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Easing serviceability, falling interest rates, and strong equity positions have resulted in broker clients feeling more positive about their financial outlook, according to a new survey.
Borrower sentiment is improving and more broker clients are finding it easier to refinance than in previous months, according to a new broker survey.
The February 2025 Member Sentiment Survey, conducted by the Mortgage & Finance Association of Australia (MFAA) in March, heard from 321 mortgage brokers and found that more than 80 per cent believed clients were feeling either positive or neutral about their financial outlook.
Around half (49.8 per cent) of brokers reported that their clients felt “neutral” about their financial outlook, with one-third feeling “positive” (32.7 per cent).
The top reasons cited by brokers for positive sentiment were the (lowering) interest rate environment, the equity position of clients and job security.
For those who believed their clients were neutral, the driving forces cited were lowering interest rates, the cost-of-living environment, and housing supply and availability.
For the 17.3 per cent of brokers who said their clients were feeling negative about their financial outlook, the predominant cause was the cost of living.
Moreover, when asked whether clients were feeling stressed about their mortgage repayments, brokers said that stress levels were easing.
Around 9 per cent of broker respondents said that none of their clients were stressed about their repayments – the highest proportion recorded since previous surveys in July 2023, February, and August 2024.
Two-fifths (40 per cent) of respondents believed that 1 per cent and 5 per cent of their client base were stressed about repayments, while 27 per cent said this was between 6 per cent and 10 per cent of their clientele.
Less than a quarter (24 per cent) said more than 10 per cent of their clients were stressed. This was around half the proportion recorded 12 months ago (when 51 per cent of brokers said that more than 10 per cent of their clients were stressed about repayments).
Servicing appears to be easing
Similarly, brokers said that servicing pressures appeared to be easing. While brokers are still seeing servicing-related challenges when refinancing, around 10 per cent said they thought it was easier.
The proportion of brokers who said it was harder for clients to refinance also nearly halved, falling from 82 per cent in February 2024 to 42 per cent in the February 2025 survey.
Commenting on the survey findings, MFAA CEO Anja Pannek told The Adviser that serviceability pressures may have eased given strong employment, growing equity positions, lower interest rates, wage resilience, stage 3 tax cuts, and a broader adoption of the 1 per cent buffer exception.
The MFAA survey also revealed that more brokers were seeing refinancers use the third-party channel for the first time. Ninety-five per cent of respondents said they had clients using a broker for the first time to refinance, with 98 per cent stating they had helped clients secure a discount.
She said it was clear brokers believe borrower sentiment has improved, stating: “There has been a huge amount of refinancing activity over the past 12 months as brokers worked with clients to restructure their loans as the cash rate climbed, which may have helped clients understand serviceability buffers and refinance their loans. This obviously, in turn, helps clients feel more confident.”
Pannek told The Adviser that the survey showed there were “glimmers of cautious optimism in the system”, saying that the survey was undertaken around the time the cash rate was reduced for the first time in four years.
The MFAA CEO said: “While the cost of living overall is still a key issue, brokers are reporting that mortgage-holders are feeling better about their ability to pay their mortgage or refinance to a better deal, which is great news for Australians.
“They have been buoyed by an improved interest rate environment with the Reserve Bank cutting the cash rate to 4.10 per cent in February, with the possibility of further interest rate cuts to come as our global geopolitical environment remains dynamic.
“Strong property equity levels and low unemployment are all boosting home owner confidence – and as inflation eases, confidence rises.
“Brokers played a critical role when borrowers were doing it tough in an economy affected by high interest rates – they have educated their clients about being financially fit, helped them negotiate a better rate with existing lenders, consolidated debt to improve cash flow, or refinanced to a better product.”
Pannek told The Adviser one of the key messages for brokers was that “there are people out there who need your guidance, and you can actually help them take that next step with whatever it is ... tweaking their home loan rate or getting ready to refinance".
The February 2025 Member Sentiment Survey echoed findings from the Reserve Bank of Australia’s (RBA) April Financial Stability Review, which found that arrears levels and the volume of borrowers at risk of falling behind on their mortgage repayments have dropped.
Just 1 per cent of all variable-rate owner-occupier borrowers are now at risk of going into arrears, the RBA found last week.
Moreover, almost all mortgagors benefited from home values that exceeded their mortgage balances, often by a substantial margin.
Only around 3 per cent of all borrowers were estimated to be experiencing a ‘cash flow shortfall’, putting them at risk of falling behind on loan repayments, the RBA said.
Serviceability may also further ease should the Coalition be elected into power following the 3 May federal election, after the opposition said it would instruct the Australian Prudential Regulation Authority (APRA) to consider the impact of its rules on access to housing and reducing what it deems to be an “overly cautious serviceability buffer” (currently 3 per cent above the advertised rate).
Related: Pressure on mortgage holders expected to ease: RBA]
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