Since 19 years of age James Symond has worked closely with his uncle and well-known founder of Aussie Home Loans, John Symond.
Now CEO, James Symond has been at Aussie Home Loans from the outset and has a finely honed perspective on Australia’s mortgage broking industry and residential property market.
He says, “We started with a handful of people and a man with a big vision in 1992. The business has grown and evolved rapidly along with the mortgage market, and I have been very fortunate to have had John’s commercial guidance throughout the journey”.
Initially working as a commission-only broker visiting customers’ homes at night and taking over as head of sales at age 25, Symond has led the growth of the Aussie’s distribution channels from around 100 brokers to more than 1,300 today, and 180 Aussie branded stores across the country.
Admitting that work−life balance is not really his forte, Symond says “I don’t really differentiate between business and pleasure; what I do is a way of life”.
That might seem a bit depressing for some but I love it. I do make sure I get some downtime during the year though, and I’m very fortunate that I travel regularly, especially to the US to visit family.
The Aussie Group, which includes its wholesale aggregator National Mortgage Brokers (nMB), is Australia’s largest retail mortgage broker, with a loan portfolio of around $70 billion, and settling around $2 billion in residential home loans each month.
The business has experienced strong growth in recent years in line with the buoyant conditions in the residential property market in many of Australia’s capital cities.
But Symond dismisses widespread speculation about a pricing bubble in the Sydney and Melbourne housing markets.
“I don’t believe there is a bubble in the Australian market and think the whole idea of a property bubble popping, and prices dropping dramatically overnight, is highly unlikely. Interest rates are low and affordable, unemployment remains manageable and demand still generally outstrips supply in most areas. I do have some concerns, however, about the apartment sector in areas like Melbourne and the outskirts of Sydney’s CBD.
“We haven’t seen a market quite like this before, with so many apartments and dwellings in the planning process. This is new territory for everyone. But it may simply be that the market is maturing and playing catch up after many years in which the stock of housing was grossly undersupplied, especially in Sydney and parts of Melbourne,” says Symond.
He notes, however, that it does raise some eyebrows when you see people banding together with their neighbours to sell their houses to developers for many millions of dollars, or when apartments in parts of Sydney nearly double in price in just a few years.
“These things are not necessarily something to worry about, but it’s certainly making us think about how it’s all going to play out.”
Symond points out that the Australian real estate industry consists of hundreds of micro markets.
“One market might be rising strongly, like Sydney, while others might be neutral or even softening in some cases, like some of the mining towns. But the key thing that Australia (and areas like Sydney in particular) has going for it is that there is generally a shortage of quality housing.
“While Australia continues to grow, migration is strong and people want to move to capital cities, property prices should remain relatively steady. I don't think prices will keep soaring like they have lately in Sydney and Melbourne. But, I don’t believe they will dramatically decrease either.”
Symond adds that he expects interest rates to remain affordably low for several years, and he also points to growing investment from Asian markets, such as China, as another key driver of demand within the Australian property market.
As I say to my team, the good news is that our economy is currently heavily reliant on growth markets like China. And, the bad news is also that our economy is heavily reliant on growth markets like China.
You can only give your best educated guess as to the likely direction of the market, but experience suggests capital city growth in property values will be slow and steady, which is a good thing.
Taking the heat out of the market
A number of banks and other authorised lending institutions have increased interest rates on investor housing loans in recent months, following APRA’s clampdown on the growth in lending to property investors.
APRA also announced recently that from 1 July 2016 the major banks will be required to hold more capital against mortgages, with the average risk weighting for home loans increasing from around 16 per cent to at least 25 per cent.
Symond indicates that some of the heat has been taken out of investment in existing dwellings in recent months and this is likely to continue.
“The demand for credit from property investors for existing properties isn’t as rampant as it was several months ago as the credit criteria have tightened. So we’ve seen those regulatory levers starting to work. However, off the plan purchases generally remain as strong as ever, again largely because of the foreign purchaser factor.”
Importantly, he suggests that the number of first home buyers, who have been increasingly discouraged by surging property prices in Sydney and Melbourne, will grow. ABS housing finance data indicate that first home buyers’ share of total housing loan commitments had dropped to 15.4% in July from 15.8% in June.
“We’re now seeing first home buyers coming out and looking at properties again. Not in droves, but we are definitely seeing first home buyer enquiry picking up,” says Symond.
The evolution of the mortgage broking market
A little over a decade ago, mortgage broking was still considered a boutique industry in Australia, but it has undergone a resurgence since the global financial crisis, when broker originations and commissions declined.
Just over half of new residential and investment property loans are now originated by brokers, up from 25 to 30% a few years ago.
Symond believes there is every chance that this will increase to 60 to 70% over the next five years.
The Aussie Group currently has about 10% of the overall mortgage broking market in Australia.
“We’re basically a sales and distribution business. Yes, we have a wonderful trusted brand which John remains closely identified with. However, today, it’s all about building more quality distribution points across the country in order to make the Aussie experience accessible to more consumers.
There are lots of opportunities for growth if we get the strategy, distribution and culture right. We’re actively looking to grow our team in all three channels ─ mobile broking, retail and wholesale.
Symond believes that in the past many mortgage brokers have relied too much on acquiring new customers. He says it is important to take care of existing customers because if you don’t, somebody else will.
“Things will inevitably slow down and brokers will suffer if there isn’t a strong relationship with the customer. Sourcing the right loan, at the right price with the right service for a customer means they will hopefully be with you for life.”
He says a key change within the industry has been that mortgage brokers are now competing against other brokers for new customers, whereas in the past brokers used to compete with the banks using their panel of lenders as the key differentiator. And, in order to compete effectively, brokers need to have a service proposition that is particular to themselves and different from that of their competitors.
“Overall, mortgage broking itself is becoming much more competitive and trusted brands are more relevant than ever. The banks and other lenders know they need mortgage brokers. We provide a very efficient and broad distribution channel for almost any lender in the country,” he says.
The Commonwealth Bank increased its investment in Aussie from 33 to 80% in December 2012, and Symond says the relationship is great.
“CBA provide funding for one of our home brand products and we have increased our compliance framework. But besides these two areas, they have been true to their word and ensure that we have the autonomy to successfully continue to build our business. And we’ve demonstrated that to all our panel lending partners as well.”
With financial services facing growing digital disruption, Symond indicates that Aussie is very focused on innovation in this area.
“We don't have it right yet, but we recognise the importance of this, recently combining our marketing, digital and IT teams who all report through to the one senior executive.”
He notes that 75% of Aussie’s marketing spend is now on digital, whereas only six years ago it was on television.
From a customer acquisition point of view, the digital space is becoming increasingly important.
“We have about 12,000 to 14,000 customers every month who have searched and contacted us through the internet. Borrowers are increasingly shopping online and sometime in the future, online sales will also become integral to our business.”
He suggests that this is not happening today because the loan process is complicated and regulation is intense.
“Today, digital online mortgage broking doesn’t really exist, either in Australia or globally. Nobody has yet cracked the code for our sector in offering a quality experience to the panel of lenders and customers, but I have no doubt someone eventually will.”
Symond says mums and dads still like the confidence that face-to-face contact brings for what is the biggest financial commitment of their life, but he recognises that there is a whole new generation coming through who might see things differently.
He also notes that things can change quickly. For example, the vast majority of all consumer credit card applications are done online now whereas, 15 years ago, the vast majority of credit card applications were processed on paper, either in a bank branch or sent in by fax.
Symond thinks his leadership of the business will likely be defined by three key things: culture, passion, and innovation.
Having lived and breathed the Aussie culture for over two decades, he argues that this is the key factor determining the success of a business.
I really believe that ‘culture eats strategy for breakfast’. For me, having the right culture is absolutely imperative if you want to turn a good company into a great one.
Aussie recently implemented a program called ‘One Team’, to ensure that everyone in the sales team, in the retail stores and head office feel like they’re part of the one team and are all heading in the same strategic direction.
Symond has also brought the contact centre back in-house to ensure his team is as close to Aussie’s biggest asset, its customers, as possible.
Moving the head office team into a new world-class, activity-based space that has been purpose-designed for Aussie is another example of the changes he is making to attract and retain the best team members.
“With a company of our size, you want to make sure you don’t have any silos and that the environment for our team members and customers is world-class.”
He also believes it is important to evolve the business every four or five years to maintain its competitive edge.
“That is what Aussie has always tried to do and we’re going through a process right now of innovation and evolution to stay ahead of the market.”
Inspiration and new ideas
Symond gives credit to the strong leadership team that he has around him as a major source of new ideas, helping Aussie to keep innovating.
“Our vision is to be the best home loan provider on the planet, so we are always looking to best practices across the globe in all industries, not just mortgage broking.”
With a close, extended family and a sibling living overseas, family and travel are both very important parts of Symond’s life.
He says, “As my brother lives in the US, I’m often in Los Angeles or New York where there is always great inspiration for businesses like ours”.
“It is a real privilege being CEO of a business that I have been part of for nearly 24 years, and working with my uncle who brought real competition to the sector. I still wake up every day loving what I do and working with our team.”