‘Fluid’ rate environment ripe for brokers

Throughout 2018, several lenders, including three of the big four banks, increased their home loan rates in response to rising wholesale funding costs, despite cash rate inertia from the Reserve Bank of Australia (RBA).

Speaking to The Adviser, Loan Market executive director Matt Lawler said that such developments “further highlight the great need for the mortgage broker industry in the financial landscape”.

“Brokers are champions for customers,” Mr Lawler said.

“[The rate hikes] have happened at a time when people could be distracted with holidays and the end of the festive season.

“This is why mortgage brokers are such a valuable service. Without brokers, customers would have very little ability to recognise these changes and then act on them.

He added: “This is what the broker market is designed to do – to support customers through changes like this.”

Mr Lawler encouraged broker to capitalise on recent rate changes by providing clients with credit alternatives from lenders with more suitable pricing arrangements.

“If banks are moving out of the rate cycle turning customer loans uncompetitive, then it is the job of the broker to find what else is out there for their customers and put them with a bank who may not be experiencing the same funding issues,” Mr Lawler added.

“Good brokers will be contacting their customers this week to discuss better options.”

Also speaking to The Adviser, Susan Mitchell, CEO of Mortgage Choice, added: “Considering lenders’ consistent out-of-cycle rate increases of last year, borrowers should expect more of the same in 2019.

“Looking after the client’s best interest is what brokers do. The start of the year is a perfect time for brokers to touch base with their clients.”

Ms Mitchell added: “Therefore, I would encourage brokers whose customers may have been affected by recent rate hikes to have conversations with their clients and assess whether they are still in a suitable product for their needs.”

Further, Sydney-based mortgage broker and director of Catalyst Advisors Stephen Michaels told The Adviser that he observed a rise in refinancing volumes off the back of rate hikes in 2018, which he said were also driven by “numerous ad-hoc policy changes”.

“The landscape has become increasingly more complex, and I think that more and more borrowers need help from brokers who can keep on top of rate and policy movements,” Mr Michaels said.

Mr Michaels encouraged brokers to keep abreast of interest rate and credit policy changes, in what he described as a “fluid” mortgage landscape.

“I think the name of the game now is product and market knowledge,” he said. “Brokers should ensure that they are on top of rate and policy movements, so they can efficiently assist borrowers in navigating the landscape.”

Mr Michaels concluded: “We’ve had a number of referrals from other brokers because they are struggling to get on top of all the daily changes.

“We as brokers need to remember that the paperwork is only 5 per cent of the deal, the rest is service and, now more than ever, knowledge.”

[Related: Cost pressures compel bank to pull rate trigger]