Political and regulatory developments are conspiring in favour of the broking industry, with a rise in sentiment towards the industry reflected in share price spikes for two major brokerages.
According to Mark Hewitt, general manager, broker and residential, at the Australian Finance Group (AFG), sentiment among brokers in the aggregator’s network has lifted following the Coalition’s surprise electoral victory, which meant that the current broker remuneration model would remain in place.
Mr Hewitt said that the lift in sentiment has been compounded by the expectations of cuts to the cash rate from the Reserve Bank of Australia (RBA) and the Australian Prudential Regulation Authority’s (APRA) proposal to loosen its serviceability measures, which could trigger a rise in home loan demand.
“What we've seen is certainly an increase in enquiry and activity from our brokers, now that the veil of the election has been lifted,” he told The Adviser.
“We’ve got the election result out of the way, we’ve got the Reserve Bank talking about interest rates coming down potentially, and we’ve also got this talk about the buffer being decreased.
“These all some very positive factors.”
The improvement in sentiment among brokers was mirrored in the share market, with investor demand for AFG and Mortgage Choice stock spiking.
Since the ASX opened on Monday (20 May), AFG’s share price has increased by 23.3 per cent, rising to $1.48 per share by close of trading yesterday (23 May).
Meanwhile, Mortgage Choice’s share price spiked by 32 per cent over the same period, rising to $1.05 by close of trading.
Mr Hewitt said the shift in the landscape has provided the industry with greater certainty and may persuade aspiring brokers who have been hesitant to join the industry to make their transition.
“It’s certainly reassuring for the industry as a profession to have some certainty,” he said.
“I think it’s going to give a lot more confidence to people that are looking to make mortgage broking their profession, and therefore AFG as a large participant may be a beneficiary of that.”
He added: “I think also what it’s going to do is that people who were holding off on making decisions, whether it be consumers looking to buy a property or upgrade a property or to refinance a loan – or mortgage brokers looking to invest in their business – will now be able to move forward with some confidence.”
Charbel Kadib is the news editor on The Adviser and Mortgage Business.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.
APRA has given the green light to BNK offloading its mortgage agg...
The weekly round-up of the biggest news stories from across Momen...