growth this year.

However, whether they like the rule changes or not, brokers in the country are facing what may be the busiest two weeks of the entire rest of the year, especially those dealing with first-time buyers in danger of being shut out of pricey markets.

“We definitely had a flurry of activity before the last mortgage rule changes came into effect, and we’re going to have it again,” said Jonathan Tillger, co-owner of Dominion Lending Centres Mortgage

Village in the GTA . “Really it is a time, an opportunity for brokers to get some business ahead of period where a lot of people may not be able to qualify and to buy because they won’t have the lower-priced inventory to fall back on.”

UK spawns generation of dependent ‘chadults’ Mortgages, further education, holidays and weddings are all on the list of demands of a 4.4 million strong generation of financially dependent grown-up ‘kids’ in the UK.

A recent Cost of a Chadult study from protection specialist LV= found that grown up children or ‘chadults’ in the UK are costing parents £47,324 on average during their post-21 adult years. British parents are regularly helping to pay towards their grown-up children’s basic living costs including bills and rent, at an average of £2,103 per year or £175 per month for each ‘chadult’. On top of this, parents are spending an additional £9,476 on average per child on big ticket items over the course of their adult lifetimes, such as helping them on to the housing ladder with a mortgage, further education, holidays, or paying towards a wedding, according to Mortgage Introducer in the UK.

The research showed that it isn’t just those ‘chadults’ between 21 and 30 that need help from parents, because it isn’t until the ripe age of 38 that parents on average expect them to be financially independent. Twenty eight per cent of parents currently supporting ‘chadults’ expect that they will always have to provide financial assistance to their children.

Weston’s employer rappedThe new employer of former Advantedge head Steve Weston has been attacked by UK politicians and regulators after it was revealed that it had manipulated interest rates affecting borrowers around the globe.

The Financial Services Authority in the UK delivered a £290m fine to Barclays Bank after it was found to have attempted to manipulate key interbank interest rates, which affect the borrowing costs of households and companies.

UK politicians called for criminal charges to be brought against executives responsible for the market manipulation, with a wider investigation into other banks still underway.

Labor leader Ed Miliband said: “When ordinary people break the law, they face charges, prosecution and punishment. We need to know who knew what, when, and criminal prosecutions should follow against those who broke the law. The same should happen here. The public who are paying the price for bankers’ irresponsibility will expect nothing less … ”

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News

Aussies playing it safe with tax refunds

Bank fees falling, but customers still ‘walloped’

Paying down debt is the top priority for Australians come tax refund time.

The Bankwest Taxing Times Report has found that 39% of Australians expecting to receive a tax refund will use it to pay down existing debt. Thirty-one per cent of respondents said they would put any tax windfall in savings.

“These results support the findings of the Bankwest Financial Fitness Index released in March, which found that half of all respondents had changed their spending habits over the year, becoming more conservative,” Bankwest retail chief executive Vittoria Shortt said.

But consumers may have less to work with this year. The survey found that 53% of respondents who expect to receive a refund believe they will receive less than $1,000. Forty-one per cent expect to receive a refund between $1,000 and $5,000, and only 7% expect to receive a payment of more than $5,000. Shortt said the majority of taxpayers are expecting a smaller refund than in previous years.

Indeed, the average refund has fallen. The average tax refund Australians expect to receive for the 2011–12 financial year is $2,017, down 13% from 2011 when the average expected refund was $2,317.

Around two-thirds of respondents prioritised credit card debt as the debt they would pay off with their refund, while 34% said they would use their refund to tackle their mortgage. Nine per

cent said they would pay off personal loans.

Only 15% of those expecting a refund plan to spend it on “something more exciting”, down from 18% last year. Of those who will devote their refund to purchases, 69% said they would use it for a holiday.

But 19% of respondents said they would spend their refund merely paying for basic commodities, such as food or utility bills. The result is up from 16% last year.

Bank fees are falling, but an industry figure has claimed banks are still finding ways to “wallop” customers.

An RBA report has found that bank fees fell by 7% in 2011 to a total of $4bn. But bank customers are still paying more than $470 a year in fees.

The Australian Bankers’ Association (ABA) has claimed the highest fees are paid by higher income families.

“For those households on low incomes, the report shows that they pay the lowest amount of bank fees. Free accounts are available for pensioners, children, students and other eligible customers,” CEO Steve Munchenberg said.

Munchenberg said customers are increasingly shopping around for low-fee options.

“Banks also offer some fee-free and low-cost ‘all-you-can-eat’ accounts. So this is a good time to shop around for a new account if you think that you are paying too much. And with new transaction account switching services starting on 1 July, it will be even easier to move your transaction account if you find a better deal,” he said.

In spite of the decline in fees, comparison site Mozo has claimed banks still hit consumers with high fees, citing high establishment fees, a $749 annual fee for Citibank’s Citi Select credit card, a $2 fee for QSCU customers who enter their PIN incorrectly at an ATM and Gateway Credit Union’s $60 annual fee for debit card

holders.“Unlimited

fee-free banking is on the rise, and consumers can now get zero fee banking from a number of challenger banks. Customers now have genuine alternatives to the Big Four banks. It’s insane to keep paying monthly account fees and transaction fees. You simply don’t need to,” Mozo director Kirsty Lamont said.

Some bank fees have been transferred from retail consumers onto business borrowers. Bank fees to businesses increased 5.5% in 2011. But the increase was down from sharp surges in business fees following the GFC. The ABA said the growth of business fees had slowed from more than 20% in 2009 and 2010.

Watch for falling feesOver the past two years: • Transaction account fees fell

by $824m or 45%• Other account fees fell by

$35m or 36%• Housing loan fees are $151m

or 11% lower• Personal loan fees are $43m

or 12% lower• Credit cards fees are $95m or

7% lower• Other fees have fallen by $6m

or 6%

Source: ABA

Tax facts: Key findings from the Taxing Times Report• 73% of tax payers expect to

receive a tax return in 2012, down from 78% who expected to receive one in 2011

• 54% of tax payers pay an accountant to prepare their tax return, while 37% do it themselves, and 7% rely on the help of family or friends

• 88% of tax payers file their tax return online, up from 86% recorded last year

Source: Bankwest

Steve Munchenberg

Banks are losing ground in satisfaction with business customers, and smaller lenders are not exempt.

The Roy Morgan Research Business Banking Satisfaction Report has found that satisfaction among business customers of the major banks fell by 0.6% in May to 63.5%. But smaller banks were not immune from the satisfaction slide, falling 1% to 65.5%.

ANZ saw the biggest drop in satisfaction, falling 2.4% to 61.5%. The bank is down 3.5% for the year in business satisfaction. NAB saw an uptick, with satisfaction improving 3% to 64.7%. Westpac leads the major banks in businesss satisfaction at 66.8%, followed by NAB, then CBA at 61.6%.

The results differed slightly based upon the size of businesses. While Westpac led satisfaction for small and large to medium businesses, CBA dominated in the micro-business segment.

Roy Morgan Research communications director Norman Morris said the major area of contention for business banking customers was business lending.

“The major problem area for all the big banks remains the very low satisfaction levels their business customers have regarding their loans. Satisfaction with loans among the Big Four customers is now only 58.6% but it will be interesting to see if this improves with declines in the official cash rate seen in May and June, the

impact of which will depend on what is passed on,” he said.

Business customers continue to prove more difficult to please than personal banking customers, with satisfaction around 14% lower. Morris said the fall in business satisfaction would likely impact the rating given to banks by consumers as well.

“It would appear that the banks are doing a relatively poor job of meeting the more complex and potentially riskier needs of their business customers and they continue to get low ratings on issues such as ‘following developments in your business’ and ‘maintaining regular contact with you’.

Banks moving backward with businesses

Business bashes the banksBank May 2012 Satisfaction Monthly change

ANZ 61.5% ↓ 2.4%

Commonwealth Bank 61.6% ↓ 0.1%

NAB 64.7% ↓ 0.2%

Westpac 66.8% No change

Source: Roy Morgan

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19brokernews.com.au

Comment

Positives amid the negatives

Westpac’s Gail Kelly went straight to the point recently when she said that the compound growth property investors had experienced in past decades was well and truly over.

Sarah Wells of redconcierge agrees. “I don’t believe we are going to see the double digit growth in property that we have done previously and also the compound effect of it.”

Wells said that socially, a general acceptance has to be reached that as a society we spend less, and save more – meaning

that a new property boom is not around the corner.

“I don’t think we can be as lucky as maybe some of the prior generations or some of us that are a little bit older that have had property for a period of time, where we were able to buy

something and within 5–7 years it doubled,” Wells said.

So in such an environment, what should you be advising your property-hungry clients?

Mark De Martino of Loan Market said it is the responsibility of a broker to make sure that they advise clients to do their homework on the property sector.

“I think it is important that they look at the fundamentals of why property is going to be a sound purchase for them, get advice from professionals – find a good real estate agent, find a good solicitor, or find a good property advocate if that is what they are after,” he said.

It is about staying close to your clients’ goals. “If they have, I guess, a more tailored requirement around what their goals are moving forward, then they probably need to go and speak to a financial planner,” she says. “If they are just simply looking to invest in property, I would suggest a client to have a look at some of the good property investor books. Look online, look on YouTube, we are absolutely surrounded by information these days.”

In the end, Wells says the decision is not the broker’s. “Our role is to educate and to guide, but it is the client’s role to decide.

And I think that as a broker all we can do these days is give our clients options, and if they decide to buy a property in the current marketplace, that is a decision they have made based on the best information they have at the time,” she says.

However, De Martino said that brokers have a positive message to tell about property.

“We need to be delivering a message to our consumers that it’s important for us to have banks that are profitable, and we need our banks to be profitable. Secondly we should be delivering to our consumers the truth that Australians have always had an obsession with property; 70% of Australian consumers own property in this country and that hasn’t changed for the last four decades or so,” he says.

Likewise, brokers have their own positive story to tell. “They should be extraordinarily positive about the fact that a recent survey showed that nearly 50% of consumers now use brokers. And that’s up from 25% 10 years ago. Brokers should talk to their consumers about how they can refer us to more customers who don’t currently utilise the services of a broker because we do an extraordinary job for our customers,” he said.

Diploma: Principle and reality

“It’s very controversial.”Talk to any mortgage broker,

and they are certain to have an opinion on the compulsory requirement for MFAA members to achieve a Diploma in mortgage broking.

But in Sally Richards’ eyes, the requirement is superfluous.

“I have a Bachelor of Commerce. I have a post-graduate degree from the Securities Institute. So for me, I feel I am about as qualified as I would need to be,” she told Australian Broker.

So Richards – a Smartline franchisee – was not happy about sitting through the Diploma.

“I thought the Diploma itself – though I did it – taught me nothing,” she explains. “I didn’t learn anything I hadn’t already covered in the years that I had been in the banking industry and the tertiary education I had already done.”

Richards also has other complaints about the process. “I felt the recognition of the prior format education wasn’t sufficient, it just wasn’t counted,” she says.

However, for John Mohnacheff of Liberty Financial, higher education standards for the industry as a whole are critical to be seen in future as a professional industry.

“People trust people who are qualified. We go to an accountant because they are qualified, you go to a solicitor because you get professional advice. I really want to see mortgage brokers in that same space,” Mohnacheff says.

He says that education is knowledge, and the more knowledgeable you are, the more opportunities there are for brokers to grow their businesses.

And Mohnacheff thinks that this should eventually include a university degree. “If you are going to call yourself a professional, well you can’t have an accountant and not have a

degree. You can’t have a solicitor without a professional qualification,” Mohnacheff says.

“I really do want to see –especially for our young people coming through – a definite career as finance professionals. So I think for the younger people coming through, a degree is absolutely imperative,” he says.

But for Richards, the decision by the MFAA to extend its completion deadline for the Diploma was bitter medicine after getting in early herself.

“I can understand why they have extended the deadline, but now all of a sudden it is cheaper than it was, which makes me, who got it done early think, ‘Great!’.

Compound property growth has been declared over by one of the nation’s leading bank CEOs. Here’s what our brokers have to say on this, and the Diploma extension

VIEWPOINT

Mark De Martino, Loan Market

Sarah Wells, redconcierge

Sally Richards, Smartline

John Mohnacheff, Liberty Financial

Our role is to educate

and to guide, but it is the client’s role to decide

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

20 brokernews.com.au

Comment

MOHNACHEFF

Like it – or not – the choice is still yours

Now I don’t want to be the financial year-end mortgage Grinch, but If the “Canadian way” truly is the way, the devil is sure to be in the detail, so let’s get just a few of those little devils out of the closet and give them a public airing early on, in the interest of furthering the debate.

Supporting “Canada Mortgage Bonds” (CMBs) or their NHA MBS wasn’t the Canada Mortgage and Housing Corporation’s (CHMC) initial activity – it was the provision of “mortgage insurance” for high LVR loans. Indeed, whilst there are a couple of private LMI providers approved for CMBs, the vast majority of loans in CMBs are mortgage insured by the CHMC mortgage insurer, which carries the “AAA” sovereign rating of Canada.

If we are to have “Australian Mortgage Bonds” (AMBs), it’s

likely that AMBs will need LMI support so there’s bound to be some structural issues around how “AAA” is achieved via an effective government guarantee on the AMBs, given the Aussie LMIs don’t have a AAA rating. If some fancy structuring on the bonds is required, this will reduce the appeal of AMBs to the investment community.

I don’t think we’re going to see a reformed HLIC come off the bench to support AMBs. Indeed, this publication’s Canadian sister title recently reported on the debate around the state getting out of the mortgage insurance business.

(http://www.mortgagebrokernews.ca/news/breaking-news/flaherty-throws-cmhc-future-in-doubt/123676/)

Of course, there’s the practical

point, if LMI is required on qualifying mortgages in AMBs, the industry will continue to be reliant on the capacity and underwriting guidelines of the LMIs so AMBs are unlikely to ‘naturally’ permit access to mortgage finance for a cohort of borrowers.

Another point – 77% of the mortgages sold into CHBs are originated by banks. Whilst AMBs would undoubtedly increase access to lower cost funding for smaller lenders and level the playing field, if the major banks were permitted to use AMBs, is there a chance that this could actually increase their market dominance? If ‘banks’ were excluded from accessing AMBs, not only would there be a hue and cry (from them) but how can we determine who could access AMBs and who could not?

Also by levelling the playing field, and by having ‘plain vanilla’ (CMBs only allow owner occupied P&I loans) mortgages in the AMB pools, the trend towards commoditisation of mortgages would be exacerbated. How would lenders accessing AMBs compete? Principally on price, I would venture. Who are the most efficient price competitors? Those with the lowest costs. Those with the lowest costs are either ‘big’ with economies of scale (i.e. big banks)

or they are those who employ the lowest cost distribution methods (like online).

Plain vanilla, commoditised, price driven mortgage products don’t sound a mortgage brokers’ stock in trade to my ears, and so I believe we need to think about whether levelling the playing field might actually marginalise brokers as smaller lenders seek to compete by driving costs out of the value chain.

There are quite a few other little demons that you can no doubt identify when thinking how AMBs may actually ‘work’. However, a final Grinch point.

Aussies who meet the criteria can readily get plain vanilla prime mortgages right now, and barring a catastrophic event like a disorderly collapse of the Euro, access to mortgage finance is set to continue.

AMBs have immediate egalitarian ‘give the little guy a go’ appeal, but we need to think carefully about the detail as the debate progresses and make sure that they’re not a solution looking for a problem.

Liberty Financial’s John Mohnacheff can’t understand what all the fuss over segmentation is all about

Correctly applied, market segmentation is about a company understanding the needs of its customers and therefore understanding how its customers decide between one product and another.

This insight is used to form groups of customers who share the same or very similar value criteria, which the company can use to determine how to best serve each group with its products and services and hence outperform the competition.

The primary objective of segmentation, therefore, is to understand how to win and retain customers. Segmentation and its corresponding product

differentiation strategy can give a company a commercial advantage.

How segmentation manifests itself within a chosen market can vary dramatically, and as such opinions are divided on the segmentation strategies that lenders have chosen.

A model questionThere are essentially two types of segmentation within this industry. Under the externally driven model, lenders advise their brokers which segment they fall into according to application volumes. This determines the products, level of service, remuneration and attention each broker will receive. Essentially the lender will announce to its brokers that they will provide such benefits as faster turnaround times, greater access to credit underwriters, and more frequent product support and training to

those brokers who provide quality volume applications.

Under the internally driven model, segmentation is determined purely by the lender’s internal operations and its strategies for its client base, but their message is that all brokers receive the same level of service and attention, irrespective of volumes.

Although the external segmentation model is transparent, it does have a propensity to discourage or disengage brokers who are unable to meet some of the lender’s conditions.

But if every business must win and retain customers in order to become and remain successful, why are we getting so hot under the collar about whether segmentation – either external or internal – is a good or a bad thing in our industry?

Choosing your serviceLet’s look at Qantas’s Platinum Frequent Flyer program. Platinum customers have their own airport lounge, they get fed and watered and they don’t have to queue at the boarding gate. Why? Because they are loyal to the Qantas brand. But those customers have a choice. They don’t have to fly Qantas. They

could choose to fly on multiple airlines instead and receive the same level of service as everyone else joining the queue at the boarding gate.

I don’t believe that there is a right or a wrong model; just as with any other business, lenders must win and hold on to their brokers, and how they choose to do that is up to them. But brokers also have a choice.

If you like the benefits that segmentation provides, you can choose it. If you don’t, you’re free to walk away.John Mohnacheff is national sales manager at Liberty Financial.

John Mohnacheff

Sometimes the solution can create more problems, and it’s possible a move to a Canadian-style mortgage bonds system could do just that, argues Kym Dalton

Beware the problems created by this solution

Kym Dalton www.futurology.com.au

Kym Dalton is a principal of SAKS Consulting and Futurology Pty Ltd – finance industry analysts, consultants and ‘true believers’

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

21brokernews.com.au

What a difference a year makes … or not. Australian Broker reflects on the punditry, breaking news and influential trends that made headlines in the magazine 12 months ago

Australian Broker Issue 8.13

Headline: Future of specialised lenders in doubt amid ASIC scrutiny (page 4)

What we reported:As ASIC moved from its licensing role to its role as NCCP watchdog, Mortgage Choice compliance and corporate standards manager Tim Donahoo last year claimed specialised lenders and brokers writing non-conforming deals could find themselves in the crosshairs. Donahoo said specialist lenders could no longer offer credit to some of the clients who had previously formed their demographic, and questioned whether some would be able to stay afloat under ASIC’s watchful gaze.

What’s happened since:The death knell for low-doc lending has been sounded countless times, and countless times specialised lenders have managed to survive. ASIC did ramp up its monitoring of the sector, with the results of a review of the industry concluding low-doc brokers were “generally aware” of responsible lending requirements, but that there was “room for improvement”. The regulator found instances of non-compliance among low-doc brokers, and said its next review would target lenders.

Headline: Housing due to rebound (page 6)

What we reported: Forecaster BIS Shrapnel last year predicted that 2012–2014 would see a rebound in the property market as first homebuyers returned. BIS said the market would see moderate growth from 2012–2013, ramping up the following year to account for double-digit growth for the three years to 2014. In particular, the company predicted double digit growth for Sydney, Brisbane and Perth, with Perth even tipped to see 19% growth by 2014.

What’s happened since:The perennially bullish forecaster has moved the goalposts a bit, now saying house price growth will return in 2013 and move strongly through 2015. But BIS has tempered its predictions somewhat, conceding that any recovery will be patchwork at best, and will skip over cities like Melbourne, Adelaide, Hobart and Canberra. While Sydney and Darwin were predicted to see moderate growth, BIS still predicted booming prices for Perth and Brisbane.

Headline: Bank wars fail to gain refi traction (page 13)

What we reported: Prior to the onset of the government’s exit fee ban, the Big Four ramped up competition last year in a bid to poach customers from one another. NAB ran its highly-publicised break-up campaign, offering to pay exit fees for CBA and Westpac customers who refinanced with the bank. CBA and Westpac moved to axe establishment fees. But the frenzy of competition did little to move consumers, with a Loan Market poll finding only 11% of the company’s brokers saw a significant rise in refinancing.

What’s happened since: Refinancing hit its highest level in four years in March, accounting for 37% of all loans written. RateCity spokesperson Michelle Hutchison attributed the surge of borrowers choosing to jump ship to the exit fee ban, and predicted the trend was set to continue. But MFAA CEO Phil Naylor said the exit fee ban had done little to encourage actual competition. He pointed to figures showing the major banks increased their market share following the ban, and said only 64.3% of refinancing customers felt they had benefited by switching lenders.

Payday lenders deny ‘sticking their head out’ (page 18)

What we reported: Payday lenders banded together last year to rubbish a “falsely damning” report from the Consumer Action Law Centre, suggesting the lenders charged as much as 400% interest and did not abide by NCCP responsible lending guidelines. National Financial Services Federation chief executive Phil Johns claimed payday lenders saw COSL complaints at or below averages for other non-bank lenders.

What’s happened since: Consumer groups have argued for strict caps on payday lending, and Financial Services Minister Bill Shorten recently proposed lifting the cap on small amount credit contracts from 10% to 20% of the amount of credit advanced. Shorten has also sought to change the previously proposed cap on monthly fees from 2% to 4%. But Johns reacted by calling the cap a “fictitious, idealistic number”.

22 brokernews.com.au

Insight22

Salespeople don’t often like to acknowledge it, but persistent routine prospecting is an essential to their sales success. Sales guru Sue Barrett explains

Many sales people, especially those new to sales, often take it personally when a prospect says ‘NO’ and fail to persist with their prospecting efforts while others turn prospecting

into stalking not knowing how to engage a prospect effectively.

Either way, these people are failing to favourably and persistently position themselves with prospects thus limiting their sales opportunities even further.

In sales there is a fine line between persistence and stalking a prospect. Did you know:•Over50%ofsalespeoplegiveupat1stcontactifthey

get a ‘NO’ from the prospect•Atthe5thcontact7%ofsalespeoplearelefttospeak

with the prospect•Atthe8thcontactthereisonlyonesalespersonleftto

work with the prospectHopefully that person is you. But why do these figures

persist? What were the successful sales people doing that the others are not? How do you capture the attention of your prospects and determine whether or not they want to engage with you and how often should you be making contact?

Ready to buy?Assuming you are making contact with prospects, the first thing you have to ask yourself is: if you prospected yourself would you be worth listening to? If you get a ‘NO’, you cannot blame your prospects for not being interested either.

The second thing is to assess where your prospect is at on the ‘ready to buy now’ scale and how you are going to maintain contact with them if they are not ready to buy now. Because, folks, not everyone is a viable prospect all the time.

Sales people have to come to realise that not every prospect is ready to work with you straight away, however this does not mean they will not be viable in the near future.

Our job in this instance, is to work out where our prospect is at and find out when they are likely to see what we do as relevant to their situation. If they are not ready now does not mean they will never be ready.

A poor recordThe brutal facts are that at best, sales people tend to check in on their prospects on a random basis, leaving their prospecting efforts to chance. They also tell us that they are worried about what to say to prospects when they follow up and do not know where to start or how to capture peoples’ attention.

They think prospects will not be interested in speaking with them and then they shoot themselves in the foot by not calling the prospect at all or messing up the prospecting call by not engaging with the prospect and finding out if we can talk now or in the future.

Like every aspect of selling, following up on prospects in your pipeline should be part of a planned routine. In our experience, with the exception of prospects already in the sales cycle, that line is usually drawn at about one direct contact every 5 weeks.

There are many ways you can to stay in meaningful touch with prospects and not be considered a stalker.

Plan to use a combination of direct contacts (via the phone) with indirect contacts (email, social media, etc.) to stay in touch with prospects.

An example sales programAn effective prospect contact program could include…

Week 1: a follow up telephone call with action items noted for the next direct contact

Week 3: send a company email newsletter, announcement or article. It doesn’t matter what you send as long as it is content-rich and not an advertisement for your products or services.

Week 4: Another indirect contact via email or social media such as something specific to the prospect i.e. a news article, something about their industry that is relevant to them, etc. This contact is designed to strengthen your personal relationship and build rapport. It must be sincere and genuine or your efforts will be seen as sycophantic and grasping.

Week 5: Another follow up telephone call – this must be structured by defining a Valid Business Reason for your call to your prospect –this is something of interest or relevant to your prospect not you.

So what happened to Week 2? After you initial dazzling Valid Business Reason in Week 1, give your prospect time to digest where you are coming from. If they are not ready to see you yet what you say can start planting seeds in their mind so that the next time you contact them you are building a strong case for them to want to see you down the track.

It’s important that when making a follow up telephone prospecting call, make sure that you are not still thinking about what to say as the phone rings. Even if you an experienced sales person you need to work out our intentions before dialling the number.

Establishing your VBR by jotting down a few key points and have a fallback position just in case the initial VBR does not work. Even practice out loud what you want to say in that first 10-15 seconds.

Remember, prospecting is the oxygen that fuels the sales fire and without effective prospecting we cannot sell.

Sales tipUsing the phone exclusively is generally not the best way to stay in touch with prospects. Instead, mix phone calls with email and social media which can be both individualised and general interest, rather than generalised corporate brochures.

Sue Barrett is the founder and managing director of sales consultancy Barrett, which specialises in sales training for individuals and companies.

Prospecting for success

23brokernews.com.au

FORUM

When NAB Broker’s John Flavell argued that bank desire to kill off brokers was ‘truly dead’, brokers welcomed the attitude, though some were cynical of its reality.

Whilst ever NAB denies broker access to its NAB-branded products (brokers can only

distribute Homeside brand to earn full commission) this is hypocrisy.Patrick on 14 Jun 2012 08:51 AM

Good luck with that. Somehow I can’t see brokers and branch lenders sitting down smoking a

peace pipe and singing ‘Kumbaya’ together any time soon.A Broker on 14 Jun 2012 08:58 AM

At last a senior banker with an attitude that is so right. Homeside will be getting more business.

Country Broker on 14 Jun 2012 09:02 AM

It is refreshing to read sensible comment about the broker channel...

phil.gt3 on 14 Jun 2012 09:16 AM

Banks no longer have an adversarial view towards the broker channel. Oh, how benevolent. Now you

realise that you need us, you think that we should flock back to the banks and “work together”. I’ll tell you what: since you need us, how about the banks reinstate the commission reductions they applied to us brokers and then we might have some trust.John Robbo on 14 Jun 2012 09:34 AM

I can’t tell you how refreshing it is to read this, finally. Let’s hope the other banks will take a leaf out of NAB/

Homeside’s book!Elle on 14 Jun 2012 09:42 AM

When the banks stop undermining brokers at a branch level or even with discount internet based offers

then there will be a reduced us and them mentality.Loz on 14 Jun 2012 11:31 AM

Once again – and to his credit – Flavell just gets it. Empathy with his business partners and an

intimate and practical understanding of the space. Well done John – I can’t fault you.Andrew Campbell on 14 Jun 2012 06:36 PM

Brokers take aim at banks on submission criticismBrokers are none too happy at being blamed for application hold-ups, saying banks need to take their fair share of responsibility.

After CBA’s executive general manager of third party distribution Kathy Cummings told MPA magazine the onus is on brokers to know a lender’s loan products, credit policy and submission process to ensure their client’s financial and customer service expectations are met, brokers returned fire, saying banks often get it wrong.

“A lot of time is spent by brokers trying to second guess what a lender may require as in many cases the correct and required documentation is supplied but the assessor comes back and requests something completely out of left field – basically the assessors require more training.” – Perth Broker wrote.

Vbliquidity suggested banks move to standardised forms to cut down on errors.

“The home loan application is as simple as the ATO tax pack. A loan is a commodity. It’s up to each lender to assess the same info on the basis it is correct,” he said.

Meanwhile, Rod claimed banks are repeat offenders when it comes to missing documents. “Most of my problems come after the loan is approved. There is a large number of times I have to follow the lender up with documents not issued or issued with incorrect information. Documents being lost in transit should be a big concern for the lenders.”

However, some brokers leapt to the defence of lenders, saying the third party channel needs to up its game.

“Brokers should stop making excuses for their poor workmanship. If a broker can’t submit a deal with all the necessary supporting documents, then they shouldn’t have a licence,” David said.

To vote in our latest online poll or get involved in our forum, visit our Australian Broker Online home page at www.brokernews.com.au

Poll: Should state governments reinstate or boost first homebuyer incentives?

Source: Australian Broker Online

Yes (48%)

No (37%)

Undecided (13%)

The beginning of July marks the end of a series of first homebuyer subsidies that state governments have used to boost their housing markets. Here’s how brokers answered.

24 brokernews.com.au

Toolkit24

Court judgements can be a stain on a client’s credit record, but as John Dickinson explains, capable handling of their removal can see clients gain a fresh start

Whether court judgements can be removed from a credit file is a question that we are asked regularly and knowing the answer could make all

the difference to your business. Before I answer this question, let’s take a quick look at what a court judgement actually is.

A court judgementA court judgment is a legal order that makes a person or organisation liable for an amount of money. If someone feels they are owed money by another party they have the option to commence legal proceedings in an attempt to recover the amount outstanding.

This process would normally involve the services of a solicitor who would begin by preparing a statement of claim. In these proceedings the party that is commencing the legal action is known as the plaintiff or claimant and the party being sued is known as the defendant.

A statement of claim will outline the claim and what the defendant may do to resolve the matter. Typically a Statement of Claim will give a 28 day period for the defendant to either file a defence or settle the matter with the Plaintiff. This process does vary slightly from state to state, but for the most part the fundamentals are the same.

One thing that does differ is the process of the defendant being served a statement of claim. In the state of NSW this does involve the defendant being personally served while in other states the plaintiff need only mail this document. We often talk to people in NSW that were not served and yet a judgement was entered, in some cases without them even knowing. While it is possible this could indicate a flaw in the process followed by the plaintiff or their solicitor, this can also be caused by what is known as substituted service. If a party such as a process server makes repeated attempts to serve the defendant, they may make an application to the court to be awarded substituted service. Once substituted service is awarded the plaintiff is seen as have fulfilled their obligations of serving the defendant and the notice period of the Statement of Claim would begin at this time.

A court action is recorded on a credit file for five years however the limitations period under law is twelve years. It’s also worth mentioning that the credit reporting agencies gain this information from the public records that the courts produce and not from the plaintiff or solicitor.

Tackling court judgementsNow we know a little more about court judgements, let me tackle the question “can they be removed from a credit report?”

The short answer is yes, in most cases a court judgement can be removed from a credit file.

The process of removing a court judgement from a credit file begins with having the plaintiff agreeing to sign a Notice of Discontinuance or Consent Order depending on the state the judgement was entered in. By signing this document the plaintiff is agreeing to formally discontinue their action, not an unreasonable

request if the judgement is paid or the defendant can settle the debt. However this can be a very different matter if this is not the case. If the judgement is unpaid there’s very little chance the plaintiff will agree to discontinue their action.

We find from experience that it can be beneficial if the defendant has not paid the judgement but is in a position to settle with the plaintiff at the time we approach them, nothing motivates a plaintiff more than the prospect of getting paid.

In most cases even if the judgement has been paid prior, the plaintiff will agree to sign the necessary documents, given they are approached in the right way of course.

One exception is if there is “bad blood” between the two parties. An example of this would be a situation where prior to the judgement being entered both parties were essentially at war and interaction may have become personal. In these cases the plaintiff may not want to do anything that could be seen as assisting the defendant. Even in these extreme examples this situation can often be overcome with effective negotiation.

Once these documents have been executed by the plaintiff the process does differ from state to state however one thing does remain consistent: the documents need to be returned to the court where the judgement was entered to be filed and stamped.

Depending on the state the necessary supporting documents can range from just the Notice of Discontinuance or Consent Order itself to a number of other documents including a comprehensive Affidavit from the defendant.

Once the court has filed and stamped the necessary documents it’s a matter of providing the stamped order to the credit reporting agencies. With this information in hand, in most cases they will delete the listing from the defendant’s credit file.

As you can imagine, there are a number of steps to this process and it does take time. From dealing with the plaintiff to having the documents filed and stamped to the actual deletion of the listing, we quote up to eight weeks to achieve this goal, longer if the plaintiff does not initially cooperate.

The good newsThe great news is if you have a client that cannot secure finance because of a court action listed on their credit file, all is not lost! With the right skills and knowledge these listings can be permanently removed from a credit file.

John Dickinson

John Dickinson is the director of credit repair agency Clean Credit Pty Ltd, a member of the newly formed Credit Repair Institute of Australia (CRIA)

Even in extreme

cases the situation can often be overcome with negotiation

Can court judgements be removed from a credit file?

http://www.australianmortgageawards.com.au

26 brokernews.com.au

Australia’s latest Census has provided a snapshot of a changing country

Australia’s Census has provided brokers with a snapshot of the country, and of their target market. The data gathered by the Australian Bureau of Statistics has painted a picture of a country where housing demand

and population growth is patchwork, and states without resource-based economies are largely being left behind.

In the five years since the last Census, the housing market has seen some fairly significant changes. Rents are up, full home ownership is down. Salaries have risen, but so has the cost of living. And the places Australians are choosing to make their homes are changing.

Mortgages more common ... and more expensiveThe number of people who own their home outright has fallen since the last Census in 2006. Mortgage holders increased from 34.1% of the population in 2006 to 34.9% in 2011. Renters saw an even more significant increase, rising from 28.1% in 2006 to 29.6% in 2011.

Households are paying more for their accommodation. Median monthly mortgage payments increased nearly 40%, shooting up from $1,300 to $1,500. Rents rose an alarming 49.2% over the period, from $191 a week to $285 a week. While people are earning more money, with household incomes rising around 20%, the growth of rent and home loan repayments steadily outpaced the rise in pay.

Australians are also devoting more of their income to paying for their housing. The proportion of household income devoted to mortgage payments rose from 31.7% in 2006 to 36.5% in 2011, while rental payments increased from 18.6% to 23.1%.

A bright spot in this data is that some homeowners have seen decent gains in home value over the period. RP Data indicated that median house prices rose 24.3% over the period between the Censuses, but analyst Cameron Kusher said this gain hasn’t kept pace with the cost of living.

“It is worth noting that family incomes, housing loan repayments and rental payments all increased by a greater amount than median home prices over the period,” Kusher said.

Changing householdsThe look of households in Australia is changing as well. An increasing number of Australians were born overseas, and the cultural makeup of the country is shifting.

The census found that the proportion of Australian residents born overseas increased from 22.2% in 2006 to 24.6% in 2011. While England and New Zealand remained the most common countries of origin for migrants, the Census revealed some telling results about Australia’s changing cultural landscape. In both 2001 and 2006, Italian was the most common language other than English spoken in Australian homes. Mandarin has now risen to the top spot, with 1.6% of Australian households speaking the language.

Household makeup is also changing, with the “Mum, Dad and kids” arrangement becoming less common. The proportion of Australians who have never been married rose from 33.2% to 34.3%, while households comprising couples without children rose from 37.2% to 37.8%.

Shifting populationAustralia’s population overall hit the 21m mark for the first time, up from around 19.9m in 2006. But major cities weren’t the only focus of the country’s swell in numbers.

Highlighting the resources-driven economy, East Pilbara in WA saw the largest proportionate growth of any local government area in the country. The mining region grew by 82.6% from 2006 to 2011. WA led the way for population growth among the states as well. The state saw its population grow by 14.3%, while resource-rich Queensland saw the greatest number of new people as its population grew from 3.9m to 4.3m.

What it all meansBrokers can take note of the fact that the Australian population is changing. Our ethnic diversity is increasing, bringing with it a different client base. The traditional household is shifting from the traditional family unit, to one of singles, childless couples or groups of friends pooling together to buy property. Group households, in fact, increased from 3.9% to 4.1% of all households. The main driver of the economy – mining – is also driving population growth and housing demand. All the Census data points to one indisputable fact: Australia is changing. And understanding and responding to this change may make all the difference for mortgage brokers.

Market talk

The number

of people who own their home outright has fallen since the Census in 2006

Falling ownership: More Australians paying a mortgage

Source: ABS

Own with a mortgage

Rent

Own ouright

Rent

Own outright

Own with a mortgage

2006 Census 2011 Census

29.6%28.1%

32.1%34.0%

34.9%34.1%

Advance Australia fair

27brokernews.com.au

Market fundamentals are beginning to point toward an improvement in residential housing, but any recovery will be patchwork.

BIS Shrapnel’s Residential Property Prospects 2012–2015 report has claimed that market conditions are on the way up, and that housing could see a recovery after two years of price declines. But the researcher said improvement would not be uniform, with NSW, WA, Queensland and the Northern Territory recovering while non-resource states would continue to lag.

Victoria, SA, Tasmania and the ACT may see the residential market continue to falter. BIS

Shrapnel said these areas saw the strongest surge in construction following the GFC, and now faced excess supply coupled with underperforming economies.

BIS forecast the market improvement to be most pronounced in areas that had seen the weakest conditions in recent times. Perth and Brisbane are expected to perform well as increased migration tightens vacancy rates.

But areas that performed strongly over recent years, such as Melbourne, Adelaide, Hobart and Canberra, are expected to see prices move sideways. Sydney and Darwin are predicted to see more modest growth of about 5% per annum.

Nevertheless, states forecast to see market conditions improve can expect conditions to turn around by next year, BIS senior manager Angie Zigomanis said.

“The recovery is expected to eventually gain traction through 2013 as continued growth in resource investment spending eventually flows through to other sectors of the economy. With the local economic and employment outlook becoming more positive, and some stabilisation and improvement overseas, purchasers are forecast to wade back into the market in greater numbers, translating to greater sales volumes and a pickup in price growth over 2013/14 and into 2014/15,” Zigomanis said.

Zigomanis predicted that factors such as a return in first homebuyer demand, increasing affordability and a surge in overseas migrants could underpin this recovery. At the moment, however, he said recovery was being stymied by pessimism over the global and domestic economy.

“While economic conditions are expected to remain challenging, improving local conditions should move to the forefront of people’s minds and begin to have a more substantial impact on purchaser sentiment,” he said.

Patchwork recovery on the way for housing

Tight market: Vacancy rates across the country (2012)

$2,017* * The average tax return Australians are expecting this year

At a glance…

Source: BankwestSource: SQM Research

Source: BIS Shrapnel

Angie Zigomanis

NUMBER CRUNCHING

1.6%Adelaide

0.6%Perth

3.1%Melbourne

1.8%National

2.6%Hobart

1.4%Brisbane

0.4%Darwin

0.9%Canberra

1.7%Sydney

Patchwork future: Forecast capital city price growth over three years to June 2015

Sydney AdelaideMelbourne Perth DarwinBrisbane Hobart Canberra0

5

10

15

20

17%

3%

1%

20% 22

%

15%

9%

5%

28 brokernews.com.au

People28

The next time executive chairman of Loan Market, Sam White, passes a homeless person on the street, he will likely think differently about walking straight up and having a chat.

Having only just participated in the 2012 St Vincent De Paul Society CEO Sleepout, which saw over 1000 CEOs nationwide sleep rough one night in June, White says he is now much more aware of the problems of homelessness – and motivated to do something about it.

“It’s a national problem, and as a country it is a blight on us all that this problem continues,” White told Australian Broker. “If we fix the issue, society as a whole will be stronger.”

Having raised $16,000 for Vinnies as part of the fundraising Sleepout event, White said that the Ray White business was looking to do more for homeless as a result of the experience.

“On the real estate side of the business we are looking at how we can potentially start a program providing short-term crisis accommodation, and looking at how to fund that.”

Soup and storiesWhite was not alone when it came to Australia’s finance and mortgage broking fraternity. The Commonwealth Bank’s Ian Narev, Aussie Home Loans’ Stephen Porges and Genworth’s Ellie Comerford all took part in Sydney, with Westpac chief executive Gail Kelly another high profile participant, receiving plaudits after raising $122,000, second only to Ian Narev’s $166,000.

CEOs sleep rough for the homeless

Ian Narev (CBA) with Stephen Porges (Aussie), Ellie Comerford (Genworth) and Sam White (Ray White)

A piece of cardboard, a sleeping bag, a pillow, and a willingness to combat homelessness – industry CEOs sleep rough at the 2012 Vinnies CEO Sleepout

Top Fundraisers

$169,599Ian Narev,

CBA

$135,205Gail Kelly, Westpac

$94,811Anthony Flynn,

Kenlynn Properties Australia

For most of the CEOs present, the event was not just about the one night – it was about gaining an understanding of homelessness, in the hope of doing something to change it.

CEOs arrived at about 6pm, and were presented with dinner at 7pm – a bowl of soup. After that, it was in to the challenging sessions organised by Vinnies for the evening.

“They had a number of speakers; people who were either homeless, or were and now aren’t. For example, there was a lady who had left an abusive husband with two small kids, and had been forced to live on the streets – those type of stories,” White said.

CEOs were then formed into groups, where they brainstormed the issues and how they – and society as a whole – could do more to help the homeless.

Then, it was on to the concrete floor at about 11pm (of the Carriageworks in Sydney’s suburb of Eveleigh for those Sydney-based CEOs such as White) with only a piece of cardboard, a sleeping bag and a pillow to see them through the night. “It was really just one night of slight discomfort compared to what these guys go through 365 days a year,” White said.

Breaking the cycleOver 100,000 Australians are out in the dark sleeping rough each night of the year, according to Vinnies. However, for White, the most shocking statistic is that 12,000 of these homeless people are under 12, and 34,000 under 18. “I didn’t realise before this data came out,” he said.

Other statistics showed the problem is not just mental illness. Often something has displaced a person causing homelessness, such as a divorce, a job loss or domestic violence.

“What we need to do is figure out how to get these people into work – that is fundamentally important – employment and education are the silver bullets to get people out of that cycle,” White said. “When you realise people go through this 365 days a year, you can understand why there is substance abuse, crime, and all those things that are so bad for society.”

So for White, the next time he passes a homeless person he might just go up and say hello. “It’s all about not forgetting these people, and building that connection,” he said.

Ellie Comerford, GenworthQ: Why did you get involved?“I haven’t had a lot of time to spend putting back into the community, so this is an opportunity that I reached out and grabbed, because the Sleepout achieves on a number of fronts. Money donated this year is over $5 million, and it creates greater awareness of homelessness:

across Australia 1,046 CEOs got involved and connected with hundreds of thousands of people with close to 33,000 people donating to date.”

Q: How did you find the experience?“With only a couple of hours sleep there was plenty of time to reflect. Why are there homeless people in this lucky country Australia?

“We were privileged to hear first hand some of the very poignant stories direct from people who are or have been homeless; teenagers, women with children; men, people who have lost everything and are now giving back.”

Q: What can the housing/finance industry do?“I and others have made a commitment to continue the journey of raising awareness of homelessness. Genworth also works with a number of community partners, with whom we are involved in initiatives to address the issue of homelessness. Genworth’s mission is to get people into homes and help keep them there. On that front we work closely with over 100 lenders in Australia by offering hardship assistance programs.”

Homelessness in Australia• 99,900 houseless people in Australia

(105,304 in 1996)

• 54% adults over 24 years of age

• 10% under the age of 12 years

• 36% young people between 12 and 24 years

• 42% of homeless people were female

• 58% were single (58,116)

• 19% were couples (18,840)

• 23% were families (22,944 people or 6,745 families)

Source: 2001 Census Data

29brokernews.com.au

St.George fills key NSW broker role

St.George will aim to deepen relationships with brokers and aggregators after an extensive recruitment process yielded a key appointment in NSW.

The bank announced in June it had filled its vacant NSW state manager role with ex-Westpac state manager Sandi Sims, who will now manage the state as a combined BDM team.

NSW was previously split into northern and southern regions by St.George, and were managed by Alan Hemmings and Paul Mullens respectively.

However, both Hemmings and Mullens have moved on from the bank, and St.George made the decision to combine the state and its BDMs under one manager.

St.George said it had undertaken an exhaustive search to recruit Sandi Sims, and that her in-depth background in third party business and familiarity

with brokers made her a strong asset to the business as it seeks to grow penetration.

“Sandi will lead our team of nine business development managers to ensure that we’re committed to knowing and supporting our broker partners like no one else, to understanding what they need now, and where they want to take their business,” said general manager of mortgage broking Clive Kirkpatrick.

Sandi said she was looking forward to getting to know the BDM team and working with broker and aggregator partners to deepen and strengthen those relationships.

Sims has held various senior management roles in mortgage and finance over the past 10 years.

Gold Coast receives new broker BDM

Former Provident Capital lending relationship manager

for Southeast Queensland, Kim Stuart, has joined Loan Market as its business development manager for the region.

Stuart has worked in the finance industry in New Zealand and Australia for the past 13 years

and acquired experience as both a broker and a business development manager.

Loan Market’s national director of sales, Mark De Martino, said Stuart will be based on the Gold Coast and focus on growing the broker team in the state’s south east corner.

“Kim is the perfect fit for Loan Market given her background in business development and experience as a mortgage broker,” he said.

“She will focus on growing our broker team and delivering high value to the current brokers while developing relationships with key referrers.”

FAST appoints WA partnership manager

FAST has recruited a new partnership manager from the ranks of Homeloans Ltd.

Natalie White-Dunn has made the move across to FAST, where she will be focused on supporting existing FAST brokers as well as drive recruitment to the NAB-owned aggregator.

White-Dunn worked at Homeloans where she was second in charge to the national settlements and securities manager for more than 10 years. Following that she went into the field as a BDM for four years.

“I have been fortunate enough to have already established strong relationships within the Western

Australian broker network, along with FAST lender partners,” White-Dunn said.

“I have always been passionate and committed to helping brokers with their business needs and will work diligently to maintain those relationships, while also increasing recruitment of other professional and experienced brokers to the FAST network,” White-Dunn said in a statement.

Acting FAST CEO David O’Toole welcomed White-Dunn to the FAST team.

“It’s fantastic to have Natalie on board and I look forward to seeing her passion and commitment to the industry translate into real growth and success amongst our members,” he said.

MOVERS & SHAKERS

Sandi Sims

Kim Stuart

Key exec to push non-bank agenda

Homeloans has named a replacement chief financial officer after the departure of Cameron Matthews

The new chief financial officer, Ian Parkes, has been charged with assisting Homeloans in meeting its strategic agenda, as well as maintaining strong financial control of the non-bank business. Homeloans executives have repeatedly said the business is on the acquisition trail.

Parkes was previously head of private bank finance at Westpac’s BT Financial Group, and has notched up 15 years’ worth of senior finance experience including 10 years with St.George Bank.

A Homeloans Ltd spokesperson said that Cameron Matthews had resigned from the business only recently, and that the departure was amicable for both parties.

Following the recently announced acquisition of the Refund Home Loans franchise, Homeloans executive chairman Tim Holmes said Parkes would contribute to ensuring its success.

“Ian has a wealth of experience in leading teams through major change activities, including mergers and acquisitions and major finance and product system integrations,” Holmes said.

The business also expects to

leverage Parkes’ knowledge and experience in analysis, consolidation and reporting of both banking and wealth products, as well as financial control.

“These are obviously challenging times for home lenders, but it’s vital to focus on keeping your operations as efficient as possible whilst remaining aware of any opportunities that might arise,” he said.

Homeloans recently labelled its acquisition of Refund as a major win for its branded distribution.

The company completed its purchase of the embattled franchise in June, more than eight months after the business entered administration. The deal saw Homeloans expand its branded distribution by adding 54 former Refund brokers to its current stable of around 20 branded brokers.

Homeloans general manager of funding and investments, Scott McWilliam, said the deal would “massively expand” the company’s branded distribution.

New CFO to assist after Refund acquisition

Has your business got any movers & shakers the market ought to know about? Send your appointment stories to the Australian Broker editor at ben.abbott@keymedia.com.au We want to hear from you!

These are challenging

times for lenders, but it’s vital to focus on being efficient

30 brokernews.com.au

Insider Got any juicy gossip, or a funny story that you’d like to share with Insider? Drop us a line at insider@ausbroker.com

these properties would depreciate. Purchased for an average of $950,000 and having had $700,000 in extra spent in additional works, the individual who will remain nameless estimated that an investor who purchases such a property could potentially claim over $30,000 in deductions in the first full year alone, and $140,000 in the first 5 years of ownership.

Insider can just imagine the hours and hours of intricate calculation that went into estimating the tax depreciation of the collection of assets in ‘The Block’ properties (and hopes it wasn’t a back-of-the-envelope job). Well, since 80% of property investors are failing to take full advantage of property depreciation and are missing out on thousands of dollars in their pockets, Insider won’t get too picky about the figures. Let’s just say they should do some calculations themselves.

A new standard for evilAussie banks seem to always get a bad rap, portrayed in much of the media as callous, greedy monoliths. But as Insider has proven time and time again, our big four are veritable saints compared to banks in the US. Take for example the case of the Cruz family of Minneapolis, Minnesota. Their bank, Pittsburgh based PNC, had a glitch which rejected an online mortgage payment.

This glitch led to a late penalty the Cruz family couldn’t pay, which led to eventual foreclosure. The family has been facing eviction since late last year, but Occupy protestors have chained themselves to the family’s house, stymieing efforts to turf them. In

Fine, Resi, so ASIC says you’ve been bad. Though you moved quickly to fix

the problem and work with the regulator when it was brought to your attention, the credit watchdog (which is all about finding a few examples to make in the early stages of its oversight), found your website had a few issues with advertising comparison rates (or not, as the case may be).

No good for consumers, right? Sure, but Resi take heart - you might find just a few broker supporters out there who are wondering what all the fuss is about when it comes to comparison rates.

Why? Well, ‘cause the rates don’t mean much at all really, do they? After all, lenders can tweak them to suit themselves (whatever data they put in, gives you the figure spat out at the end), so how is a consumer to really get a decent comparison anyway?

And then there’s the refinance factor (who keeps a loan that long these days?), and of course, there’s that pesky mandatory disclaimer, which in itself states the embodiment of the problem – there’s a hell of a lot of variations that can be made on the rate.

In the end, the rates can be just as misleading as they are helpful – after all, any good broker could tell you that a manufactured rate won’t tell you about a great loan feature now will it?

While Insider agrees with the principle of the rate and a comparison, consumers may not

fact, underground hip hop artist Brother Ali even managed to get himself arrested while taking part in the standoff. As if PNC hadn’t caused the family enough trouble, the Cruzes made a recent trip to Pittsburgh to plead their case to the bank’s execs and ask for a variation.

They were answered by the bank’s vice president, who kindly threatened them with arrest should they set foot on the bank’s property again. Insider, for one, is going to think twice before complaining about the Aussie majors. When it comes to evil, PNC has set the bar unattainably high.

Buffett-ed market could reboundSpeaking of the beleaguered US housing market, there’s at least one person who’s banking on a recovery in the States: Warren Buffett. The billionaire Berkshire Hathaway CEO has made moves signalling his confidence that things are about to turn around for American housing. In recent months, he’s put in a $3.85bn bid for the mortgage business and portfolio of bankrupt Residential Capital, bought out a brickmaker, expanded Berkshire’s real estate brokerage and formed a loan servicing and mortgage business.

Buffett told Berkshire shareholders that the US was currently creating “more households than housing units”. Now, before you jump in on a hypothetical American housing boom, you should know that Buffett rolled the dice – and lost – on a property recovery last year. Still, history thus far has taught that it’s usually unwise to bet against Buffett.

“Maybe my broker can tell me what colour the fruit is….”

Comparisons want apples to be oranges

even be interested in the reality. As one broker put it on the Australian Broker forum: “If I had a dollar for every time a client has asked me what the comparison rate on a loan is, I’d have $0.”

New whizz kid on ‘The Block’Someone’s been spending a bit too much time in front of a telly armed with a pen, paper and an overzealous interest in depreciating assets.

Yep, ‘The Block’ is a huge hit, Insider knows, especially for the property industry and the professionals who feed off it – oh, and meet their client’s needs of course. Well, one such professional obviously had some extra time spare, because not only did he avidly watch The Block, episode after episode, but he entertained himself with the added activity of calculating just how much assets within

US property: Buffett buys up big

31

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MARKETING SERVICES1300 HomeLoan1300 466 356Page 5

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WHOLESALEResimac1300 764 447www.resimac.com.auPage 32

OTHER SERVICESResidex1300 139 775www.residex.com.auPage 31

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AGGREGATOR / WHOLESALE BROKERChoice Aggregation Services1300 135 389www.choiceaggregationservices.com.auPage 7

FINANCESemper Capital Pty Ltd1800 SEMPER (736 737)enquiries@semper.com.auwww.semper.com.auPage 21

LENDER Liberty Financial 132 388www.liberty.com.au Page/s 3 & 15

MKM Capital 1300 762 151 www.mkmcapital.com.au Page 10

NCF Financial Services Pty Ltd.1300 550 707www.ncf1.com.auPage 8

Pepper Homeloans1800 737 737www.pepperonline.com.auPage 11

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