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Sentiment towards growth has been dented by the rising rate environment
The upward interest rate cycle is starting to impact broker business - with findings from the Q2 The Adviser sentiment survey highlighting an overall drop in optimism towards business growth and how the government is handling the economy.
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Three hikes to the official cash rate this year - each of 25 basis points - have collectively impacted broker perception towards the health of the economy, according to The Adviser's latest quarterly sentiment survey.
Just 15.3 per cent of respondents believed that the economy was in a better position than it was in Q1 (a 30.8 per cent drop). Overall, 31.7 per cent of respondents thought the economy had worsened - an increase of 10.6 per cent since last quarter.
Summarising respondent findings on economic issues, it is clear that overall sentiment towards the economy is waning, with more than 75 per cent of brokers believing that the current RBA cash rate will have a negative impact on the demand for home loans over the coming quarter.
Moreover, 69.4 per cent of respondents believe that the government is not doing a good job of managing the Australian economy - a 21.7 per cent increase from Q1.
Broker expectations for business expansion and loan volume growth have tapered considerably - a reflection of rising rates and overall economic conditions.
Almost one third of brokers expect loan volumes to decrease over the coming quarter - up 7.5 per cent on last quarter's results.
An expected drop in loan volumes will translate into an overall decline in business, the results indicate. According to this quarter's survey, 34.7 per cent of brokers expect business to grow over the quarter ahead.
This figure is down by 11.0 per cent on last quarter's results. Despite this downfall, a majority of brokers (44.3 per cent) indicated that business will remain the same, whereas 21.0 per cent of respondents think business will decline.
In terms of market prospects for brokers, first home buyers have officially stepped off following the wind back of government incentives at the end of 2009.
Despite the ease in first home buyer activity, investors and refinancers are filling the gap.
In the quarter ahead, the investor and refinancing sector will be most active, registering 34.7 per cent and 50.8 per cent respectively. These figures are relatively consistent with Q1's findings.
In line with an expected slowdown in volume and business growth, investment in new staffing will remain stable according to brokers, with 12.3 per cent of brokers looking to hire staff.
