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ISCOVER
2016 looks set to be another year of change. The going has been good, with booming house prices and healthy domestic and offshore investor appetite, but a combination of greater regulatory scrutiny and an unstable housing market may make some brokers nervous.
And you can understand why.
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Investors have been the dominant target for brokers for some time. But there are two powers at play that might start to change this.
The first is APRA’s measures to restrict investment lending. It didn’t have an immediate effect, but recent data has shown investor loans have started to drop off, falling by almost $2.6 billion in September.
If investors start to leave the market, the government’s efforts to restrict foreign investment pay off and housing prices remain cool, we could see the return of first home buyers. This means updating marketing efforts to educate a digitally savvy but inexperienced buyer.
The second is the bank rate rises. While they are still at relatively low levels, banks are passing on funding costs so existing home owners might be feeling nervous about the prospect of further rises and be prompted to shop around. This could make refinancing a bigger market for brokers next year.
When initiating those conversations with existing clients, one of the first steps to take is to check whether they are on top of their finances. Exploring complementary products, like a debt consolidation loan, can help protect clients from exposure to interest rates. We’ve been able to source personal loans from 4.9 per cent per annum, so the cost of debt is also attractive.
At the same time as the emphasis on certain target markets might change, brokers also have to contend with a stricter regulatory environment. A lot has been written about the increased red tape burden on brokers and financial planners as a result of the Murray Inquiry.
The introduction of the National Consumer Credit Protection Act 2009 has impacted all brokers as well as organisations like Fair Go Finance. Like us, the financial planning and broking industry may see people leave the market, but those who operate reputable businesses and are willing to invest in training, technology, compliance and systems should survive.
To summarise, while the future may be looking a little uncertain, it’s clear there are potential strategies that can be put in place to prepare your business for 2016. These include:
• re-evaluating your marketing strategies;
• ensuring your dialogue with existing clients explores all refinancing opportunities; and
• embracing regulatory changes.
With 2016 only a few weeks away, giving due consideration to next year’s strategies can help you position yourself on the winning straight, just like Prince of Penzance did at the Melbourne Cup.
