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In a recent survey, brokers have expressed concerns about the impact of rising interest rates and longer processing times on mortgage refinancing.
According to Equifax, a data analytics company that surveyed 569 brokers, almost 25 per cent of mortgage brokers anticipate an increase in refinancing loans this year.
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However, due to the combination of rising arrears, higher interest rates, and extended loan application approval times, brokers are finding it increasingly difficult to secure refinancing options for their clients.
The Australian Bureau of Statistics (ABS) released new data for March 2023, indicating that the value of loans being refinanced between lenders reached a record high of $21.2 billion, marking a 6.5 per cent increase.
This surge in refinances is driven by borrowers seeking cheaper interest rates from competitive lenders.
Equifax data also revealed that refinancing inquiries accounted for up to 44 per cent of all mortgage demand in April, with brokers expecting this trend to continue.
In fact, 22 per cent of surveyed brokers plan to take on more refinancing loans for individuals over the next 12 months.
However, the latest ABS data for April showed a noticeable decline in refinancing activity due to the increasing difficulty of switching lenders, particularly with lenders assessing borrowers based on a 3 per cent serviceability buffer.
Executive general manager at Equifax, Moses Samaha, highlighted the challenges faced by mortgage brokers in securing refinancing for their customers, citing higher interest rates and longer loan approval times as key obstacles.
Mr Samaha stated: “Mortgage brokers are struggling to keep up with demand as borrowers look to refinance and ease the cost of living pressures.”
The survey conducted by Equifax also indicated that 38 per cent of brokers identified raising interest rates as the main cause of significant delays in application approvals over the past year.
While concerns regarding service-level agreements decreased from 56 per cent of respondents in 2022 to 31 per cent this year, they remain an important consideration for brokers.
To stay competitive, 16 per cent of brokers have conducted more borrowing capacity assessments, while 15 per cent have intensified lead generation and follow-up efforts.
Approximately 21 per cent of brokers plan to utilise digital and AI tools to improve efficiency. Additionally, 16.5 per cent of respondents aim to adopt new digital solutions for process automation within the next 12 months and an additional 17 per cent plan to leverage digital solutions to enhance the customer experience.
Brokers are turning to digital ID verification, client affordability assessment platforms, and business process improvement tools to elevate customer satisfaction, according to Mr Samaha.
“While there are areas where broker and customer expectations may not align perfectly, delivering a top-notch customer experience remains crucial to the broker community,” Mr Samaha said.
“By leveraging emerging technologies, brokers can better understand their customers’ needs and continue to be trusted partners to consumers, especially during turbulent times.”
[Related: Brokers left behind by slow digital ID adoption: Broker]
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