Boothy Bites Episode 13 - Advantages of Lending Advisers | Interest Rates & Property Market Updates

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00:00:00:00 - 00:00:08:51
[Jackie] Hi everyone, and welcome to Boothy’s Bites for April. Of course, we can't do this without the man himself, so. Hi Boothy, how are you? How was your Easter break?

00:00:08:56 - 00:00:29:00
[Chris] Oh, I just told you that. I said it wasn't very good. Jackie and I have been talking about the emotional connection to technology. And sadly, on the Thursday before the Easter break, Jackie, my computer wouldn't want to start. obviously we've been I've been pushing her too hard and that was it. So she packed up for me. So no shops open on Friday.

00:00:29:04 - 00:00:47:51
[Chris] Having said that, I did manage to go sailing on Saturday and Sunday, which was wonderful. I probably stressed out a little bit about going shopping on the Monday, but I managed to buy myself a new little baby on the Monday. So I'm back in operations right now. But yeah, ready to roll. And tell us about your technology mishap as well, because there's a story there too.

00:00:48:00 - 00:01:05:18
[Jackie] So before we started filming this, I was telling me about, my phone. I smashed the screen last night, and then I went to use it for something to work this morning. And I completely forgot. But then when I actually went to use it, I could read through the cracks too. So we were saying, that's the meaning of life, right?

00:01:05:29 - 00:01:07:25
[Jackie] You got to read through the cracks.

00:01:07:30 - 00:01:21:32
[Chris] You just got to keep going forwards. Forge ahead, read through the cracks. Nothing's perfect. Right? So anyway, But yeah, having said that, welcome to...is this a March or April? I think we're kind of wrapping up March, but we're definitely in April now. So autumn's here.

00:01:21:41 - 00:01:32:16
[Jackie] Yeah. Sure is. Anyway, on with the show. So I would love to hear your thoughts on why you think it's better to go to a lending advisor rather than a bank for advice.

00:01:32:16 - 00:02:08:09
[Chris] Yeah. So, I mean, the statistics came out last week from the MFAA, which is our mortgage broking association, and 71.8% of home loans and investment home loan. I've been written by mortgage brokers. I think it's in the last quarter, which is a huge, huge number. Right. And I do feel, you know, that the I suppose, the justification of of people reaching out to a lending adviser or a mortgage broker instead of going direct to bank is, you know, this advice that people get from speaking to a professional who's been in industry for a long, long time, been doing this, this, you know, providing this service to clients and also with these relationships in part...

00:02:08:09 - 00:02:26:00
[Chris] ...has, you know, is part of that wealth creation journey with that client as well. So, you know, for me, when we're talking about why use a lending adviser or a mortgage broker, it's a not go direct to the bank. Well, really what you're doing is you're separating the, you know, the product, which is the bank and the advice piece.

00:02:26:00 - 00:02:49:21
[Chris] Now, obviously we need the banks to fulfill, you know, the lending and provide the debt to purchase a property or do what we're doing. But the advice component there is is far more important. You know, the, you know, the way to structure your debt, the extra sort of products and services which are attached to a loan, and how to utilize those features and benefits of a loan are very important as well.

00:02:49:21 - 00:03:07:48
[Chris] Also, you know, mapping out what a long term plan around debt and properties as well. Obviously, you know, buying a property, you've got this immediate need for some cash, but, you know, one of the long term plans outside of that and speaking to a professional is who can give you that counsel, guidance and advice in accordance with your sort of, you know, your whole deal team as well.

00:03:07:48 - 00:03:28:24
[Chris] You know, working with an accountant, working with a financial planner, working with the solicitor as well, having that sort of that advice team, I think really is invaluable. So 71.8% is a statistic which I'm pretty proud of, you know. So well done mortgage brokers lending advisers out there for that number. But you know, I think we we genuinely do a lot a lot more than just provide a product and loan.

00:03:28:24 - 00:03:30:30
[Chris] So, you know, kudos to the industry for where we're at.

00:03:30:30 - 00:03:36:15
[Jackie] Yeah! Go, us, go! Woo!

00:03:36:19 - 00:03:40:15
[Jackie] And so what's the latest from the reserve Bank of Australia?

00:03:40:15 - 00:04:00:36
[Chris] So I think, you know, it's been a bit sort of boring as it were, just over the last few months. We've really had that focus on inflation for quite a while. And it's interesting I spoke I sent a message this morning, you know, from December 2022 we've come down from 8.4% inflation, which was crazy to that sort of exit out of Covid, down to this soaring firm 3.4% today.

00:04:00:41 - 00:04:19:58
[Chris] And really it's taken us this long to to reopen many of the sort of the chains of service across the nation, across the globe to get this inflation down. There's still some bottlenecks around, you know, and things with these products and services. Hence, you know, a bit frustrating that hasn't got back down below the 3% band right now.

00:04:20:02 - 00:04:38:26
[Chris] But certainly momentum is in our favor. So this inflation side of things is really kind of a wait and see. Hence sort of the boring rhetoric from the reserve Bank right now, but 3.4% with the momentum with us, I do believe that we will be in within this two and 3 to 3% band that the RBA needs to be in in the next sort of quarter.

00:04:38:31 - 00:05:02:27
[Chris] And what that means then, is really that the RBA then has a luxury to start thinking about other things which are affecting the economy. And the biggest impact to our economy now is certainly this slowdown in growth. So, you know, when we slowing growth, the way to sort of improve that slightly is to potentially reduce interest rates. Hence, some of the forecast for interest rates is that, you know, we'll see a cash rate cut over the next sort of six months as well.

00:05:02:27 - 00:05:22:24
[Chris] So again, it's a wait and see. I mean, interestingly, the interbank markets have changed their interest rates. So they're trading at lower interest rates. So the one year government treasury bond is down at sort of 4%, 4.05%, which is actually already captured in that sort of rate cut potentially over the next six months as well. So you know, so the RBA is a little bit boring.

00:05:22:24 - 00:05:37:19
[Chris] But I think now we we need to focus on what the other impacting factors on economy are and growth in particular. And I think that will give us a new sort of new indications around, you know, what the RBA does next with interest rates. Yeah. So so the long winded explanation.

00:05:37:26 - 00:05:43:12
[Jackie] No, I love it. Hopefully we are at that turning point. But sitting at a lot to that indicator. that's what it's like right now.

00:05:43:44 - 00:05:49:49
[Jackie] About to turn. And so what are some of the your favorite interest rates at the moment.

00:05:50:02 - 00:06:07:31
[Chris] Yeah. So well so good news on that. So we're actually providing a mortgage monitor service for clients. So we've got a lot of clients in our world who potentially aren't looking to refinance, don't really want to change banks happy with their lender. Okay. What I would say is when's the last time your bank called you to offer you a better interest rate?

00:06:07:35 - 00:06:35:06
[Chris] Our mortgage monitor service offers this. So what we're saying to many of our clients is, let's go back and check in with your existing lender and find out where the benchmark of a better rate should be for you with that lender, and then assess whether it's a good or a bad rate there. Before we looked at to sort of refinance, but some of our competitive rates right now move Bank in particular, have got an incredibly low variable principal and interest rate at 5.94% for owner occupiers, which is super, super cheap.

00:06:35:13 - 00:06:54:36
[Chris] We're doing a bit of work with Adelaide and Bendigo Bank, and they've got some really good interest rates and offers right now as well. And interestingly fixed rates. So Move Bank have got a 5.79% with offset that and three year fixed their two. So again we've got some products which are priced a lot lower than potentially where your rate is today.

00:06:54:36 - 00:07:10:30
[Chris] So again it's appropriate now to to sort of check in and get a health check on your interest rates. Five for a better rate at your existing lender. For investors I think cash flow budget is important. So resetting interest only repayments on your investment debt helping us, that's a good thing to do right now. An interest rate was there.

00:07:10:31 - 00:07:33:00
[Chris] Bank of Queensland have got a really cool three year fixed rate at 6.09. Now I know forecast interest rates often go lower, but if you want cashflow certainty on interest only 6.09 might be a good way to give you that sort of peace of mind for the next couple of years. Outside of that, though, that we've got a AMP variable interest only at 6.49%, which is a really, really competitive interest only rate there as well.

00:07:33:00 - 00:07:42:10
[Chris] So a few good options for clients. But I think first and foremost, check in, register for your mortgage monitor. Your lending advisor will review your rates and and give you the advice next.

00:07:42:24 - 00:07:48:07
[Jackie] Sounds good. And so I saw that you had, you know, bank in for a chat recently. What do they have on offer?

00:07:48:16 - 00:08:10:25
[Chris] You know, part of the mortgage broking role is that we do have access to other types of lending businesses. Okay. And also often, you know, we get the opportunity to support small business, larger business, self-employed clients as well. So I know we mainly talk about home loans and investment home loans on here. But the specialization or the skill set of our brokers certainly extends to these services too.

00:08:10:30 - 00:08:36:23
[Chris] Now, when a business is borrowing money for small businesses, typically most lenders like to have like property being a home or commercial property security for that debt. Uniquely Judo, which is, you know, it's sort of a new-ish bank. They've been around 3 or 4 years and and growing exponentially. They're a great bank. Their service proposition is to basically provide a credit solution around the going concern or the cash flow of that business.

00:08:36:23 - 00:08:52:42
[Chris] So what that means is that if you don't have equity in property or the primary asset is this business, the business can actually borrow money, utilize in the, you know, the value of the business, and not secure it against bricks and mortar, which is great. You still got to demonstrate servicing. You know, you still got to go through that credit conversation with it.

00:08:52:51 - 00:09:11:00
[Chris] And because you the bank is taking on a higher risk as well. There is a premium interest rate for these types of loans. But nonetheless, for people who are running businesses out there who are looking to, you know, acquire other businesses, they maybe want to do some shareholder lending, you know, get other key staff members involved in equity in the business.

00:09:11:00 - 00:09:36:33
[Chris] Alternatively, need cash to keep the business afloat through, you know, growing pains and things like that. Well, then judo got a really, really compelling offer to support businesses as a standalone lending against the business. And, you know, the interest rates, even though they're a little bit higher, are still very reasonable. You know, you talking sort of sub round about sort of that nine, 10%, which is still cheapest money for a business loan anyway.

00:09:36:37 - 00:09:50:35
[Chris] ...and also a couple of my good friends are over at Judo as well. So they're helping lots of clients right now. We've got an accountancy business in there, a law firm in their real estate business in that we've got a guy who runs a pub and clubs up in the, in the Northern Territory in there as well.

00:09:50:40 - 00:10:08:51
[Chris] Right now, what else have we got? oh. And he's got a, motel as well. And I've got one more, but I forgot. Oh, financial planning. We're doing financial planning acquisitions as well. Lots of our clients or partners are actually buying books or or the businesses to merge into big, bigger businesses. And, you know, I've got a great policy around financial planning space as well.

00:10:08:51 - 00:10:13:23
[Chris] So anyway, that's my little wrap for Judo. Go, Judo.

00:10:13:28 - 00:10:18:29
[Jackie] Go, Judo! And so what about your wrap on property? I love your property updates.

00:10:18:34 - 00:10:40:23
[Chris] Well it's it's a bit difficult. So I mean the auction rates on the weekend where, you know, the clearance rates were huge. I think it was like 80% clearance rates in Sydney. And the property market is really hot, hot, hot. So we have one of the, you know, the biggest amount of pre-approval and largest number of clients I've had since we started reading in our book, you know, looking, looking and actively looking to buy property.

00:10:40:28 - 00:11:03:05
[Chris] And I'm sure it's quite frustrating, going to open homes, going to auctions and, and sort of not getting your paddle up. So, you know, I feel that right now there is certainly a bit of an undersupply property in the marketplace right now. We've talked about those pockets of property as well, so that, you know, we've got a lot of first home buyers trying to get into that sort of sub $1 million property value as well, making it extremely, extremely hot.

00:11:03:05 - 00:11:17:43
[Chris] So yeah, it's a bit of a challenge for many. But pleasingly, on the weekend I think we had 4 or 5 good clients exchanged on new homes, which is wonderful. So, you know, we'll be looking forward to winter for those guys moving in, getting some pictures on Lydian HQ about them, you know, with clay keys and new homes.

00:11:17:56 - 00:11:24:54
[Chris] So I suppose the message really is, you know, keep trying. Although it might be frustrating, opportunities do pop up. And it's a numbers game isn't it?

00:11:24:54 - 00:11:30:16
[Jackie] Yes, definitely. And speaking about Lydian HQ, what's the update there?

00:11:30:27 - 00:11:50:33
[Chris] Well, we have a new person joined us and he's a basically a friend of a friend. So there's a partnership that we've got called Salefunder. And those guys were fed through one of their staff members, brothers, who is aspirationally looking to become a mortgage broker. So Remon Gallo joined us last month and he's a lovely young chap. He started out in his mortgage broking journey.

00:11:50:47 - 00:12:13:49
[Chris] He's putting up with Christian in the office here and, you know, learning everything about lending, which is great. So we've kind of got this little A-Team going on, which is cool. And you know, Remon's a lovely guy. He comes with a psychology background. So different sort of lens on things. And hopefully he's not judging me right now. But he's a pretty studious guy too, a good team player and a really nice fit for our Sydney office as well.

00:12:13:49 - 00:12:16:26
[Chris] So, you know, welcome to Remon. Yeah. Good bloke. All around.

00:12:16:33 - 00:12:24:07
[Jackie] Yeah. Awesome. And so are we hiring in any cities at the moment or are we close to the brokers. What's the update there?

00:12:24:12 - 00:12:44:43
[Chris] That's a really good question. You've been watching some of the posts okay. Well, so geographically Lydian... so we've got a partnership with H&R Block which is quite huge, right? And those guys amazingly you've got 400 offices seven 2000 texture. It's a crazy, crazy number. And we are supporting this mortgage monitor service with H&R block in this coming tax season.

00:12:44:43 - 00:13:05:54
[Chris] With this sort of impending event, we are looking to bolster up the team some of the slots. We've got to manage a district which would be 20 offices. Yeah, maybe 150 staff in that sort of little district. That would be Perth. We're looking for people over in WA. So anyone over there is looking to yeah I suppose have a boost to their, you know their numbers.

00:13:05:54 - 00:13:23:47
[Chris] We'll then reach out to Lydian and and we can certainly have a chat and connect and, and talk about those districts that we've got. There are openings Newcastle just north of Sydney. So we've got a great team up in Newcastle. Jim's the district manager up there and we're looking to have a person to pop around those Newcastle offices as well and support that.

00:13:23:58 - 00:13:48:21
[Chris] Tasmania. I don't know if anyone was looking for a move down to to Tassie as well, and certainly, there's a little spot down there. So if you can drive between Launceston and Hobart and support Carol and her team, they're looking for people there as well. And then lastly, Canberra. So our capital city viewers, if you're there and you're a mortgage broker in Canberra, will then certainly there's an opportunity to speak to to to speak to us there and have a little patch as well.

00:13:48:32 - 00:13:56:54
[Chris] So selective spots right now in line with the districts that we're currently supporting more remotely than, than others. But anyway yeah reach out.

00:13:57:07 - 00:14:12:37
[Jackie] Yeah. Awesome. And if you do reach out after watching this video, let us know if we get well that's everything. Thank you so much, Boothy. Always so much fun jumping on these updates with you. So we'll see you next month. May! The May update.

00:14:12:48 - 00:14:20:13
[Chris] Yeah okay. We'll keep reading between the cracks okay. And yeah. Enjoy your...enjoy your April. Thanks again Jackie, I love it. Ciao, ciao!

00:14:20:22 - 00:14:27:18
[Jackie] Thanks, Boothy Bye!