1 in 10 brokers say customers could be in serious debt

Siobhan Hayden, COO of HashChing, said that these findings, combined with potential further interest rate hikes next year, “suggest that Australian borrowers have tough times ahead”.

Despite the indebtedness of some mortgagors, just 6 per cent of brokers noticed a rise in the number of customer at risk of defaulting on their mortgage repayments over the last three months.

The HashChing survey of brokers also found that the vast majority, or 83 per cent, expect investors to continue retreating from the housing market in 2019 due to lending restrictions.

The Australian Prudential Regulation Authority’s 10 per cent cap on investor loan growth, which was lifted on the condition that lenders demonstrate compliance with the measure, has already resulted in a $16.6 billion decline in investor loan approvals in the 2017–18 financial year.

“The overwhelming majority of brokers expect that APRA’s macro-prudential measures will continue to push investors out of the local housing market well into 2019, further exacerbating the housing market corrections currently underway in Sydney and Melbourne,” Ms Hayden said.

“In parallel, brokers are having to navigate different lender policies on the treatment of an applicant’s income and expenses, further delaying approval processes.”

A previous survey by HashChing found that 41 per cent of brokers believe that more than a quarter of borrowers who secured a home loan last year would not be approved for the same product today due to increased scrutiny of living expenses.

Ms Hayden also noted the shift away from banks and towards non-bank lenders as a result of tighter lending standards.

“This indicates that the market is trending towards independent lenders — who largely operate outside of APRA’s controls — to escape tighter credit restrictions,” Ms Hayden said.

Recent ANZ Bank data had also shown that new mortgage issuance by non-bank lenders have risen by approximately 13 per cent over the year in the 2017–18 financial year, compared to 4.8 per cent growth for banks, taking the non-banks’ share of total housing debt from 6.6 per cent to 7.7 per cent.

ANZ economists Daniel Gradwell and Shaurya Mishra described the increase as a net positive, speculating that non-bank lenders “are making the most of their position outside of APRA’s regulatory net”.

Further, 94 per cent of brokers do not believe restructuring their lender-paid commissions, which has come under intense scrutiny in the last couple of years due to the perception of it being at odds with the interests of borrowers, will improve borrower protection, according to the HashChing survey.

“This is largely because the high majority of a broker’s leads come through referral networks. If they fail to prioritise their client’s best interest, it cannibalises their business,” Ms Hayden said.

“This means that consumers are far more likely to be protected if they use a broker, rather than going directly to a big bank — especially if they go through a marketplace, like HashChing, which shows dynamic ratings and reviews for each broker.”

Ninety-eight per cent of brokers expect the cash rate to remain on hold, as it has for more than two years, while 47 per cent expect an increase in 2019.

[Related: Over 25% of mortgagors wouldn’t qualify today: HashChing]