australian broker magazine issue 7.10

Smaller lenders throw down the gauntlet

POST APPROVED PP255003/06906$4.95 ISSUE 7.10

May 2010

Brokerstosupportsmalllendersmore

Rebranding for ALI

Home lending lows

Art of negotiation

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

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

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

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

an innovative approach to attracting borrowers and brokers to their products, by offering to pay for the LMI premium for loans up to 90% LVR where the premium is less than $4,380.

Carrington MD Gino Marra said non-bank lenders in general are more innovative than the banks in their offerings.The pendulum is swinging back

towards the non-bank lenders and some sanity is coming back to the market, Marra said. Consumers have seen banks raising rates outside of the RBA and theyve realised that there is no more risk going with a non-bank lender than there is going with a major bank.Marra said the offer, open until

November, is for either Genworth or QBE LMI insured clients and

that brokers can earn up to 1.2% commission on its All-in-One product or up to 0.8% commission on the Horizon product. Non-bank lender Collins

Securities and mortgage manager Iden Group have both promised mortgage brokers higher commissions for loans they originate, as they look to gain market share in an environment where the majors dominate.Collins CEO Rob Emmett said

the lender was increasing the amount paid on its low-doc refinance product to a maximum of 0.6% upfront and an ongoing trail of 0.25%. Its really a reflection of the work that goes into a refinance application from a broker perspective and also weve got increased funding for that product, Emmett said.What were finding is that as

the banks tighten up and restrict a lot of their parameters and credit policies its opening the door to the non-banking sector. Emmett said he is cautiously optimistic going forward and has seen evidence that funding sources have increased in the past 1218 months.While brokers and consumers

are still sending the majority of their business to the majors, Emmett said there are signs that the third party channel is ready to embrace non-bank lenders once more. Its certainly a challenge but the walls are breaking down before our eyes, he said.

Gino Marra

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Australian growth to provide opportunities for brokers

Brokers train for post-GFC world

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

Caputo, said that continued net migration is going to change the

makeup of the Australian population. Immigrants are going to have different ways of purchasing property and will be looking for different types of property, he said. You could start to see more mortgage products where there are more than one or two borrowers on the loan.

Caputo said that demand for property will continue to grow, increasing the likelihood of borrowers receiving support from parents or grandparents. LMI is going to be a very important product to support homeownership within the Australian market. Theres no doubt home prices in Australia are going to remain robust and strong for some time.Steve Weston, GM of broker

platforms and lending for Advantedge, said historically, immigrants are more likely to use mortgage brokers than other segments of the market, largely driven by unfamiliarity with the Australian banking and financial system and language barriers.I think brokers who can develop

a proposition that reflects the needs and habits of migrants will be ideally positioned to capture the growth. Word-of-mouth recommendations by family and friends ... will often start the discussion with prospective clients.

The National Finance Institute has set up a series of workshops to help new and experienced brokers re-engineer their business to harness the demand for professional brokers. FrontRunner Consulting Groups Doug Mathlin and National Finance Institutes Peter Heinrich will hold workshops nation-wide to help brokers adapt their business to a post-GFC world. The signs are good for mortgage

brokers as many tell me that lead generation is improving, consumer confidence in property is rapidly rising, as are property values in

many areas in Australia, FrontRunners Mathlin said.He added that the new regulation

provides opportunities for brokers who can take advantage of the fact that many brokers are leaving the industry before the legislation becomes effective. New regulations will force brokers to implement processes in their business. This clearly leaves an

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

Bernard Salt

growth constantly working on your service proposition, client care and personal performance, Mathlin said. Heinrich will lead a session

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

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

interest of the licensee conflicts with a legal obligation that the licensee owes to the client, including one that arises under the credit legislation, ASIC said in a regulatory guide to the National Consumer Credit Protection Act.Brokers who break those legal

obligations face fines of up to $11,000; or two years in jail; or both. If it is a company that is found guilty of breaching those obligations, the penalty can be as high as $1.1m.

RBS is currently in the process of selling its hugely successful reverse mortgage business in Australia, as part of austerity measures put in place by the banks owners in the UK.Following a strategic review in

February, the partially government-owned lender announced it would exit all non-core retail businesses outside of the UK. This led to the cessation of new business for its Australian rever