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In what is a buoyant market compared with 12 months ago, brokers see refinancing as the main thrust for business activity.
According to The Adviser’s latest weekly straw poll, 41.4 per cent of brokers said business was most active in refinancing, while investors came a close second with 36.9 per cent.
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Of 309 respondents, 16.5 per cent said upsizing and downgrading provided them with the majority of their business, while only 5.2 per cent attributed the majority of their business to first home buyer activity.
Loan Management Services director Lisa Sanders told The Adviser that she had seen a “dramatic surge” in the level of refinancing activity.
“I’m finding a lot of my clients are first refinancing their home loans and then using the equity that has been freed up for an investment loan,” she said.
But while refinancing activity is providing the majority of brokers with the majority of their business, Ms Sanders said it was no surprise to see investor activity also accounted for a significant portion of broker business.
“The two really complement each other,” she said.
Although Ms Sanders could not predict how long refinance and investment activity would remain dominant, she said the future of the refinance and investor market will be determined by credit policy.
“Lowering LVRs and tightening the availability of credit will have a direct impact on borrowers in 2010, more so than rising interest rates” she said.
And Independent Mortgage and Financial Services director Helen Lenyszyn agreed.
“I don’t think a 25 basis point rate rise in March will necessarily deter investors,” Ms Lenyszyn told The Adviser.
“Investors are generally mindful that rates will increase eventually. They generally factor into account the possibility of rate rises when determining borrowing affordability.”
Intelligent Finance managing director Justin Doobov said that while investors also accounted for a significant portion of his business, brokers should not disregard first home buyers just yet.
“We wrote almost equal first home buyers to investor loans last month. We’ve got tonnes of pre-approvals with first home buyers just waiting to go. Many of these are top-end buyers looking at $1 million to $2 million properties, so they’re not overly concerned by the winding up of the FHB government initiatives,” Mr Doobov said.
