AFG Competition Index – June 2016

Majors the victors with fixed rates the weapon of choice

The majors have made their move in a bid to squeeze out their competitors with a targeted push for fixed rate market share.

After a soft start in March with 64.2% of the fixed rate market, the major lenders pushed hard to lift their share to 77.9% by the end of May 2016. This saw the non-majors share drop from 35.8% to 22.1% as the quarter drew to a close.

Mark Hewitt, AFG General Manager of Sales and Operations noted ANZ was the dominant player in this game. “ANZ fought hard to lift their share from a flat 11.3% in March and April to close out May at 20.2% of fixed rate loans.”

“Suncorp was the hardest hit with its share of the fixed rate market tumbling from 20.6% in March down to 4.8% by the end of the quarter,” he said.

“The winner in the battle for overall market share between the majors for the quarter was the Westpac Group, with Westpac, Bank of Melbourne, St George and Bank SA delivering a combined 20.5% of all loans in May, up from 17.6% at the end of February.

“This win has helped them make up ground to close in on the CBA stable with the CBA and Bankwest total dropping from 30.8% down to 24.5% as the quarter drew to a close.

For the non-majors, ING delivered a strong result lifting from 1.5% to 4.3% over the quarter.

“At the other end of the scale Bank of Queensland has slid again this quarter. After riding high at 7% back in December 2015 they have dropped back significantly the past two quarters to be at 0.4% by the end of May.

“These types of significant drops are often the result of service levels blowing out. If a broker has a client that needs their home loan settled in a reasonable time frame they are not going to risk placing the business where it will be held up by slow processing times,” he said.

“We have always said that a broker’s decision on where to place the client is driven by pricing, policy and service: A home loan that has a competitive interest rate, with a lending policy that meets the client’s individual circumstances and high quality service that will ensure a smooth settlement.

“All three of these components must line up for the recommendation to go a lender’s way.”

Download full report:?AFG – Competition Index – June 2016

Finding the right staff and boosting your hire power

How do you hire the right person for the job? Now that’s a brain teaser Google is happy to share the answer to.

Google was once famous for throwing curly brain teasers into its hiring process. Questions actually posed to Google interview candidates over the years have included doozies such as, “A man pushed his car to a hotel and lost his fortune. What happened?” (Hint: think Monopoly). And, “How much should you charge to wash all the windows in Seattle?” (The trick is to come up with a simple answer, rather than a total. For example, $2 per window.). The theory went that these questions, along with more traditional queries, would help Google spot lateral-thinking innovators among the crowd.

Turns out they were wrong.

Last year Laszlo Bock, senior vice-president of People Operations at Google, published the book Work Rules!: Insights From Within Google that will Transform How you Live and Lead. It revealed the company’s latest thinking on how to hire the best and brightest.

Bock wrote that lateral-thinking questions had been axed from Google interviews after being found to be next to useless in staff selection. “(Brainteasers) serve primarily to make the interviewer feel clever and self-satisfied. They have little?if any, ability to predict how candidates will perform in a job,” Bock wrote.

In fact, some curveball questions, such as “What do you think about when you’re alone in your car?” could actually trigger unhelpful bias in interviewers, along the lines of: “OMG! I think about the same things in the car,” Bock wrote.

So how do you get your hiring right? It is, after all, one of the most important decisions any business owner, particularly a small business owner, makes. In his book, Bock has outlined a scientific method to take some of the ‘gut work’ out of interviewing and hiring. He wrote that studies had shown interviewers often worked on impressions formed within the first few seconds of meeting a candidate.

So the first step to effective interviewing was being conscious of any biases and keeping first impressions in check. In laying out which interview methods were most effective Bock cited a 1998 article published in Psychological Bulletin by Frank Schmidt and John Hunter, which analysed 85 years of research data. It found work sample tests – where employees were asked to complete a task related to their job – were the best indicator of job performance, with a weighting of about 29 percent.

Other highly predictive selection methods, according to Hunter and Schmidt, were structured interviews (at 26 percent), in which candidates were asked a consistent set of questions directly related to the job and their prior experience. Also correlating strongly with good job performance were tests of general cognitive ability (26 percent).

By comparison, other selection criteria that correlated weakly with predicting good job performance included references (seven percent), years of work experience (three percent) and a good performance in unstructured interviews (14 percent).

Tips to get your hiring right.

  1. Be aware of your own bias. A study published in 2000 by the University of Toledo reported that judgments made in the first 10 seconds of an interview could predict the outcome. Essentially, the majority of the interview is spent trying to confirm that initial impression, rather than truly assessing applicants. It is important to get on with employees, but just because you like someone does not mean they will be good at their job.
  2. If you are interviewing for a job that is task oriented, include a work sample test where possible. Giving an applicant some sample work to perform, even if it is submitted before or after the face-to-face interview process, is a strong indicator of on-the-job performance.
  3. Structured interviews take time to prepare but ultimately deliver the strongest indicators of job performance. Questions should be consistent for all candidates and draw on real and hypothetical job-related scenarios, such as: “Describe a situation where you were responsible for getting others to make a change”. For a quick and easy short-cut, Bock has referred business owners to the US Department of Veterans Affairs website’s Performance Based Interviewing site ( to find sample questions. “Use them…you’ll do better at hiring immediately,” he said.
  4. Depending on the size of your business, consider including junior staff in the selection process. Bock has revealed that while most job applicants met high-ranking staff during the interview process, Google turned this on its head. Along with meeting the bosses, Google candidates also met staff who would work for them, and who were encouraged to have a voice in the selection process.

Paid advertising — what do I need to know before I start?

Here’s our brief guide to the different types of media available to you if you’re considering paid advertising. Every dollar is precious and it’s imperative to achieve the greatest return on your investment in order to grow your business, so we’ve briefly outlined a few pros and cons about each of the main media options you have when it comes to spending your advertising dollars.

Pay per click advertising

Known as PPC, this form of advertising consists of internet ads that are run via search engines and their partner sites. You pay only for clients that click on your link, the ads can be instantaneous and very easily changed, and you can segment down your audience and select where your ads will be shown, and where they won’t – ensuring each click is more likely to be a consumer more likely to want what you’re selling. The downside is you often have to ‘bid’ for the keywords you’re looking to come up with and with competitors also wanting the same keyword searches such as ‘Italian restaurant?Melbourne’?you could be paying relatively high per click prices and also be appearing in a cluttered advertising space alongside most of your competitors.

Social media advertising

Most social media platforms are now leaning more and more towards attracting the advertising dollar and it can be a very cost-effective and targeted medium to consider, particularly when it comes to a wide and targeted reach. This can be great for building customer relationships, growing your database and for the ability to connect with the next generation of customers. The downsides include the fact most people on social media are there to connect, not to be sold to, so you have to carefully consider your message and your offering so it’s not a hard sell. And be prepared for the fact that proven conversion rates are often on the low side.

Online banner ads

Banner advertising is one of the more popular forms of advertising online. An ad is produced that consumers are encouraged to click on for more information. Prices CPM (cost per mille or cost per thousand impressions) or CPC (cost per click) can be relatively inexpensive depending on where you choose to be. They are a great branding tool and are very easy to track in terms of conversion.? Good design and clear messaging are important though as the medium can be seen as intrusive and annoying for people online and could lead to more harm than good. ?Over-saturation?is something to avoid, and popup blockers are another barrier to consider. Like anything, check out what your competitors are doing and see what you think works, and what fails to hit the mark.


Television reaches more people, has a high penetration and achieves high message delivery fast, but it is expensive with both ad placement and the cost of production often prohibitive. It’s also relatively inflexible for rapid response to changes to creative, and it’s not ideal for short term planning due to the popularity of the medium with larger spend advertisers. With both television and radio, experts often tell you that the optimal frequency is between three and four times for your client to be exposed to the advertisement. The first time is when they see the message, recognition comes with the second exposure and action comes between the third and fourth time.


Radio also achieves high message delivery over time, reaches a captive audience (ie those at work or in their vehicles), is good for targeting certain demographics, but isn’t a strong medium for active response and can be cost prohibitive due to the need to use multiple stations to cover broad audiences. With radio, always look at the rate for different times of the day and think about when your target market is most likely to be tuning in. You can select BMAD (breakfast/morning/afternoon/drive) or ROS which means Run of Station which means your ad can be run anytime.? Don’t be seduced into the cheaper rate as it will mostly relate to off-peak times when most of your prospective clients may be fast asleep.

Print media

Press ads can achieve high reach quickly, often has a strong local area targeting capability and has the ability to target niche demographics through tailored sections and lift-outs. It is an expensive medium if you’re looking for frequency of exposure and the cost of production (design) can also be high. Other things to note are that some of the larger metro papers will do a split between different areas, so you may be able to negotiate a lower rate if it’s only one footprint you want to be seen in. In terms of measurement, consider the circulation, which is the total number of papers/magazines printed and distributed or sold, and readership is worked out by the number of times the medium is considered ‘read’, i.e. if there are at least three people on average in households within your area, the circulation may be 1,000 but the readership is calculated at 3,000.

Something else to consider with print media is its shelf life — i.e. a daily paper’s shelf life is around 24-36 hours, a weekly paper for a fortnight or so, and a monthly glossy magazine’s shelf life can be far longer if it’s lurking about in a hairdresser’s, coffee shop or doctor’s surgery.

Lastly, think long and hard about traditional printed media and if it’s really something that still applies to the sorts of people you’re trying to attract.? It?wasn’t?so long ago that for most businesses the weighty Yellow Pages was an advertising mandatory, and now most consumers struggle to remember where they keep their’s, or it’s already in the recycling bin. Chances are your customers are leafing through pages online these days rather than old school directories.

Where and who?

This is by no means an extensive list and?we’ve?left off vehicles such as outdoor advertising and promotional advertising, but hopefully this gives you a few pointers in the right direction. Like anything, always think about who you want to talk to (your demographic), what messages are most likely to appeal to them, and where they are most likely to have exposure to them.

One final word before you begin.? Please be aware of legal and compliance obligations in terms of what you can say, and who you can say it to.

A plan to start investing later in life

By the time we save for our first home, upgrade to a bigger or better one, earn enough money to pay the mortgage and bills and live life in?between, it’s not surprising many of us don’t contemplate investing in property until we are middle-aged or beyond.

But like so many things in life, it’s not too late to become a property investor, especially if you have a stable financial base with equity in your own home and plan on working for at least another 10 years (the average property cycle). In fact, many later investors find they have more funds, time and focus on making wiser choices and reaping the rewards.

Be clear on your goals

Spend some time working out what you want from your investment, and ultimately your lifestyle in the medium and long-term. Are you looking for income generation in the shorter term or capital growth over time?

Many investors, regardless of age, make the mistake of diving in without a strategy. The challenge for those who start investing?later in life is that there are fewer employment years to support cash flow so understanding your end game and developing a plan becomes more important in order not to waste money, time or opportunities.

It’s also critical to remember your circumstances and the lifestyle you want down the track are unique. Your plan needs to suit your goals, not someone else’s.

Yield or capital growth?

While both rental returns (yield) and a property’s potential to increase in value (capital growth) are important, property investment strategies can sometimes lean towards one or the other. Properties with high rental returns are often close to a sustainable supply of itinerant workers or students, such as hospitals or universities. Generally the entry price is lower because there are a lot of similar properties nearby, which creates a more saturated market and, in turn, limits the potential for rapid capital growth. But the lower price point and ongoing supply of employees or students means strong rents.

Investors pursuing capital growth can tend to look for a worst-house-best-street scenario and are prepared to cash in down the track when prices in that area ultimately increase or the investor adds value themselves with a renovation.

Many investors aim to strike a balance between both yield and capital growth by looking for properties that meet basic location fundamentals: close to reliable public transport, proximity to a CBD or other employment hub, and good infrastructure.

Do your numbers

The best starting point is a complete financial audit. Review how much you owe on your home and how much it’s worth to work out your equity position, then look at your earnings, how many years you expect to continue working and a rough estimate of your annual living costs. At this stage you may benefit from the advice of a financial planner or mortgage broker who can present a number of options based on your situation. Whether you seek advice or manage solo, your numbers are essential to make the right decisions for your circumstances.

Consider a buyer’s agent

Buyer’s agents are licensed professionals that specialise in searching for, evaluating and negotiating on property on your behalf. They are not real estate agents.

A buyer’s agent can take the leg work and emotion out of your investment search while working to your brief. Most charge either a flat fee or a percentage of the property purchase price, but some may charge a mix of both.

A buyer’s agent can be helpful if you are time poor or unsure where to invest. Many investors use a buyer’s agent for their first one or two properties and then feel confident to go it alone.

Portfolio reach

If you plan to acquire a portfolio of properties, you will probably need to think beyond your neighbourhood. While many investors like being familiar with where they invest, it may be difficult to create diversity if you just stay local – and diversity, as with any investment portfolio, is important if markets shift.

If you do look further afield, do plenty of research and take the time to visit the property yourself, or the development if buying off the plan.