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Despite facing challenges such as recessionary threats, rising rates, and persistent inflation, brokers have observed some positive developments in 2023.
The year concluded with the Reserve Bank of Australia (RBA) maintaining December’s cash rate at 4.35 per cent. However, the ongoing inflation at 5.4 per cent and higher rates have significantly impacted Australian spending habits throughout the year.
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Consequently, many brokers have noticed borrowers adopting creative approaches to enter the housing market, such as moving in with parents to save, co-owning properties with friends or family, and adjusting their expectations due to serviceability buffers restricting entry into the market.
Amy Small from Small Local Brokers anticipates that co-ownership policies will continue evolving in the coming year.
“I noted a few battles convincing lenders of co-ownership situations for first home buyers especially if they were opposite genders,” Ms Small said.
Despite the notable challenges faced in 2023, Ms Small expressed gratitude for certain developments.
“It has been nice to see the removal of cashback. This type of marketing encouraged loan churning, which is not what us as [brokers’] core value represents,” Ms Small said.
Earlier this year, in a bid to attract new customers, banks initiated cashback deals – some as high as $6,000 – resulting in a surge of refinances and clawbacks for many brokers.
While relieved to see the cessation of cashback offers, Ms Small acknowledged that clawbacks remained a significant issue heading into 2024.
“I am a small business and have had the occasion that so many clawbacks have resulted in no profit and sometimes my monthly costs are not covered through no action of myself, but purely a client selling or separating,” Ms Small said.
“The market moves faster than every two years the average clawback period and this needs to be changed to keep up.”
Technology advancements
2023 saw significant advancements in technology, including the integration of AI like ChatGPT and increased investments by lenders to expedite application processes.
Suvidh Arora from Cinch Loans highlighted how the use of technology and its integration with lender systems enabled clients to achieve better outcomes.
“Some of the lenders have also joined the digital revolution, which is making processes a bit less cumbersome for brokers and clients alike,” Mr Arora said.
“The focus of some of the lenders on helping their clients coming off rate cliffs, and ensuring they get competitive interest rate offerings instead of looking elsewhere, has been refreshing.”
Despite these improvements, Mr Arora acknowledged there’s room for growth.
“I would personally like to see more and more lenders use technology to improve the overall experience of the end user,” Mr Arora said.
“I would also like to see lenders becoming more uniform in how systems are designed, so there is less friction in the lodgement and approval processes.
“It would also be amazing to have most of the lenders ensuring that their existing clients are looked after with the best possible deals upfront before a refinance is processed, without relying on ‘retention teams’, rather than just focusing on new business.”
Looking ahead to the new year, Arora anticipates increased buyer and refinance activity in 2024.
He remains hopeful that the government will continue supporting first-time home buyers and single parents, enabling more Australians to achieve their home ownership dreams.
[Related: Banks scale back cashback offers amid easing competition]
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