It's a Broker Thing
It’s a Broker Thing brings you real broker conversations, the kind that happen when you’re talking shop with someone who understands the pace, the pressure and the unexpected moments that come with the job.
Each episode shares stories, insights and practical ideas from people who’ve genuinely lived broking, with honest chat and a few laughs along the way.
This podcast is for general education only and isn’t financial, legal, or tax advice. The guests’ views are their own. Bluestone accepts no liability for errors or how you use this information.
It's a Broker Thing
7. When Rates Rise, Brokers Step Up, with guest Rachelle Kroon
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In broking, your clients don't remember the rate. They remember how you showed up when things got tough.
In this episode, Rachelle Kroon shares how she's built Sphere Home Loans on one non-negotiable: the client comes first, always. From navigating COVID lockdowns to today's rising rate environment, Rachelle gets real about why no AI tool replaces a phone call and why uncertainty is actually a broker's biggest opportunity.
If you’ve ever felt the weight of guiding clients through uncomfortable moments, this one will hit home. Honest, practical and full of “you wouldn’t believe this” moments, it’s a reminder of why brokers matter most when rates rise.
Welcome to It's a Broker Thing podcast, brought to you by Bluestone Home Loans. Each episode we'll dive into market updates, practical insights, and real stories for brokers who want to stay ahead, build stronger relationships and grow their business. Let's dive in. Interest rates are up, the pressure's building, and for brokers, this is a moment in time where they can move from a guide to a trusted advisor. In today's episode, we'll talk about how interest rates rising are impacting brokers. We'll look at how borrowers are feeling, and we'll ask how brokers can be a trusted guide for their clients. Joining me today is Rachel Croon, founder and managing director of Sphere Home Loans. I'm your host, Tony McCrae. Rachel, thanks for joining us and welcome.
SPEAKER_00Thank you for having me.
SPEAKER_01Now, right off the bat, I have to declare um Rachel and I worked together for a uh a very short period of uh of time back in uh our banking days. So you've sort of seen it from both sides. You've seen the banking side uh and you've seen the broking um side. What what how did that journey from banker to broker go for you?
SPEAKER_00Yeah, well, uh I guess I was in the a third-party section of the bank, so the mortgage broker section. So I was never actually client-facing, but I was broker-facing. So I guess the luxury that I got from all those years was getting to work with some of the best brokers in the country, which was a real privilege. So I guess when I started my business, I had a lot of experience in credit and understanding how banks worked and understanding how everything worked, I guess, beh under the hood and under the bonnet. And I'd had the privilege of seeing so many great brokers, you know, run their businesses. And I had a really clear idea of what I liked and what I wanted to do, and I guess what I didn't want to be. But what I hadn't done before was actually been client-facing. So it was a big learning experience for me, you know, having always been one removed. It's a very different experience when you're actually at the goal face talking to clients. It's a very different experience than just finding the solution.
SPEAKER_01And and and how did you go, because you're absolutely right, it it is completely different. So, how did you go about um, you know, educating yourself and and and just finding that uh that space to to deal with clients?
SPEAKER_00Oh, I hired really quickly. So as soon as I started, I hired, and you know, you know what you're good at and you know what you're not good at. So what I did was hired people very quickly that I guess were the gaps that I didn't have. Um and two of those women that I hired, you know, 12 years ago now are still with me. So it's been a it's been a we've had that journey. I guess the three of us have had that journey all together and we've grown the business. But I think making the transition from, I guess, banker to broker is you know, it's a it's a great one. You get so much experience before you go, but you also are learning along the way. Um and I see so many uh bankers that come over that have been, you know, lenders in the branch and they come over with a different set of skills. They come over and, you know, having a client base and you know, having had so much client experience, but they've got the different things to learn, like how to actually manage a business and how to grow stuff and how to uh coach. And they're probably the skills I had, but I learned the other skills, like, you know, talking to clients and taking them on a journey.
SPEAKER_01It's a bold move because you know you're still young, but you were really young when when when you did that. And and not only did you just go, Hey, I'm gonna um start a broking business, but I'm gonna hire people, I'm gonna bring them on board. And and and that responsibility level just jumps to whole new levels.
SPEAKER_00Oh, look, it it really does. And I and like I said, I'd I'd worked in that space and I'd seen other people do it. So it's you know, you're not pioneering, you've seen other people do it, and you can kind of learn from their journey. So that was a really privileged place to come from. But it was a big risk, and you walk away from a big salary, and you really need to back yourself when you start a business. So, you know, that was 13 years ago um in June. Um, but I think for me it was, I guess I the skills that I had were I felt were transferable and the things I learned, you just learned along the way. But it was, yeah, it was a huge risk.
SPEAKER_01Yeah. So tell me a little bit about um sphere home loans and um the sort sorts of customers that you you look after or specialties or anything like that.
SPEAKER_00Yeah, so we've got a pretty we've got about eight mortgage brokers now. Um we uh have a we're probably probably a diverse client base, but the majority of our clients would probably be from a younger demographic. We're probably we probably um attract a more aspirational and financially responsible client. They want they want a relationship, they want guidance, they've got big dreams and they want somebody to go with them on that journey. Um so that's probably we even though we have, you know, whether it's first home buyers, investors, um they all want a relationship and that's probably the thing that they have in common. Um as a business, we uh I guess we run a salaried model for mortgage brokers. It's a little bit different to, I guess, your traditional um, you know, contractor model. And I think for us, for me, as the director, that gives me a little bit more control and it gives me a little bit more um, I guess, ability to make sure that every customer or client that comes through our doors gets exactly the same level of service and the same client uh experience. So I think something I was really passionate about when I started the business and having seen, I guess, a different, different angles, I really wanted to be that guide for the client and I really wanted to be the customer to be the center of everything we do. And I've been absolutely non-negotiable about that. Everyone in our business is client-focused. That's just the only thing that every staff member has in common is that they're client-focused, and and our customers feel that. So we have a I guess we have a system that I guess guides people through from when they're buying their first home to when they're building their medical center ten years later.
SPEAKER_01Yeah, sure. And you were recognised last year as a finalist in the uh uh AMAs for uh best customer um service, which Bluestone uh happened to uh to sponsor as well.
SPEAKER_00Thank you.
SPEAKER_01Which was um is a great achievement on that front.
SPEAKER_00It's really special for us.
SPEAKER_01Let's let's jump into um what I'd really like to delve in today. So we've we've we've turned the corner, maybe not a great one, but we're in a um interest rate um upwards trend at the moment, and there may be more to come. As a broker, what's changed for you is we've we've you know, like if we we go back to um last year, we were actually thinking we're in a downward trend and it's sort of turned on a dime. And so what have you had to do in your business and and and it's changed for you in this changed environment?
SPEAKER_00Yeah, so I mean, this is the time as a broker that you've got the opportunity to really stand out. These are the moments of truth that clients think about. They think about how you interacted with them at a time of uncertainty, at a time that was tough. And I really relate it back to COVID. So COVID for us was probably the first time that our business went through something like that. And when that happened, I called other directors of mortgage brokerages that had navigated clients through the GFC. I wasn't in business then, so I didn't know how to handle it. And I contacted other people and said, you know, what do you do? Um, and they gave us, you know, some advice and we guided our clients through that time. I had all of my brokers on lockdown just contacting clients. That's all we did all through those those lockdown months was contacting clients and and had conversations about what that meant for them and how they felt. And that's what people remember. They don't remember whether you save them 10 basis points on a on a product, they remember the way you make them feel in tough times. So basically, I mean our business has doubled since the time of COVID, but the systems and the the strategy is the same. So when rates started to rise, you know, a couple of months ago, and then we've obviously had the uncertainty of of what's happening at a at a from a global perspective, and people are feeling people are feeling scared. And so we're contacting them. And you've got a big client base, you need to have great systems and processes in place to be able to do that. But you just have to do it. You've got to sit down and contact everybody, and people want to know that you're there for them, and they want to know that their strategy still matters and not to die, not to guess delve off course of a strategy because of uncertainty. So that's where we come in as guides.
SPEAKER_01And is has it been a bit of a pivot from um acquisition to servicing, or or are you still balancing the two?
SPEAKER_00Well, we actually had our um, you know, we have we haven't had a dip in in applications. We as a business we process 150 applications a month. So these phone calls that we're navigating, we can't stop the other thing. It's another, I guess, another process we need to do. So we usually have enough staff to cover, you know, contacts of our clients twice a year on top of the normal um acquisition, but this is different. So it's about okay, everyone needs to have the right staffing in place in their teams to be able to make these phone calls. So it is it is a challenge being able to contact all our clients while they're um I guess while they're still working on acquisition because nothing's slowed down. There's no there's no slowdown in volume while this is happening. So but it is really important that, and I have to admit my team are probably working a little bit harder the last few weeks than they do normally. Um I was in at the office at eight o'clock last night and there was a few people still there, but it's just these are the times that matter, and we can have some quiet times a little bit later.
SPEAKER_01Yeah, sure, sure. And um in the market where you are, have have have you seen any shift in in you know property prices, in um uh sort of auction clearance rates and things like that?
SPEAKER_00Yeah, so we work, we're a national business, so we work pretty much the states are all pretty similar to us. So even though we're boat based on the central coast and that's where our staff are, our our clients are very uh spread across the country. Um but from the central coast, I guess if we're going to look at that in particular, um, there hasn't been a shift in prices. There certainly has been a little people a little bit more cautious. And I think people are when there there's some uncertainty, people aren't moving as fast. But I was speaking to an agent uh a couple of days ago and he said he had about 25% of the people through his open homes last weekend than he did two months before, but it didn't change the outcome.
SPEAKER_01Yeah, yeah. Yeah, no, I do a um a quarterly uh webinar with uh Tim Lawless from uh Cotality. And and it's interesting because um although we've seen in Sydney and Melbourne um a little bit of a um slowdown, not a not a decrease, but just a slowdown in the growth. There are other pockets outside of um particularly the more affluent that are actually continue to go gangbusters. And and then if you look at some of the states, you know, WA continues to go really strong. Uh Brisbane um is uh is a fantastic market, and um and with the Olympics coming up, um, you know, they they're expecting to continue to see that growth there. So we're we're sort of we we've got a n a rising interest rate environment, we've got a very uneven property um market uh at at the moment. So while some are maybe feeling it, others are seeing it as an opportunity, I I suspect.
SPEAKER_00Yeah, and I think for a a broker, it's just a time to have a conversation. People aren't it's not going to change the but the market's not gonna change. It just there's a feeling of uncertainty that they need to have a conversation about before they move forward. Because people aren't stopping buying and selling.
SPEAKER_01No. So you're feeling fairly buoyant about uh the market and uh and bullish.
SPEAKER_00Yeah.
SPEAKER_01How are your clients feeling and and and are they changing their behaviors at the moment?
SPEAKER_00Yeah, so I would say especially in the in the invest uh from the investor front, like rate rises for investors means restrictions on serviceability. So there's obviously some investors' strategies need to change as rates rise. Um, and people are making moves, you know, trying to preempt some government decisions that might be coming up in the next month. Um but people make moves based on their own strategy. And I guess our job is to help them or remind them of that strategy and not let these outside noise and influence um and you know, sometimes this media just gets in the way. It's just noise. Like block it out and think about your strategy. Let's let's stay on let's stay on course of what you want to do.
SPEAKER_01So deal in the um the here and now and and but just um be sort of uh diligent of uh any any changes that's right.
SPEAKER_00But I would say, I mean, we've got c uh we have not had seen any slowdown in client behaviour. So no no one's stopping buying or investing. I think it's more so when w when I say we're having conversations, it's more people that are worried about is this going to get somewhere that we can't control. People are worried about the things they don't know about right now.
SPEAKER_01Yeah, yeah, okay. And and um, you know, there's been a lot of media speculation and you know quite frankly, I think the government have been testing the water on uh um reducing capital gains, uh discounts and uh and all of that. Is i uh are your customers is that front of mind for them or are they just getting on with uh with what they do?
SPEAKER_00Yeah, we actually um I actually put a couple of emails out on our community page recently and talked asked about whether the CGT difference would change your strategy. And I was pretty surprised, or well probably not as surprised as I think I am, but not many people would change their strategy based on the changes that they're proposing, or with the when you s when I'm saying the changes they're proposing, I'm talking about the Labour government, you know, proposed changes, maybe not the Greens. If that would have come in, that's a different story. Yeah, but I don't think people will change their strategy based on um, you know, a a change in you know tax that they might be paying in 10 years. People are long like mo mo most of our clients are long-term investors. They're not property flippers. So I guess if you're a property flipper, that might be different. But I mean the the client that we kind of attract are more of a long-term investor. So your long-term strategy isn't changing over a you know a long-term may or may not change government um policy.
SPEAKER_01And are you doing much um first-home buyer and and um of interest in with the the government's first home buyer scheme?
SPEAKER_00Yeah, we are, and we have. So in our team, we have sort of segmented brokers. So we would do segmentation. Um, you and I remember that from our banking days. I do. I do.
SPEAKER_01I launched uh in in my Westpac days, we launched the platinum uh segment for brokers.
SPEAKER_00So we we segment, so we have you know, we have certain brokers that deal with prodominantly with investors. We've got um, and I I work with um a particular podcast and we bring in a lot of first home buyers through that through that forum. But I've got a few brokers that work just with first home buyers. Um, and they might be first home buyers to live in, and they're doing a lot of the government schemes, they're doing the help to buy scheme, the 5%. Um, my if I'm gonna get on my soapbox about the 5% scheme, and this is where I get frustrated, is it's a great scheme. I love anything that will help first home buyers get in. But they're restricting the money that they can leave out, and they're also restricting what they can do with that property. So let's say, and you and I've seen this so in so many cycles over the years, people get into a little bit of trouble after they bought buy their first house, and what do they do? They move back in with mum and dad and rent the house out. Well, if you can't leave a cash buffer out, but you also can't rent that house out because of the restrictions, that's where I foresee potentially some problems. So I think the government scheme is great and we're putting a lot of people into that. But our first home buyer brokers are definitely having the conversation about these are the potential issues. Let's really think about that before we take up the scheme.
SPEAKER_01I love that you guys are doing it because it's it's one of my real concerns with the the five um percent deposit scheme that um, and particularly now we're in a a rising um interest rate environment, it's inevitable that some of these um borrowers will will get into a little little bit of strife. And and you as as a lender, we want the flexibility to be able to give them options to be able to move back in with mum and dad and and and and and maybe rent it out for a period of time. But as a lender, we're left exposed uh because the the scheme falls over at that point. Yeah, that's right. So I love that you guys are um uh are doing that and and giving that guidance.
SPEAKER_00There's probably a few clients that we would have maybe encouraged into a different strategy because of that, you know, more of a parental guarantee rather than a government guarantee. And a few of those have already rented their houses out. So it is um it is something that people need to consider.
SPEAKER_01Yeah. So we've obviously um seen interest rates um go up. That does naturally put customers under um additional strain and and and and some um pushes them um you know further towards that edge. What are you doing with those clients and how are you supporting them and uh and working with them?
SPEAKER_00Yeah, so I think it's just about and it's coming back to, I guess, what the client's strategy is and what their needs are. So if you're talking to a first home buyer that may be bought in a lower rate environment, it's a very different conversation to an investor that's trying to hold multiple properties through this time. So, you know, for the first home buyers, it's really about talking about their budget. It's really about, hey, you know, there's the potential that rates are going up. You know, I know you could afford the loan at that, but have a look at your budget and see if you're really allowing that to happen. But for investors, it's making sure there's cash buffers, liquidity in their portfolio. Um, I think a lot of people are, you know, maybe a few months ago adjusted their portfolio and their lending to make sure their um, you know, their finances was going to weather the storm that may come or may not, but hey, let's make sure you've got the cash buffers to get through what potentially could happen.
SPEAKER_01Yeah. So it it it sounds to me that uh the sphere model is the um you know, really the the the life of the customer as opposed to the pure just their transactional or life of loan.
SPEAKER_00Absolutely. But you need to be able to allow the broker to do that. So you need to be able to put enough people in their team to make sure that they're they can do that. Because you if your average broker, you know, writing and trying to do everything at once, it can get really hard. So I think it from you know, from my perspective, it's making sure that they've got the ability and time in their day to call that customer.
SPEAKER_01Yeah, and and and and I s I suspect actually really knowing your customer, being curious with your customer, um provides the right to be able to um give that advice and guidance through times like this.
SPEAKER_00Yeah, and not everybody wants to talk to their mortgage broker at this time, but the ones that do, we need to make sure that they know that we're there for them and that we're approachable. Um, you know, some people need to be reminded, hey, there's no silly questions and it's okay.
SPEAKER_01Yeah, and as a lender, you know, we we we really can encourage mortgage brokers to be having those conversations and encouraging their customers if they are in a little bit of um pressure um to contact us. And um, you know, the there's there's normally a way to navigate through these things and and and and the the hard luck stories, um, we don't want them. We we we we we don't need those either. And so we're really keen to have that engagement.
SPEAKER_00Yeah, and a good conversation really can stop that happening.
SPEAKER_01Yeah, absolutely. So um as we look forward, um what advice and and and and steps would you give to other brokerages um to navigate through um this uncertain time?
SPEAKER_00Yeah, look, and I was in a meeting the other day and there was a few different brokers and we're just having a chat about how we're gonna tackle this. And a few of them were saying, Oh, you know, I'm using AI and I'm getting all these emails out and I'm doing this mass contact, and and that's great. Mass contact is great, but there nothing is going to replace picking up the phone and calling your client. Um there are clients that want to hear from us at these times, and even if it's just, hey, how are you feeling right now? And I think the the the only piece of advice I would have is that to have some sort of system in place that every client of yours can get a quick phone call.
SPEAKER_01Is that um in system, is that a process or is that actually you've invested in um a CRM that uh you know it allows you to just um you know sort of automate that uh approach?
SPEAKER_00We uh we are using very backward systems. We are not I wish to say, I want to say that I'm this tech person and that's getting all you know, we're just putting our database and we're just calling them one by one.
SPEAKER_01Right, okay. So it really is it's the it's the old list uh and I go down the list and uh kiss off with the uh with the customer. Beautiful. So in that process, uh have you got a story you can shell um share with us about you know reaching out to customers and how you've had um or your team have had a real impact um and and and changed things for them?
SPEAKER_00Yeah, so I guess when you talk about I guess client impact, we're talking about that proactive contact. And I I'm gonna I'm going to go back to COVID. I know this isn't like COVID, but it is, it's that feeling of uncertainty that kind of draws the two together. So in in COVID, we were making those calls and and the brokers and I were making, I don't know, it's up to 80 calls a day back in those, in those, in those times. And then we played a game at lunchtime to break it up. But um one of the calls I made was to a client that had two investment properties and their own home. And as I made the call, they were saying, we're actually just getting ready to sell the investments. We're freaking out. Um, and we're really worried. And I said, tell me more about that. Like just tell me more about what we're doing because I'm looking at your notes here from when you bought the properties and you're planning on holding those to retirement. So just what's changed? Has anyone lost their job? And it was just that feeling of anxiety of one of us may lose our job and then the the market might crash out that they were thinking of selling and and um, you know, just making sure that they were safe and didn't have the anxiety. So it's all about the feelings. They didn't want to have the anxiety over the period. But what we did was just did some scenarios for them based on if we got some cash buffers out, if we and put some cash in an account to make them feel more comfortable about the next bit of time. Because at the moment, the stress is we can't afford to hold these properties if something goes wrong. So let's let's talk about taking some of that pressure out. Um we all they end up holding the properties, but we all know what happened to the property prices just after COVID. And No one lost their like uh in this particular instance, they didn't lose their job. They actually had rates go down and they would have really regretted selling a property at a time because of a feeling of anxiety. So I think those proactive calls are really important and I think they're just as important now as they were in COVID.
SPEAKER_01Yeah. So again, it comes back to that um engaging, asking the right questions, and then presenting options um to your customers, which is is no different to how we look at the world as well.
SPEAKER_00Yeah, and we don't give advice, we give options. So it's about giving the scenarios. So, you know, when someone's deciding whether to do A or B, it feels an easier conversation to sit down and have when you've got the numbers in front of you. So if I walk around my office, the the word that is said the most out of any other word is scenario. It's about the scenarios because we get the scenario. So that those clients just needed the scenarios that they had available to them so they can sit down and have an informed discussion about their options rather than, you know, making emotional decisions based on, you know, fear.
SPEAKER_01And what what role do partnerships, uh referral resources or you know, both ways play in in that particular process? And and have you seen them become more important uh in times like now or in times like COVID?
SPEAKER_00Yeah, well, we so all of our clients, we talked about the SAROM, so all of our clients are databased via the referral partner. So yeah, obviously that makes a huge difference because where the client comes from says a lot about what their needs might be. So, you know, that I I talked about one of our referral partners that that we work with that gives us a lot of first home buyers. You know, we can we can definitely database that out and call all of those clients. And they're the ones that have, I guess, different needs to, you know, you're a more sophisticated investor or your um, you know, just a, you know, your average family. They have that, they have different needs, but the referral partner is really important. Um, and our mutual respect of the referral partners are really important. We only work with people that have similar, I guess, I guess, similar views on client service as we do. We're really particular with who we work with and our referral partners would have the same, um, especially our main referral partners would have the same feelings about about with us about clients and wanting to do the right thing.
SPEAKER_01Yeah. So if I was to ask you um a bold prediction for uh the next um I'm not gonna say 12 months, we'll just go the next six months. Um what what you know what what do you think is gonna be the most impactful thing that uh occurs in our market?
SPEAKER_00Oh look I think that people need to be prepared for um, you know, a more restricted time. Obviously there's costs going up and things are happening, but I feel that everything's gonna be just fine. Like I feel like everything is going to be just where it is. Property prices are not going to come anywhere close to redacting. I mean, we've got markets inside markets, but I still think the majority of good markets, and you mentioned Brisbane before, I've got a huge amount of clients investing there. I don't I don't see any worries about the next six months. I think it's gonna be uh for property in particular, we have a massive supply issue. So I still think we're gonna be continuing to flow on the way that we've been flowing. I think brokers are gonna be particularly busy over the next six months, and I think we're all going to um weather the storm.
SPEAKER_01Yeah, I I I tend to agree because I think we've still got an undersupply um in the market. Um we've still, although we've we've pulled back a little bit on um immigration, but it's interesting. You look at the model of um uh people that come to Australia, they spend their first two years renting typically and then then buy after that point. So we've got a whole wave of uh of um immigrants when we had um record levels that haven't yet bought into the market. And so I think that's going to be um a positive sign to ensure the property prices um you know stay um stay strong moving forward.
SPEAKER_00Yeah, and I think if there's one market to watch in the next six months, it'll be first home buyers.
SPEAKER_01First home buyers. Good or bad?
SPEAKER_00Good. Good. I think there'll be a huge amount of people entering the market. I really do, yeah.
SPEAKER_01Yeah, well that's great to hear because I like I think um you know the the more we can do in sensible practical ways to help first home buyers is really important because we know that um home ownership um is actually a pathway to a whole heap of uh positive signs for society, for individuals, for um for self-uh esteem and self-worth.
SPEAKER_00That is right. So yeah, I think um especially Gen Z in particular really need to be encouraged more than anyone to that home ownership is possible for them.
SPEAKER_01Fantastic. Well, Rachel, um I've got to thank you for your time today. Um your great insights. I know um those that are listening and and and broader people in the broker would uh have found them um invaluable. And uh it's also great to uh catch up again after uh all these years.
SPEAKER_00Great to see you too.
SPEAKER_01Thank you. And thank you to our audience for uh for joining us today. Don't forget to subscribe or join the Bluestone community for more insights and updates, and we'll catch you on the next episode. That's a wrap of this episode of It's a Broker Thing, brought to you by Bluestone Home Loans. We love sharing ideas that help you stay ahead because backing brokers, well, it's a Bluestone thing. Hit subscribe and join us next time for more insights and stories that keep you in the know. This podcast is for general education only and isn't financial, legal, or tax advice. Guest views are their own. Bluestone accepts no liability for errors or how you use this information.