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One successful broker has seen a “doubling” of customers asking for fixed rates following “all the shocks of 2016”, particularly the election of Donald Trump to the US presidency.
Speaking to The Adviser, Graeme Salt of Origin Finance remarked that since the election of Donald Trump, his brokerage has seen a “doubling in inquiries” for fixed rates, despite the recent rate hikes by lenders.
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“In the GFC there was a flight to safety when borrowers were just worried and they went to the lenders who they knew, the big names, and moved away from the small lenders,” Mr Salt explained.
“Here it's different; here what we're seeing is a flight to certainty. There's comfort in knowing what they're doing after all the shocks of 2016. Just by taking out a fixed rate, even at a slightly higher interest rate, it’s a premium they're paying but it gives them the certainty of safety.”
Mr Salt said shocks to the global economy, particularly Brexit and Donald Trump’s presidency, have left borrowers asking ‘What’s next?’.
“I think people are thinking that even though the economy is doing OK, they need to take a slightly more ‘bulk and brace’ approach,” he said.
To help his clients navigate the uncertain global economic climate engendered by these events, Mr Salt said he has been placing an emphasis on helping them workshop the ‘pros and cons’ of both options.
“[I’ve been saying] it’s best to have your fingers in a number of pies at the moment … so what we're finding is that a lot of customers will go for a split, a variable split, a three-year split and a five-year split, backing a number of horses just to give them that security,” Mr Salt said.
For other brokers seeking to help their customers navigate the complex global economic environment, Mr Salt reminded them that ultimately it depends on the customer’s needs.
“It depends on the customer's circumstances, and it's not always about the financial considerations as to whether they want a fixed or variable loan,” he concluded.
[Related: Broking boss says US election will have ‘massive consequences’]
