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Investors and downgraders are expected to drive a vast majority of next year's property activity, but will have little interest in using brokers, according to a new report.
With 45 per cent of loans – an all-time high – being written via the third-party distribution channel, brokers need to refocus their business for a changing consumer, according to JP Morgan’s Australian Mortgage Industry report.
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While refinancers and first-time buyers have the strongest preference for brokers, they are currently among the least likely to make a property transaction in the next 12 months. And according to the report, those most likely to move on property – solo investors and down-traders – are unlikely to approach a broker.
JP Morgan banking analyst Scott Manning said that while lenders have been keen to expand in the broker channel, it’s up to brokers to keep the channel’s growth at record highs.
“We’ve seen lenders commit to brokers by tweaking commissions, but it’s not about commissions for brokers,” he said. “What needs to happen is brokers need to show the sectors of the market that aren’t likely to engage them how valuable they can be.”
Speaking with The Adviser, managing director of 1st Street Home Loans and top broker Jeremy Fisher said investors were one of the tougher client bases to crack.
“It doesn’t surprise me that brokers are popular with first home buyers because they are the ones that are generally younger and need a helping hand,” he said.
“It’s the older investors that are tougher to crack – the ones who have been in the game a long time and have a sense of customer loyalty to the relationship they’ve forged with their bank.”
According to Mr Fisher, breaking in is simple if you can get face-to-face time with the investor.
“Once you get in front of them and they see the value propositin for what you can offer, which is over and above what they’re currently getting, I find that’s where we win the business,” he said.
Broker at Seven Point Finance Brett Amos agreed that investors would be the most popular market sector in 2014, but had a tip for brokers who want to break into the investor sector.
“Our firm went along to a lot of property information nights that are run by agents linked to developers,” he said.
“It was great for us on two counts. Firstly, a lot of the customers were very interested in investment property, and secondly, not many of them had connections to brokers seeing as they were just testing the water by coming to these events.”
