Sentiment survey -- Q4 2008 report907 people have read this article
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| Wednesday, 31 December 2008 |
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While times are tough the industry remains cautiously optimistic about growth in the coming quarter. Sentiment is not only a good barometer for measuring the mood of a particular demographic, it can be a valuable indicator of emerging trends as well as market turning points. Australia’s third-party distribution channel has grown rapidly over the last decade but events of the last 12 months have had a dramatic affect on all industry stakeholders, including brokers, aggregators, lenders and suppliers. Commission reductions, the disappearance of some lenders, significant changes to product and pricing, and the advance of regulation have caused many brokers to rethink their business. There is no shortage of theories as to how the broking industry will evolve from here, but until now there has been little to quantify the true picture. The Mortgage Business Sentiment Survey gives the industry the first real insight into the perceptions of the third-party channel, and over time this quarterly report – using data generated by the survey – will provide the industry with an accurate illustration of broker sentiment on a range of business, economic and industry issues. Back in April, at the time of the first cuts, the focus of industry commentary fell on the prospect of a substantial reduction in broker numbers – though this has yet to materialise. The third-party industry remains robust and the outcome of commission cuts has been the re-think of brokers’ client value proposition and opportunities for diversification. Six months on from initial bank commission cuts, and while commissions remain a concern for the industry, a narrow majority of 53.2 per cent believe that they are sustainable at their current levels; 39 per cent say they are not while 7.8 per cent are unsure. Interestingly, despite concern from over a third of the industry that commissions are not sustainable, only a moderate 7.6 per cent of respondents are thinking about leaving the mortgage industry during the coming quarter. This sentiment was supported by data released by the Housing Industry Association (HIA) in November which showed that new house sales leaped by 6.7 per cent in mid-October. Nearly a third of survey respondents (30.1 per cent) expect refinancing to be most active, followed by investors (13.1 per cent) and upsizers/ downsizers (4.8 per cent). Overall respondents were split in terms of where they expect to generate most business from in the quarter ahead: 51.7 per cent of respondents will look to existing clients while 48.3 per cent will source most business from new clients. This is reflected in 60.2 per cent of respondents agreeing that the government is doing a good job of controlling inflation through its management of monetary policy. This compares with 31.5 per cent who disagree, and 8.3 per cent who are not sure. Overall, 46.3 per cent of respondents said the federal government was effectively managing the economy whereas 40.4 per cent said they were not, followed by 13.3 per cent who did not know. When asked to compare this quarter’s economic conditions with the previous quarter, 60.7 per cent said they were worse. Only 20.4 per cent said that this quarter’s economic conditions were better; 18.9 per cent said they were the same. It is important to note that despite considerable action by the federal government in response to conditions over this current quarter, a lag is to be expected before the results are seen – the next quarter’s survey findings will no doubt be interesting. Impact of RBA interest rates: A two per cent cut to the official cash rate over the period of September to November has been met with industry approval, with a resounding 75.3 per cent of respondents agreeing that the current RBA rate will have a positive impact on home loan volumes. Viewed in isolation, the RBA rate reductions – the first time the central bank cut rates since September 2001 – are obvious drivers for more consumers to either enter the market or move into new homes. However coupled with the federal government’s stimulus package to motivate competition in the mortgage market, plus a significant boost to the first home buyer grant, it is hoped that home loan volumes will rise. Whether they do will become clear once housing data and loan performance figures are released over the coming months. To help crystallise the key findings of the quarterly survey, the Mortgage Business Index measures overall expectations for growth across the broker industry. The index – which this quarter sits at 37 – is based on a number of key business indicators exclusively from the 521 brokers that completed this quarter’s Mortgage Business Sentiment Survey (which had a total pool of 631). Expectations for loan volumes, plans to increase staffing levels, business investment plans and expected overall growth determine the index level each quarter. The Mortgage Business Index will be a key benchmarking tool to map industry progression. ------------------------------ DATA WRAP: BUSINESS ISSUES Are you considering leaving the mortgage industry during the coming quarter? ------------------------------ DATA WRAP: THE PROPERTY MARKET ------------------------------ DATA WRAP: THE ECONOMY ------------------------------ VOLUMES GROWTH ------------------------------ |
