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As lenders are passing on the June rate hike to mortgagors — and with more hikes expected to come — the MFAA has said borrowers ‘would be crazy’ not to seek a broker for help.
On Tuesday (6 June), the Reserve Bank of Australia (RBA) lifted the cash rate for the 12th time in 13 months, increasing it by 25 bps to 3.85 per cent.
Several lenders have already announced that they will be passing on the full 25-bp rate rise to mortgagors, with AMP increasing interest rates on new variable-rate home loans from today (9 June) — and from 12 June for existing customers — while Westpac will hitch up rates on both new and existing customers from 20 June.
Speaking to The Adviser after the moves, the chief executive of the Mortgage and Finance Association of Australia (MFAA), Anja Pannek, highlighted that more rate rises are likely on the horizon and that borrowers would benefit by turning to brokers for help navigating their options.
Ms Pannek said: “The increasing interest rate environment and cost-of-living crisis are presenting challenges for borrowers, we have to acknowledge that.
“I think the reality is that we will likely see more rate rises through the course of this year.
“This environment poses challenges to not just borrowers who are coming off very low fixed rates but also to those borrowers with higher variable home loans. Against this backdrop it’s important to remember mortgage brokers are part of the solution for home loan borrowers.
“Mortgage brokers are helping borrowers understand their options, whether it be to negotiate a better rate with their incumbent lender, or to look for a more appropriate loan to refinance into.
“Now more than ever — if you have a home loan you need to be seeing your broker to understand your options — you would be crazy not to.”
The MFAA CEO highlighted that the association recently launched a consumer marketing campaign, which has been live across several digital and media platforms, highlighting how important it is to seek out a mortgage broker.
She revealed that the campaign has so far recorded over 2.5 million impressions and led to heightened traffic to the ‘Find a broker’ tool on the association’s consumer website mortgageandfinancehelp.com.au.
“This translates to more awareness of the immense value that mortgage brokers provide to consumers and that reaching out to a mortgage [broker] just makes sense in this environment,” she said.
While around 70 per cent of all mortgages are written by brokers, recent research has shown that only a small proportion of existing borrowers are asking their broker for help.
Indeed, the ‘Australian mortgage and rental affordability survey’ conducted by research firm McCrindle for the Finance Brokers Association of Australia (FBAA), has revealed that only 11 per cent of people surveyed had asked their broker for help with mortgage stress.
Speaking to The Adviser, FBAA executive director Peter White AM commented that brokers therefore need to “proactively contact their clients/database and ask how they are going and how can they help”.
However, Mr White flagged that the survey had also shown that 40 per cent of mortgage respondents said their mental health had been affected, adding that brokers therefore need to be “mindful that many borrowers are under mental health pressures”.
He concluded that brokers should also ensure they look after their own mental wellness, stating: It’s ok not to be ok’ - we’re in very different times and it’s not easy for anyone.”
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[Related: Rate hike to 'tip people into financial hardship', warns broker]
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