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Broker sentiment towards business growth has showed marked improvement
2009 will be remembered as an important year in the evolution of the third party distribution channel.
It was during 2009 that the full impact of commission cuts were realised, not to mention the ongoing issues created by the GFC – including slower property markets. Brokers were rightly concerned about business prospects.
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While there are still numerous challenges facing brokers in 2010, such as impending licensing, the results of this quarter’s The Adviser Index highlight solid broker attitudes towards business expansion and loan volume growth.
The Adviser Index hit 40.5 for Q1 2010 – up 11.2 percentage points on Q4 2009.
And all indicators point to strong broker business over the coming quarter, spurred by investor and refinancing activity.
First home buyers – buoyed by increased government grants and concessions – kept broker business turning over during most of 2009. Indeed, this market segment was the key focus for many brokers.
As we move into 2010, the bourgeoning market segments of investors, refinancers and upgraders/downsizers are expected to pick up where the first home buyer market stepped off following the wind back of government incentives at the end of 2009.
Both the investor and refinancing markets are set to generate increased volumes over the coming quarter, according to the survey respondents, registering 45.6 per cent and 37.2 per cent respectively.
This is up 34.3 per cent (investors) and 17.5 per cent (refinancing) on the same time last year, and is in tune with the findings in Q4 2009 – highlighting consistency within these market prospects.
Overall, the majority of respondents expect loan volumes to increase over the coming quarter – up 1.0 per cent on Q4 2009’s findings.
Respondents’ views towards the overall economy were fairly consistent compared to the Q4 2009 findings. The largest shift was the 9.5 per cent drop from last quarter in the number of respondents that expect rates to rise over the next quarter – now accounting for 85.3 per cent of respondents.
Summarising respondent findings on economic issues, it would appear that the overall sentiment towards the economy is positive, with the majority of brokers believing that economic conditions are better than the quarter prior. Moreover, 63.3 per cent of respondents believe that the RBA is doing an effective job of controlling inflation – a figure that has risen by 3.2 per cent from Q4 2009.
Notwithstanding these results, the majority of brokers believe the current RBA interest rate will have a negative impact on the demand for home loans over the coming quarter.
