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The vast majority of brokers believe that refinancing clients is “the best chance for mortgage brokers to have a profitable 2020”, according to a new survey.
According to a survey of mortgage brokers conducted by mortgage broker platform HashChing in mid-May, the current surge in refinance activity is helping bolster broker income and will be a lifeline for profit this year.
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More than half (56 per cent) of brokers responding to the survey* said that they had seen an increase in customers looking to refinance their homes since the outbreak of COVID and the drop in interest rates.
Moreover, three-quarters of brokers (77 per cent) said they saw refinancing as “the best chance for mortgage brokers to have a profitable 2020”. Indeed, refinance activity is becoming increasingly important to brokers as a source of income – as the volume of business loans and new mortgages drop dramatically during COVID-19 – coupled with an increase in non-income generating activities (such as repricing requests).
Speaking to the figures, the CEO of HashChing, Arun Maharaj, said that as COVID-19 social distancing rules ease, there would still be a lasting impact on the Australian economy, and brokers would need to be able to adapt to the changing environment to survive.
“The majority of respondents in our latest survey (77 per cent) said they saw refinancing as a key growth driver in 2020,” Mr Maharaj noted.
“Fifty-five per cent of brokers have already seen an increase, suggesting that this will be an area of increased competition in the months to come.
Interestingly, just under 60 per cent of brokers indicated they saw first home buyers to be the winners from “the coronavirus disruption”, ahead of domestic investor (35 per cent) and foreign investors (7 per cent).
The HashChing CEO said that this could “put some of the digital customer acquisition and nurturing skills we have seen brokers develop these last few months to the test”.
Mr Maharaj continued: “There’s a lot of pressure on mortgage brokers, so we sincerely hope these avenues of growth come through.”
Interest rate outlook
When asked about their thoughts on the property market more generally, nearly half of brokers surveyed (55 per cent) said they thought the RBA’s decision to lower interest rates was a “good thing for the property market, given the current pandemic situation”. However, more than a third (36 per cent) said it did not make a difference.
The majority of brokers (73 per cent) said they believed that the current cash rate of 0.25 per cent would remain for at least another 12 months. Indeed, the central bank has ruled out further adjustments to the cash rate, which governor Philip Lowe expects to remain unchanged “for some years”.
Mr Maharaj commented: “We’ve seen a lot of talk from industry bodies and government officials on what can be done to revitalise the struggling construction sector – big, exciting fiscal stimulus in this area appears to be needed if only to bring optimism back to the market,” he said.
Brokers were also asked whether they felt the media was “fairly portraying what’s happening in the property market”. While 80 per cent said they did not feel that media reports reflected their own experiences of the property market, it was disclosed how it differed (for example, whether they believed it was too positive or too negative).
*HashChing has not disclosed how many brokers responded to this survey.
