What does it mean for you?

ANDREW

Since the media began forecasting rate cuts two months ago, I have noticed a heightened level of enquiry for commercial and residential. I am not seeing any first time borrowers, I think in part due to the lack of confidence in job security.

LUIS

My enquiries have increased at a reasonable level. People still feel the RBA should reduce rates even more in order [for them to be able] to make decisions regarding refinance or buying properties. We have clients across all estates and they all expect more reductions, especially when they have a high level of personal debt.

STEPHANIE

We’ve had a number of calls from existing clients and prospects just wanting to do a ‘health check’ on their current loans but, to be honest, we’ve had no more enquiries than usual when it comes to rate cuts or increases.

MARK

Absolutely. Investors who were on the edge of making a decision to hit the market have found greater comfort to take that next investment step.

DONALD

Not as much as I thought. It takes time for investors and home buyers to digest the real benefits of a rate cut before they re-enter the real estate market.

WHAT TRENDS ARE YOU NOTICING IN THE TYPES OF BUYER FOR WHICH YOU’RE WRITING BUSINESS?

ANDREW

I’m seeing established and solid net worth clients plus long-term and profitable business owners. Their investments are well placed with little or no risk attached.

RAEL

Investors have been coming back into the market over the last 12 months – the latest rate cuts have brought yields and costs closer and have thereby attracted an even stronger interest.

LUIS

We get all types of buyers. However, we have noticed that more clients are now thinking of building rather than purchasing established properties. Building prices have reduced considerably in the past couple of years.

STEPHANIE

First home buyers have become almost non-existent this year, so the bulk of business enquiries are from investors or home buyers looking to upgrade, and also people looking to build or renovate.

MARK

The market is still hot for investors who know what they are doing in a particular marketplace. The lower the rates go, the more the so-called ‘investors’ will come out and play – which is what we’re starting to see.

DONALD

For purchasing markets, I would say Gen X and Gen Y are the key drivers here. Investors through self-managed super funds and builders/developers are also very steady.

THE DIPLOMA ISSUE HAS CREATED A LOT OF CONTROVERSY. DO YOU BELIEVE COMPULSORY FURTHER EDUCATION – SUCH AS THE DIPLOMA – IS A GOOD THING FOR THE INDUSTRY?

ANDREW

I do not think enough importance is being placed on the history and knowledge of existing brokers and their lending backgrounds. Completing more courses does not prepare you for the issues we face, nor does it give you the ability to correctly recommend the right product for the client.

RAEL

I think it has its place but not in the current format. Having just completed the diploma, I think it completely missed the mark in terms of what it should cover. The entire course was focused on commercial lending which for many brokers is irrelevant.

LUIS

I have been in the industry for eight years now and I always wondered why it was so unregulated and out of place. In my opinion, it is a must that the industry require further education and regulation.

MARK

I do [believe compulsory education is good for the industry]. However, the governing bodies need to ensure the information and assignments are relevant to what we do each and every day. I feel that with such education requirements, the right people will stay in the industry – which is great.

DONALD

Diploma level is adequate for anyone to give advice in this industry given what’s happened in the US and Europe already. This is not an industry for just anybody, especially if they lack the relevant experience and knowledge. I am 10 fingers up for the further education requirement for everyone in my group. We need quality, not quantity.

A FEW LENDERS HAVE RE-ENGAGED THE BROKER MARKET RECENTLY –NOTABLY BoQ AND ME BANK. HAS THIS HAD A NOTICEABLE IMPACT UPON COMPETITION IN THE MORTGAGE LENDING SPACE?

ANDREW

I have not seen any impact by the aforementioned banks, nor have they been proactive at broker functions in terms of getting their product out there. I think we need to see the existing banks, which are already here, ramp up their products and offerings to allow them to compete with the big four.

LUIS

Some would say lenders like Macquarie Bank are back from exile; the same goes for ME Bank. These lenders have not grown their portfolio as they thought they would without us. ING DIRECT, for example, has grown much more because of their broker focus across Australia. The more lenders in the market, the better the competition for business – and that’s what we need in order to get customers better priced products.

STEPHANIE

It hasn’t had an impact from what I can see – lenders come and go in the broker space. As long as we have enough choice from quality lenders, then a couple of smaller players coming and going is not really going to have an impact.

MARK

Definitely. The more competition the better, in order to keep the banks honest during these times when they open and close their doors regularly depending on deposit levels and funding abilities.

THE ADVISER RECENTLY RANKED AUSTRALIA’S MAJOR BANKS ACROSS A VARIETY OF METRICS. NAB CAME OUT ON TOP, FOLLOWED BY ANZ, THEN CBA AND WESTPAC. WHAT ARE THE MAJOR LENDERS DOING WELL AND WHAT COULD THEY BE DOING BETTER?

ANDREW

The majors are all pricing competitively; however, price is only part of the story. What is slowing us down at present is credit appetite and the reluctance to approve transactions in a timely manner.

RAEL

Consistent application and alignment of policy with LMI is the most critical issue. As brokers, we face the constant hurdle of fighting with lenders over the moving target of policy application.

LUIS

NAB came out on top due to a change in their mentality regarding reducing excessive banking fees. This is a good move from NAB. We expect other banks to follow, especially CBA and Westpac. They could improve greatly by getting rid of so many fees and hidden charges. I’ve always been against excessive bank fees for home loans or banking products.

STEPHANIE

Their competitive advantage in the current environment is having customers still feel more ‘comfortable’ with a major brand name. Clients will often decide to stick with a major even when cheaper and often better loans are put in front of them. So, despite all the anger about banks not passing on the full rate cuts, or stepping out of line with the RBA, clients will stay with major known brands. In terms of what the majors could do better, I’d nominate better BDM contact and focus and easier access to file owners so we can quickly resolve any issues with applications.

MARK

Major banks can’t service investment-type brokers due to the simplicity of their broker businesses. They have to stop catering for the average broker and focus on their top 10 per cent of brokers that support their particular businesses. The old rule still applies: the top 10 per cent of clients make up 90 per cent of your profit.

THERE IS INCREASING SPECULATION THAT FEE FOR ADVICE COULD BECOME THE INDUSTRY STANDARD IN THE FUTURE. DO YOU BELIEVE THIS IS SO?

ANDREW

I don’t feel that fee for advice will become an industry standard. The option to charge a client should be at the discretion of the broker. If a fee for service model is pushed forward as standard, it could have serious implications for our industry in a very negative way.

LUIS

Who knows? It will take time before we get to this stage. I think clients will expect value for money once we charge a fee for advice. I believe banks make so much money from what we do for them that it would be more reasonable for them to share more profits with us. In my opinion, we should charge the clients only if they come to to us for business advice where they’re not buying a product.

STEPHANIE

I believe the industry is too mature now to have such a major change. Consumers really are driving our industry, and I don’t believe they would go for this.

MARK

This is something I have trouble understanding since our competition is in fact writers within the banks. Under standard bank practice, brokers don’t compete against each other when using their particular bank. If this is the case and we are creating a level playing field on rate and product, how can we charge a fee for advice when the banks offer the same service for free? Unless we are offering a completely different proposition – that most brokers I know will struggle with – then this change will affect the market dramatically and position the banks incorrectly when market share is already a problem.

DONALD

I deeply believe in it, with my involvement in other ‘fee for service’ industries. I see nothing wrong for charging a fee. Aggregators, for instance, are parties trying to avoid the ‘fee for service’ model as that will put an end to the aggregation ‘industry’. The question really is, what percentage of brokers are ready for fee for service? The fee for service model will eventually remove the ‘conflict of interest’ and ‘disclosure’ of commission payable by lenders.

SOCIAL MEDIA HAS REVOLUTIONISED THE WAY PEOPLE COMMUNICATE. WHAT IMPACT HAS SOCIAL MEDIA HAD ON YOUR BUSINESS AND WHY?

ANDREW

While Facebook and Twitter have ‘invaded’ our lives, my clients are still very much from the ‘old school’ in that they enjoy face to face contact and the email notes and reminders.

RAEL

I am constantly tweeting and then linking that to Facebook and LinkedIn. It does generate some feedback from clients and, if nothing else, it’s a subtle way of being in their faces all the time.

LUIS

It has had a great impact on all of us. Clients are moving fast on all new technology being offered. I have my business, ATL Finance, on Facebook, LinkedIn, Google and YouTube and I’m receiving good feedback from both old and new clients. We all need to be in front of the technology to reach our clients faster than the others. The old ways of doing business are just not as effective any more.

STEPHANIE

I don’t understand social media at all and while I have been making a concerted effort to give it a go this year, it’s too early to see if it’s having a direct impact. I’m actually struggling to understand how social media can be an effective business tool in our industry.