​Ray Hair: Mandate to Grow

by Adam Smith11 Aug 2014
Mortgage industry veteran Ray Hair has joined Homeloans, and says his mandate is to see the non-bank make significant inroads in market share

Ray Hair is a fixture in the mortgage industry; a well-respected industry veteran who’s been around mortgage broking from its early days. That’s why his recent hire by Homeloans Ltd seemed like such a coup. And Hair says he’s thrilled to be back on the front lines.

Hair previously helmed PLAN Australia, where he served for 10 years. He departed in 2011 to take the reins as CEO of Australian Life Insurance, which sells debt protection insurance through brokers. Now, with the departure of Greg Mitchell, Hair has stepped into Mitchell’s role as general manager of Homeloans Ltd, a move he said he was excited to make.

“It’s absolutely fabulous to be on board at Homeloans and back in the mortgage game itself, so to speak,” Hair said.

First and foremost on Hair’s agenda will be pursuing growth for the non-bank lender. The lender has seen strong results, reporting a 12.4% increase in its lending volumes at its last six-month profit report. But Hair said he will be looking to take the non-bank even further.

“The game plan is quite clearly to grow. My mandate is to grow Homeloans in terms of market share. It’s about getting the message out to brokers and through brokers to their customers. We need to get the message out there, and get aligned with the right brokers; those willing and able to provide alternative solutions to their customers,” he said.

While major banks still dominate market share, Hair suggested that the economic environment was becoming more conducive to competition.

“Competition is alive and well, and I think that’s a good thing for consumers and a good thing for brokers,” Hair said.

This improved competition is largely due to an improved funding environment, Hair said. With interest rates at record lows and funders coming back to the market, Hair said non-banks had to grab hold of the opportunity presented by the current economic environment.

“The reason I’m so excited about this opportunity is that there is an improved environment on the funding side. We’ve got a broader choice of funders and a broader range of products for both brokers and their customers. Now it’s about leveraging that environment in the current market, and delivering an alternative solution to the broker market and to their customers,” he said.

One source of growth for Homeloans has been its acquisition of the defunct Refund Home Loans. While Homeloans did not buy the company’s brand, it did acquire Refund’s book, as well as adding many of the company’s former brokers to its existing branded broker distribution network.

“You can measure [the success of] that in two ways,” Hair said. “First there was the acquisition of the existing book, and financially that made a lot of sense. Then there’s the opportunity to partner up with brokers and provide them with a new home, combining that with a small but existing Homeloans branded broker channel. The success of that strategy is what’s ahead of us. We have to work out the best way to leverage that channel, support that channel and grow that channel in a way that also works in relation to our non-branded broker partners. That opportunity is an emerging one.”

With these opportunities in front of them, Hair said Homeloans is poised for growth. He said his role will be focused on significantly expanding the business.

“Our opportunity is still there to grow. We’ve got a better funding environment and a good interest rate environment, and my mandate is to grow the business and to build on the existing sales team. The existing sales team is very strong and has a very good reputation, but we have to grow that to almost double in size,” Hair said.

In order to achieve this growth, Hair said the lender has laid the groundwork of investing in its processes to better serve its broker network.

“We’ve done a lot of work recently in terms of improving our processes, and bringing on the right people in the back office and front end, and now is the time to leverage off that,” he said.

“We’ve improved our credit capabilities in terms of our people and processes, and working with our funding partners to streamline those processes and take out the duplication where possible. That delivers to the broker and their customer a fairly seamless service.”

Hair said non-banks could only hope to compete by ensuring their processes and service provided brokers with positive experiences.

“If you’re going to be a viable alternative lender, you have to deliver positive service experiences at the broker level and the customer level,” Hair said.

He argued that non-banks had to be proactive in communicating their value proposition to brokers. Without the retail distribution footprint of their competitors, non-banks’ fortunes are generally much more tied to the third-party channel. Yet, the lenders can be something of a hard sell to many brokers, who choose to send most deals through traditional banks. But Hair said it is the responsibility of the non-banks to position themselves as a viable alternative.

“I don’t believe that there’s a lack of support of non-banks. I think it’s up to us to sell ourselves to brokers. Brokers will align themselves to partners who are flexible, responsive and on the same page. What we have to do is deliver them a solution they can sell,” he said. 

Hair suggested the non-bank sector couldn’t expect the support of brokers unless it showed them it deserved their confidence.

“Yes, it’s easy to be critical of the market share the majors have, and I don’t mean that in the sense that their market share is because of brokers doing the wrong thing, but we need to partner with brokers to demonstrate that we’re going to deliver value to their customer and value to them. If there’s a lack of confidence in their lender partner, brokers are not going to be putting that lender on the table as an alternative and I think that’s understandable. The challenge is very much on our part, and all we can do is look to brokers who are willing to consider us and demonstrate to them that we have a range of alternative solutions that are every bit as competitive as anyone else,” Hair said.

Overall, Hair said he sees strong opportunities for both the non-bank sector and mortgage brokers. That isn’t to say the current environment is without headwinds, however.

“I do think it comes back to housing affordability and consumer confidence. Whilst the interest rate environment is at record lows, people are not as confident about their economic position and – depending where you are in Australia – affordability has become a major issue,” he said.

But, just as non-banks must be responsive to changing dynamics, Hair said brokers who show adaptability are geared for success.

“It is a relatively buoyant market, but you’ve got to understand that it is very much driven by the current positive interest rate environment. Brokers are at the coalface. They hear it first, see it first and feel it first. They have to listen and respond to their customers in terms of what they’re looking for. It’s the broker who is inflexible who is at risk of missing opportunities as markets and demand changes.”

This feature is from Australian Broker Issue #11.12. For more, please download the entire issue.