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Borrowers’ wallets and broker optimism both took a hit after November’s rate hike, The Adviser’s recent survey show
NOVEMBER’S CASH rate rise not only left borrowers smarting but also dampened broker optimism, The Adviser’s latest quarterly sentiment survey can confirm. Just 35.5 per cent of brokers who responded to the survey expect their business to grow in the coming quarter, down 6.6 per cent on the last quarter.
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Decreased confidence is reflected in an expected drop in loan volumes. Only one third anticipate volumes increasing in Q1 2011 – that’s down 6.2 per cent on the sentiment expressed in September 2010. More than 57 per cent of respondents believe economic conditions have worsened over the last quarter, while only 14.8 per cent feel the economy is in a better position, so these sentiments appear unlikely to change soon.
A vast majority of respondents blame the federal government for deteriorating economic conditions: 65.3 per cent believe the government is not doing a good job managing the Australian economy, a 4.2 per cent increase on last quarter.
The Reserve Bank (RBA) doesn’t escape unscathed: while a majority believe the RBA is doing a good job controlling inflation through monetary policy, 44.9 per cent of brokers who responded to the survey believe the Bank could do a better job, a 15.9 per cent rise on Q3 2010.
Asked what impact the current RBA interest rate would have on demand for home loans over the coming quarter, 76.6 per cent said it would be negative – up 41.4 per cent on last time.
As interest rates head toward more traditional levels, brokers are understandably concerned that younger and first home buyers will be pushed out of the market.
Only 0.4 per cent of respondents believe first home buyers will be the most active over the coming quarter, suggesting they have officially stepped off following the wind back of federal government incentives at the end of 2009.
Brokers expect most of their business in the coming quarter to come from refinancing, according to The Adviser’s survey. Seventy-one per cent of respondents indicate this will be the most active sector between January and March 2011, up 27.4 per cent on Q3 2010 findings.
Overall, the survey suggests brokers believe the recent out-of-cycle rate hikes by Australia’s majors will encourage mortgagors to consider their options and indicate any dissatisfaction with their current lender by voting with their feet.
