Blue Owl Finance owner Aidan Hartley is seeing his niche focus on first home buyers pay off three years after the launch of his brokerage as clients begin to return for refinancing and upgrading.
Hartley (pictured above) said his decision to focus on first home buyers happened organically – his initial “scattergun” approach to winning deals evolved into helping people in his own age bracket.
“A lot of other people under 35 are at a time in life where they are getting onto the property ladder, so it really just started with groups of friends and snowballed from there,” Hartley said. “I also just really like it. I’m doing this eight to 10 hours a day, so I guess a bit selfishly I’d much rather work with a group of people that I really enjoy working with.”.
Now with three years’ worth of business under his belt and a team of six, Hartley said he was seeing these clients begin to return, and also strong demand from new first home buyers.
“With my team I’m calling it the second wave,” he said. “We have a lot of traction with new first home buyer clients coming through the door, but we are actually trying to limit new clients a little bit at the moment.”
“We’re doing a lot of refinance work for existing clients; for example, those falling off cheaper fixed rates. We have really good processes in place for those sorts of clients.
“We put a lot of time and energy into managing the back book. I would say two thirds of our focus right now is on things like repricing and renegotiation of rates, annual reviews and check-ins.”
Hartley said the return rate for his existing book of customers was over 80%, with about 70% looking at refinancing, and 30% already looking to upgrade their properties as they grew their equity.
“They have managed to build equity in those three years and are now able to sell and upsize or hold onto their existing property and buy another property and build a portfolio.”
Choosing a first home buyer focus for the long-term
Blue Owl Finance’s focus on first home buyers felt like a “slow burn”, Harley said. Compared side-by-side with refinance deals, first home buyers took a lot more time and effort.
“It does feel like a loss leader sometimes because of the time and effort to get applications through.
“It is almost one of the hardest forms of lending to do, and most brokers will shy away from it because of that. Brokers love refinance work, because those deals you can do in one or two hours and get paid the same as a first home buyer that might take six or 12 months before a purchase.”
However, Hartley said being the first broker a client ever dealt with and knowing that the team would do a terrific job, meant aiming at a longer-term goal of being their clients’ broker forever.
“It is a slow burn and can feel like it takes forever and can be very frustrating; about one in three clients we do pre-approvals for do not buy, meaning that we are basically working for free.
“But the vision has been that these first home buyers will be our clients for the next 10 or 20 years most of them, so we will not just be taking care of the original transaction.
“It is not a transactional relationship as such – we do a lot of work with them, so we feel like we have a very good relationship with them, and that also leads to a lot of referrals as well.”
Hartley said he currently spent nothing on marketing, and that all new business was referral based.
Helping first time borrowers overcome affordability challenges
Hartley said that, historically, the main challenge for first home buyers was not surmounting affordability hurdles, but instead coming up with a deposit to step on to the property ladder.
That has “flipped upside down” over the past 12 months, as a lot of borrowers are facing affordability issues despite having access to either cash or schemes that support home buyers.
These include stamp duty concessions as well as the First Home Buyer Guarantee Scheme which enables buyers to purchase with a 5% deposit by guaranteeing Lenders Mortgage Insurance.
“They may have the cash and incentives, but with rates going from 2% to 5%, demonstrating to banks they can afford a larger loan has become difficult – affordability has dropped by 30%,” Hartley said.
“A lot are now unable to get into the town house or house they might have wanted, and might need to look beyond the blue chip suburb they were after. We are also seeing a lot of unit purchases.”
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