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Australia's economy may be returning to health, but brokers hoping to see a repeat of the 2002 boom will be bitterly disappointed.
The shadow of the ‘worst recession since the war’ seems to have swept quietly over our shores. Despite dire predictions, the unemployment rate has crept up slowly rather than soared, and our economy has stalled but not crumbled.
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That’s not to say that things haven’t been tough.
The housing market has been subdued over the last 12 months but it is now rapidly making up for lost time. The shining light for many brokers since the RBA started slashing rates last September has been the charge of the first home buyer.
Buyers fleeing the rental trap have accounted for a significant chunk of finance commitments over the last nine months peaking at 27.1 per cent in June – and still account for around a quarter of all loans.
The slack from the waning first home buyer surge is now being taken up by investors and refinancers which is another positive sign that the wheels are far from coming off the property market.
But there are stark differences between this recovery and that enjoyed by brokers in previous cycles. A horrendous shortage of liquidity continues to plague lenders and there is little evidence to suggest this will ease any time soon.
The banks have made it clear that they will move rates up independently of the RBA as the bank bill swap rate (BBSW) continues to move in a generally upward trajectory. And it is now apparent that the RBA may only be a month or two off tightening its monetary policy as our old friend inflation lurks ever closer.
Brokers also face a more stringent regulatory regime and those who don’t take time to comply will fast find themselves left by the wayside.
The right place, right time scenario which set so many brokers up at the beginning of the decade will not cut much ice this time around.
Today the market overwhelmingly favours the professional rather than the pioneer and it will be this segment of the industry that will stand the greatest chance of capitalising on opportunities in the approaching market phase.
Brokers with the right lender partnerships, a clear measure of what constitutes quality business and a true focus on the client’s long-term financial well being will be the winners in the new era of mortgage broking.
Alex Whitlock
Publisher, Mortgage Business
