Gerald Foley, managing director of National Mortgage Brokers (nMB) joins AB TV to discuss what nMB is planning this financial year, along with the historic first interest rate rise for the first time in almost 12 years and what it’s priorities are over the next year.
Kylie: [00:00:19] Welcome to Australian Broker TV. I'm Kylie Speer and joining me today is Gerald Foley, managing director of National Mortgage Brokers. Welcome to you, Gerald, and thank you for joining us.
Gerald: [00:00:30] Thanks, Kylie. Great to be here today. Welcome. Everyone who's watching this broadcast today. Yeah, certainly exciting times ahead ahead for us.
Kylie: [00:00:40] Well, firstly, we're in the new financial year. Are there any exciting new projects NMB is working on?
Gerald: [00:00:48] Yeah, we've got lots of things planned for the New Year, but I think our starting point is going to be really just finishing the wrap up of FY 22 and all of the reporting and everything. With that, we're well advanced on our on our planning. We've had a great finish to this financial year. We've finished such a strong position through a tough, tough year. But but but feeling really confident going into the new year. And our focus will be three key areas, really recruitment, some systems development, continue to work with our brokers to grow their business models, which I can talk about. And but also then getting that right balance between coming into a rising interest rate market where. Not only brokers, but also borrowers and lenders. Haven't seen this before. You know, 12 years since since there's been a rate rise. We're all working through what that means, what it looks like, and trying to manage that piece through. So a real mix of some projects, significant ones, particularly around technology and also maintaining our broker support and then also looking to continue our great growth over the last couple of years.
Kylie: [00:02:01] You've mentioned interest rates and they have risen for the first time in almost 12 years. What advice should brokers be giving their clients when it comes to this ongoing challenge?
Gerald: [00:02:12] It's certainly a change, isn't it? And it's not only I mean, advice for brokers, but but also we're actually in a market now where borrowers, lenders and brokers haven't seen rate rises. I mean, loans don't run 12 years. So it's a new dynamic for everyone. And we've all got to just go back and understand the lending rules, the steps that lenders take to make sure that borrowers can absorb a rate rise. You know, we know that many, many borrowers are ahead of their payments already. So the conversation is around. If there's going to cause stress to increase your payment with a new rate, well, maybe you can hold the payment and just extend your loan term a little bit. So there's there's more than you know, there's more than one way that you can work through these challenges. But of course, there are there's nervousness amongst the borrower community. We get that. And as I say, it's new. And, you know, for the last 12 years, as you say, the letters have always been good news. Your rate's been reduced or people have been able to go and obtain cheaper money.
Gerald: [00:03:10] It's all been positive. But now we've put an overlay of we've gone from property values rising consistently and at at times quite, quite quickly. Also created that that refi opportunity, which is maybe not the same as what it was, but the advice is. Sit back, assess each situation, work out. Is there capacity within the the credits that you've you've stored on your loan, you've been able to pay more? Can I tap into those if I need to, but also have conversations around the good things that are still in play for the borrower? Unemployment's low. It hasn't been this low. So, you know, the issue really is not not totally interest rate rises, but stability of employment and income flow. And if that's protected, then there's always a way to work through the current cycle. So with with all respect to our friends at Key Media and the media at large, don't get caught up on the headlines. It's another piece of advice as well. Just, you know, look at each situation and work through it that way.
Kylie: [00:04:15] How is technology improving processes and systems for NMB brokers?
Gerald: [00:04:20] Yeah, look, it's a key focus for us. We've been working on a number of projects for a while now. As people may know, we're part of the Liberty Financial Group and there's a there's a significant program in place across various parts of the business. So we're really excited that through FY 23, there will be a new platform for our brokers to to to access. So excited about that. Still a little bit away. We've still got a bit of development and testing and things, but that will be a significant part of of of our offering through the year that we're working through. So very excited to be working on that project and looking to roll it out later in the financial year. But certainly, as people know, these are long term and significant projects. But also too, we're very comfortable that the platforms we have today are good but always looking for for improvement on the way through as well, like all good business people.
Kylie: [00:05:19] What is NMB's value proposition when it comes to supporting brokers and their businesses and in what ways does NMB support differ from its competitors?
Gerald: [00:05:30] Yeah, I think we've always adopted a model of broker to broker business and by that I mean many people start out as a broker single operator and then finding their way through that that that broker to broker business journey. So we have adopted over many years now a number of ways that we talk about broker businesses. We have. Physical assets that brokers can use to help them through their business program. So our broker to broker business business model is based around. People, partners, planning premises and process. That's our focus. And we've got actions and and and age for all brokers to work through different phases of that. We think the development of the extension of that becomes a better broker business in time as well. And that's probably more about process improvement. But if we get those four key pieces strong and in a good, good model, then the process is where we then work towards the end. So, so we like to talk about the broker to broker business journey. That's a really significant part of what we what we do there. And as to some of the tools that we have available, we've developed a very strong broker benchmarking program over probably 8 to 10 years now and again, always refining. It's not the same now as it was when we launched, always learning. But that's really about sitting back once a quarter with our brokers who choose to be part of the program and just analyzing your lending your loan book growth types of customer flows, where your business is, where you're losing business off your loan book. And it's a really focused quarterly review and that helps to set a good business and action plan. So yeah, we're quite proud of the tools that we've developed in the conversations, how they've really matured with our brokers over the journey. It's been it's been a really good part of, I think, where we do have a point of difference in just that understanding of the brokers business and the dynamics and the characteristics within their, within their business model. Yeah.
Kylie: [00:07:34] Really. And finally, speaking of looking ahead, what are NMB's priorities over the next 12 months?
Gerald: [00:07:40] Probably, maybe, maybe three areas I'll put that into. The first one is quickly understanding what the new market looks like back to the interest rate cycle and other things that are coming along. There are some economic changes and maybe challenges that will focus on. Secondly, continuing our really strong recruitment of recent years, we've had a really strong run, good recruitment of good broker businesses for what, for a range of reasons have decided that us as an aggregator provide what they're looking for to help them grow their business and develop further. So we'll definitely be continuing on our very strong recruitment strategy. We would like to be part of introducing more women brokers into our business. We sort of reflect the market now about 75 to 25%. So we've got a number of activities planned for FY 23 to really help not only bring new. Women into our broking environment, but also some of our existing brokers that are maybe male dominated to to look at ways that they can introduce female brokers into their business model, which I think is really important to have that that sort of diversity across your business model. And I guess the third party is really to focus on just always refining the business support we provide to our existing broker groups, you know, more refining a broker benchmarking program, you know, business and action planning templates, all those things that we like to do. And including that too. We're seeing more brokers now looking to acquire other loan books or businesses, and we're developing that capacity to help as well, from financial modeling to potentially financial support or whatever that may look like. So I'll say that's our sort of three, three key focuses for the for the year ahead.
Kylie: [00:09:30] And an exciting year ahead, it sounds. Thank you so much once again for your time today, Gerald. It was lovely speaking with you.
Gerald: [00:09:38] Thanks, Kylie. Thanks for the time today. Good luck to all the brokers wrapping up the current financial year and good luck for FY 23. We would hope to be a part of it with with many of you on that journey. So thanks very much and all the best to everyone.
Kylie: [00:09:52] And thank you to our viewers for watching the latest episode of Australian Broken TV. We look forward to seeing you again soon.