Lunch with Aussie Home Loans’ John Symond and future direction of interest rates

JOHN Symond, who brought competition to the banking sector and cheaper mortgages for all, has his view on the future direction of interest rates.

‘At Aussie, we’ll save you’ ... Aussie Home Loans founder and executive chairman John Symond at Chianti restaurant in Adelaide. Picture: Calum Robertson

JOHN Symond, who brought competition to the banking sector and cheaper mortgages for all with his company Aussie Home Loans, has his view on the future direction of interest rates.

Your TV ads in the 1990s made you a household name. Do you still get people coming up to you and reciting your catchphrase “at Aussie, we’ll save you”?

JOHN SYMOND: Every day, every day, but that’s good. It’s good fun.

Why did you front the ads personally?

I couldn’t afford real talent. People laugh when I tell them but I didn’t have any money. I was broke. I was staving off going under, and when you don’t have money or backers you have got to do everything. What we were doing was so controversial because no one had gone on the front foot and publicly slammed the banks.

took on the banks and won ... John Symond opens a new branch of Aussie Home Loans in Rooty Hill, Sydney, in July 2103.

What did you do before starting Aussie?

I spent 15 years in law specialising in property and finance, helping people get into homes. I then started my own finance advisory business, and the State Bank of South Australia subsidiary Beneficial wanted to do a joint venture with me. I thought this sounds all right, I went in 50-50, had about $3 million in savings which was a lot of money and tipped it in good faith. I was naive, I didn’t have any advisers and didn’t think a government-owned bank could go belly-up, and when they did after the 1987 stockmarket crash, I couldn’t get my money out. I was treated badly, and was facing bankruptcy because all my cash had gone. I was on my head, my marriage didn’t survive, I was so angry with the way banks treated people and I went on the warpath and tried to change the system.

Interest rate falls a career highlight ... John Symond outside his home in Point Piper, Sydney, in November 2010.

What has been the highlight of your career so far?

The drop in interest rates. The banks had to drop their interest rates by 3 per cent. We were the first to introduce securitisation in Australia and the genie was out of the bottle. Two years after us RAMS started, and two years after that Wizard came on. The copied us and a whole industry was born. I feel very proud that every house in every street got a two or three per cent reduction.

What do you think is going to happen with interest rates?

The way the economy is going, which is not good, there’s probably another rate drop up the Reserve Bank’s sleeve. Interest rates are going to remain lower for longer than a lot of people think. We have entered into a low interest rate environment globally and we will never see interest rates go anywhere near where they used to go. Consumers won’t cop it.

Shepherd Centre Australian Father of the Year in 2012 ... John Symond with his children Stephen and Deborah. Picture: Danny Aarons

Will future interest rate cuts have as much effect as past cuts?

No. We’ve already got the lowest rates in history, and if you can’t afford 4.25 per cent today, 4 per cent is not going to make much difference.

For many years you battled the banks, and in recent years you’ve sold 80 per cent of Aussie to one of them. Why did you decide to sell it to the Commonwealth Bank?

My kids aren’t in the business with me. I’m 67, and I agreed to stay on for five years so I’ll probably be 70, and the business has never been more successful. I’d rather go out on a high and I can’t be here when I’m 100. I negotiated with CommBank that it would be run as independent, and true to their word they’ve left me alone. I still run it as if I own 100 per cent, not 20 per cent, and we still take it to the banks — including the Commonwealth Bank because that’s our culture. CommBank never invested in Aussie to turn us into bank branches.

‘Nothing is 100 per cent safe, but I think the big banks in Australia are as close as you can get to that’ ... John Symond talks between bites at Chianti restaurant, Adelaide. Picture: Calum Robertson

Table for three ... The bill for the interview with Aussie Home Loans founder and executive chairman John Symond. Picture: Calum Robertson

You received 2.75 million Commonwealth Bank shares for part of Aussie. Does that make you one of the biggest shareholders of Australia’s biggest bank?

I’ve never checked, but they say I’m the largest individual shareholder. When I sold, it wasn’t for the money. I thought it was the right time, I wanted a stable investment, and I had been watching CommBank for 10 years. The banks used to be all about ripping, but that has changed. I thought I’m going to roll in my Aussie shares into CommBank shares, and so far it’s been a good move. It’s going to stay there for decades — they pay good dividends, are solid and very well managed, and I know the senior execs. When the last 20 per cent goes in two-and-a-half years’ time, it will probably be the same. Nothing is 100 per cent safe, but I think the big banks in Australia are as close as you can get to that.

What’s your outlook for Australia’s property market?

Historically, when you have low interest rates affordability is improved as long as you’ve got a job. If unemployment is contained, the property market is very bright.

Originally published as Lunch with Aussie Home Loans’ John Symond and future direction of interest rates