Boothy Bites Episode 12 - Rates Hold Steady, Let's See What Happens Next

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00:00:00:00 - 00:00:07:27
[Jackie] Hi, everyone, and welcome to Boothy’s Bites with the man himself, Mr. Chris Booth. How are you, Boothy, on this Monday morning?

00:00:07:31 - 00:00:09:02
[Chris] Hey, Jackie, are you doing all right? Happy March.

00:00:09:03 - 00:00:31:18
[Jackie] Happy March. My goodness. The March installment of Boothy’s Bites. Yikes! Anyway, let's jump straight into it. So usually we open with an update on interest rates, but I want to do that second. And first of all, I'd love for you to talk us through the Lydian Partnership Program and how it's mutually beneficial between both the partners and the brokers.

00:00:31:21 - 00:00:53:42
[Chris] Yeah. And this conversation and sort of commentary sort of really brought about by the week that was last week where CBA had come into market with a really, really good product. Okay. So no doubt about it, they've got this digital loan called Unloan, which is a very good product. It has very cheap rates. It isn't for everyone. It's quite a niche space where all of the information is kind of validated digitally for you.

00:00:53:42 - 00:01:10:53
[Chris] So it's one of these sort of these new sort of digital loans. But one of the big things for me was last week we actually had a great meeting with BankVic. So this is a new lender to Lydian’s panel, and it got me thinking about why we do what we do. What's the, you know, what's the value proposition of working with Lydian.

00:01:11:02 - 00:01:37:17
[Chris] And yeah, my commentary is around so really... BankVic are a really beautiful bank. You know, it's community focused. They're very much looking after their members who are people in working for like the police, fire, nurses, ambulance and also looking after teachers as well. So anyone sort of in social services. They've got lending products dedicated to those types of clients, which is great.

00:01:37:21 - 00:01:58:18
[Chris] And yeah, look, I suppose what that means for me is that when when you actually get to sort of speak to a mortgage broker, obviously the product that we're delivering at the end of the you know, the advice process is really important. But the things that we do before that are even more important, right? Having sort of one single product to refer to is not best interest for the client.

00:01:58:22 - 00:02:19:42
[Chris] So, you know, what where Lydian is really coming from is that when you do introduce a client to us, you know, we obviously going to do that sort of that needs and objectives and that discovery session finding out about that client and if their profession is such, which it suits that particular lender, well, then we've got over 60 different lenders which actually sort of match up that social and financial profile to those different lenders.

00:02:19:49 - 00:02:35:07
[Chris] Secondly, as well, you know, when we want to press that button and send a client to a lender, we want to have a high probability that we're going to get approved, right? There's no point in actually sending that client to a bank and going, sorry, the client. Okay. And then the client goes, well, you know, really what happened?

00:02:35:15 - 00:02:50:56
[Chris] And that's not what you get in our world, okay? So you know, the work we do before we actually send and... sorry, make a recommendation for a lender and then send the details of a client to a lender. It's huge. You know, we collect a lot of information. We go through like a really detailed due diligence process.

00:02:50:56 - 00:03:12:22
[Chris] We check serviceability, we do valuation reports on property. We validate, you know, the types of income that a person derives. We look at the credit report and look at the behavior of credit before. And really we deep dive into those documents that we get. And that for me, is really a massive point of difference. Yes, we can refer through to on loan.

00:03:12:27 - 00:03:32:36
[Chris] And if it fits, they'll get where you're going. Your client's going to be happy and going to get a great product. But they basically haven't been advised through the journey or the process. And I think a lot of a lot of clients these days need that hand-holding, that education, that personal touch. And I can guarantee you CBA won't be actually speaking to the client through Unloan because it's a digital loan.

00:03:32:51 - 00:04:00:47
[Chris] You might be a cyber boss. I don't know, is that correct word or anything or a bot speaking to the client saying, you know, computer doesn't know or computer says no (laughs). So yeah, so kind of wrapping it up a little bit, you know, is a really sort of reflective moment for me in the CBA, trying to shake the market up by having this product, which is available to accountants, lawyers, real estate agents to spot and refer their client details through.

00:04:00:52 - 00:04:25:57
[Chris] There's no pre-qualification before you refer for the loan. And yeah, CBA will pay commission for that referral. But as far as where everything comes in is one, you're going to speak to a very, very good broker. Number two, you're going to get all of the quality of the advice that the client is expecting, because when we referred from a professional, you know, we want to uphold the quality of the advice that they actually give to their clients.

00:04:26:11 - 00:04:44:06
[Chris] We want to do the same and we do do the same. We have an advice process to go through. We make it very clear why we recommending that product, whether it be for price, whether it be for credit policy, whether it be for other nuances within the lender as well. We make it very clear to both the client and the partner what commissions we get paid from each different lender as well.

00:04:44:20 - 00:05:02:18
[Chris] So it's a really transparent conversation. And really I just want to say like stick it to CBA. It's a great product, but you've just got to look at it the wrong way. You know, if you want that product to have value in all lending market, well then you should be broking that through the broking channel as normal. I'm more than happy to, you know, to talk to CBA.

00:05:02:18 - 00:05:20:15
[Chris] If anyone watches Boothy’s Bites this month and talk how that week how we could do that you know but anyway, so my messages is Lydian is about giving advice. We're actually about helping clients and we want to make sure that the outcome that we get for the clients is kind of locked in upfront. So that's my preaching moment.

00:05:20:15 - 00:05:23:26
[Chris] Hopefully I didn't take up too much time.

00:05:23:31 - 00:05:35:18
[Jackie] I love it. I know which channel I go in Lydian every day. But then again, maybe I'm paid to say that (laughs). So moving on to interest rates right now, what is the update there?

00:05:35:27 - 00:05:57:38
[Chris] Well, we've had a month which was really quite, you know, low key, to be honest. Again, we've talking about inflation. Inflation is coming down, which is great. The there is a bit of sort of you know, the commentary is really is now turned and we're really waiting for sort of next indications. But certainly growth in the economy has really stalled both domestically and internationally in sort of similar marketplaces to Australia.

00:05:57:43 - 00:06:22:53
[Chris] And what that means basically is as growth falls, the central banks of those nationalities will actually have to consider, you know, what they do to stimulate growth. Now, in Australia, the only lever we have over here is to decrease interest rates. And I do believe that growth cycle that we've, you know, we've got right now has sort of petered out at the end of a lot of the income streams that the economy gets from exporting, especially to China.

00:06:22:54 - 00:06:41:09
[Chris] You know, they've obviously done quite poorly lately and there’s a bit of trouble there and we've killed off the consumer you know with the high interest rate increases over the last sort of two years as well. And in Australia we get impacted by high interest rates or interest rate movements at the RBA because we don't have those 30 year terms like they do overseas and things.

00:06:41:09 - 00:07:01:10
[Chris] So, you know, we have killed off the consumer a little bit and I think the only sort of viable pocket of the economy which we can probably incentivize a little bit to get out and spend and feel a bit more comfortable about things in the economy is that consumer. So, my gut feeling is that by June we'll get some rhetoric from RBA to say interest rates, you know, we're planning to put them down. Also in July...

00:07:01:10 - 00:07:16:55
[Chris] We've got the tax breaks from the from the government as well, which is a bit of a bonus to it. So I think we're on a plateau for a few months. The next meeting with RBA is I think is on the 18th and 19th, which is next week. So that's the first week. Yeah, let's change the cycle a little bit.

00:07:16:55 - 00:07:23:52
[Chris] So you know, just kind of watch this space. But I think normal interest rates for the, for the time being. So yeah, I think we've got a bit of stability in the market. Yeah.

00:07:23:58 - 00:07:27:05
[Jackie] Okay. So hold steady and see what happens.

00:07:27:16 - 00:07:28:39
[Chris] Hold fast. Yeah.

00:07:28:44 - 00:07:39:27
[Jackie] Something like that (laughs). What about that home loans? What are your favorite home lending interest offers on the table at the moment?

00:07:39:32 - 00:07:57:46
[Chris] Yeah so again, we do have a lot of lenders. So a lot of our business goes to the major banks. Now, there's no doubt about it. But there's a lot of second tier or sort of second lenders out there who we do support. And that's mainly around that pricing and community service that they get. Move banks, a lovely bank and they've got some great rates right now.

00:07:57:46 - 00:08:21:28
[Chris] So move bank they've got a principal interest variable 5.94%. They've actually got a three year fixed principal and interest owner occupied at 5.79%. So really cheap interest rates compared to others. And secondly, good service proposition. You know, there are nice bank, nice community bank as well. So you certainly get the service there and then some investor home loans if you're looking to pay principal and interest.

00:08:21:30 - 00:08:45:07
[Chris] Heritage Bank: they've got 6.24 P&I variable which is a pretty cheap rate and then AMP are actually quite active in that market right now. So maybe a bit of a high higher dollar figure for your loan. They've got some attractive rates I believe like 6.49 is their carded rate and that's interest-only variable. And also I think if it's over $1,000,000, we can get some specials down to the 6.39, but sort of reach out to us.

00:08:45:12 - 00:09:05:09
[Chris] And then lastly, we've got Bank of Queensland, they've got a 6.09 3-year fixed interest. Only. Would I recommend a fixed right now? Probably not. I'd have to have a deep conversation with the client, but if really you want cashflow certainty just to lock in those rates and have a bit of peace of mind for a few years, we can talk through what the merits and the benefits and things like that are for you as well.

00:09:05:09 - 00:09:09:49
[Chris] So yeah, as interest rates kind of coming down, we're starting to see some cheaper fixed rates in the markets.

00:09:09:54 - 00:09:15:07
[Jackie] Yep. Awesome. And what about the property updates? What have you got for us there?

00:09:15:12 - 00:09:49:13
[Chris] Well, I'm no property guru, okay, but it seems as though the property market is still pretty hot, hot, hot. You know, clearance rates are really, really strong. And certainly, there's a lot of demand. I mean, we've got lots of pre-approvals in place for clients, mainly on that sort of first home buyer or that first home sort of space, so a lot of demand with finance ready to go find that first home and really what that means in that price point sort of, you know, first time home buyers, you know, sort of the 600 to sort of $1.5 million, that's really heavily contested.

00:09:49:28 - 00:10:15:32
[Chris] The apartment market in Sydney is pretty hot. You know, I've seen some recent options which have been quite crazy for apartments locally. And secondly, that sort of, you know, the upgrade family home, you know, up to sort of two and a half million dollars. I know that sounds a lot of money, but, you know, if you're selling and buying with some equity in that and sort of borrowing that one, one and a half million dollars, which is still an affordable loan, that up to that sort of two and a half, $3 million home prices is certainly being hotly contested auction as well.

00:10:15:32 - 00:10:33:10
[Chris] So again, I think, you know, that it's quite a tight market, the higher value properties, I think that's a difficult one because a lot of people who borrow, they're largely reliant on like bonuses and alternate styles of income or, you know, probably not quite as confident today in the marketplace as there might have been a few years ago.

00:10:33:10 - 00:10:54:07
[Chris] So and then the other one we're seeing is people selling in sort of more of the regional areas. So, you know, Sydney being a hub, being a city, a lot of people through COVID went out or pre-COVID went out and bought, you know, sort of on the fringe suburbs or in the sort of regional suburbs which were connected to Sydney, but still kind of a one and a half, two-hour commute.

00:10:54:07 - 00:11:18:19
[Chris] And I think what people are having to do now is kind of reassess that lifestyle because the work-from-home availability is probably not as easy to manage. Secondly, there is demand for people to get back in the offices, whether it be like a couple of days a week and things. So you know, that call card back, back to more suburbia, closer to the CBD, we start to see a few sales of properties in those regional areas and people trying to buy back in the cities again.

00:11:18:19 - 00:11:21:15
[Chris] So that's my property snapshot.

00:11:21:19 - 00:11:27:54
[Jackie] Love it. And just to finish off, what's news at Lydian HQ, besides our new uniforms that we’re wearing (laughs).

00:11:27:59 - 00:11:31:57
[Chris] Yes, it's White Monday (laughs).

00:11:34:24 - 00:11:58:09
[Chris] Yeah. So for us, really, you know, we've got a few new brokers in Lydian over the last six months and really what that is doing is kind of plugging in some of the pockets that we've got with regards our national partner being H&R BLOCK. So H&R BLOCK has got sort of 18 districts around the country, and we're trying to find appropriate mortgage brokers in those geographical locations to support the sort of rollout of services with those districts.

00:11:58:13 - 00:12:21:36
[Chris] We've been short of someone in the South Sydney region and we've been very fortunate to get Josh and he comes in basically great pedigree, good banker, good broker, and we welcome Josh to the team and we look, if anyone's out there, we do desperately need a Canberra broker, which would be good, a Newcastle broker which fits in on that sort of Newcastle North patch there and anyone watching from Perth as well...

00:12:21:36 - 00:12:29:47
[Chris] ...we'd love to have a broker geographically located in the Perth city as well. So a few opportunities there for brokers to join the Lydian group. But welcome Josh!

00:12:29:47 - 00:12:38:52
[Jackie] Yeah, welcome Josh! And get in contact if anyone is interested in joining the crew, the best crew ever.

00:12:38:52 - 00:12:40:37
[Chris] Too easy (laughs).

00:12:40:42 - 00:12:48:46
[Chris] Well Boothy, thank you so much for your time. Love chatting to you and we'll see you next month for another installment of Boothy’s Bites!

00:12:48:46 - 00:12:51:54
[Chris] Thanks so much, Jackie! You have a great March and we'll see you soon.