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This month, Australian First Mortgage (AFM) turns 10 – a huge milestone for the mortgage originator, which was established just a few years before the GFC. The Adviser looks back at those 10 years and asks what the future holds...
Being a non-bank lender in today’s market is often a tough gig.
Brokers are hesitant to write non-bank products for several reasons – including fear. When the global financial crisis (GFC) hit, many of the nation’s non-bank lenders were forced to shut their doors.
Australian First Mortgage, however, managed to stand the test of time.
The mortgage originator, which consistently ranks as one of the best in the market, has proven that dedication to the broker channel, an unwavering commitment to innovation and a passion for the industry are the keys to success.
This month, AFM celebrates its 10th birthday – a huge milestone for a lender established only a few years before the crisis.
While the lender is incredibly proud of its achievements – including reaching $2 billion in funds under management earlier this year – directors Iain Forbes and Tanya and David White admit the road to the lender’s 10th birthday hasn’t always been smooth.
“The GFC was tough,” says Ms White. “That said, we never thought, ‘we are not going to make this’.
“We were in the fortunate position that we knew we always had money in the bank. In addition, we always had business coming through the door, albeit at very low levels.
“We would meet daily to talk about finances and review our costs. For us, the most important thing was hanging on to our staff and staying true to our core objective: being a true lending alternative for the third party distribution channel.
“We really tried to hang onto our staff. We didn’t want to let go of our team because we had invested in them. Thankfully, I can say that we didn’t let go any of our core staff. Instead, we rationalised things. We looked at our spending and cut back in areas where we knew we could. We looked at our offices and downsized where possible. We never compromised our people. We looked at other ways to reduce our expenses and for that, we are very proud.”
AFM, adds David White, was also proud to have such “excellent funders”.
“Our funders always supported us,” he says. “They always reassured us that they would help us see that period out. Because of that, we managed to stay cautiously optimistic.
“We chose the right funders. When other non-banks folded, it was generally because they aligned themselves with securitised funders. We made smart decisions going into the business – and we had to, because without those smart decisions we wouldn’t be where we are today.
“Unlike many other lenders, we were a relatively new company so we couldn’t rely on trail book income. We had to work hard for every deal and that is something we continue to do today.”
Survival of the fittest
While the GFC was a testing time for AFM, the company is, in many ways, ‘glad’ that it happened.
The crisis taught AFM to box clever, be financially savvy and make good business decisions – plus, it helped to reinforce the AFM business model.
According to Ms White, the GFC forced many other lenders to diversify into other business areas, including aggregation or retail finance.
AFM, however, always remained true to the company’s core goals.
“Our focus has always been consistent and pure,” she says. “Our time hasn’t been stretched to look at a retail model.
“All our resources and our energy is put into one model and we work it hard. As much as it is attractive to look at other models, we have not done that. We have stayed true to what we said we would do. We have been there through all the challenges – through the good, the bad and the ugly. We always hang tough.
“For us, brokers are and always will be our core focus – and nothing will change that.”
Thanks to its panel of major, loyal funders, including ING DIRECT, Advantedge, Adelaide Bank and Pepper, AFM manages to provide innovative and competitively priced products to the broker channel.
The lender’s proposition has always been to provide “flexible, competitive and innovative products to brokers”, says Iain Forbes.
“We are committed to providing competitively priced products and a service that is second to none,” he adds.
“You have three directors who are passionate about the business. They are working in the business and on the business every day. We are always free to discuss any opportunities or deals. We are easy to contact – as are our BDMs. We are determined to be flexible.”
Mortgage Wisdom broker Dave Seager reinforces that claim. One of the reasons he writes AFM products on a “consistent” basis, Mr Seager says, is that he knows his deals will be turned around quickly and without fuss.
“Being able to talk directly to credit managers is hugely beneficial,” he says. “Their BDMs are quick to respond to scenarios. In addition, all of the directors are always available to talk through deals. They are passionate about the business and that shines through in everything they say and do.
Mr Seager also benefits from AFM’s “wide suite of products”.
“Having four or five funders makes it easy, because I know if the loan doesn’t suit one funder’s products, it will more than likely suit another,” he says. “Their product range is wide and very competitive. Their pro-packs go toe-to-toe with the majors and their non-conforming [product] stands up well against every other lender in that space.”
The next 10 years
According to David White, the future is bright for AFM, with the lender set to make several positive enhancements to the business.
“We are moving over to a cloud environment,” he says. “On top of that, we plan to move to a new loan management system as we believe this will create significant improvements in how our brokers lodge loans.
“We are also moving to a new phone system to help connect us more efficiently with our Manilla office, which we opened in 2011.”
The company is also aiming to recruit more people both for its Manilla and its Australian offices.
“We are proud to say that we will never lose staff here as a result of our Manilla branch. Our Manilla branch helps us process loans quicker and more effectively,” says Mr White.
“This leaves our staff here in Australia to work on more client-facing duties.
“We will continue to grow our teams, be innovative with our products and competitive with our pricing.
“We are looking forward to the future and to another prosperous 10 years.”
