Mortgage brokers. could be wasting time and money chasing leads in the wrong markets if they decide to specialise in certain deals like refinancing, warns CoreLogic.
A large percentage of the residential mortgage activity in Australia is driven by refinance type events; these include restructures and top-ups as well as the typical refinance from one lender to another.
Across CoreLogic’s platforms, refinance accounts for approximately 70 per cent of activity, followed by 25 per cent for purchases and 5 per cent for construction. Mortgagee in possession events make up less than 0.5 per cent of activity.
Based on settled sales over the 12 months to April 2016, CoreLogic estimates that 339,026 houses and 132,081 units sold nationally. Using a year-on-year measure, house sales have fallen 3.7 per cent over the year while unit sales are 9.7 per cent lower. The data also indicates that 61.5 per cent of all house sales and 72.8 per cent of all unit sales occurred within a capital city.
CoreLogic general manager of broker, non-bank and valuation solutions, Matt Carlson, believes that while the data is useful and provides a valuable overview of the system, it may be misleading for mortgage professionals operating in a local market.
“Attracting new business either through marketing, leads or referrals from existing clients is typically how mortgage businesses grow; all methods have positives and challenges. But what if you decided to target [a] new client’s refinancing where most of the activity in the area is investors making purchases? You could be aiming where the market isn’t and spending valuable time and money for little reward,” Mr Carlson said.
When it comes to refinance, purchases and construction activity, some areas diverge from the national average, he pointed out.
“Knowing where these are can give that edge in helping a professional understand their local market dynamics, helping focus new business activities and supporting retention processes,” Mr Carlson said.
While many successful and established mortgage professionals are likely to have access to information about their local markets, some considerations remain, including – is the information up to date, does it go to a level of detail that is actionable and can this information be leveraged further to support communications to clients?
CoreLogic believes having access to information which provides actionable insights is the key. Depending on whether the broking business is general or focused on certain segments, insights are available across the spectrum:
• First home buyers – Where are the most affordable areas, which areas fit the clients’ price range, what is on the market now and what has recently transacted?
• Downsizers – What is available in the area they want to live in, is the stock moving quickly or staying on the market longer, what is the average discount, what is the value of their current home, will this have an impact to needing debt or not?
• Upgraders – What is the potential value of the existing home, which area is holding the stock they want to upgrade to, is it a type of dwelling or specific area they are looking for?
• Investors – Which areas have the best rental yields? Apartments, units or houses? What have the trends been over a period of time?
“The bottom line is mortgage professionals already have a greater understanding of the industry in which they operate and they are well positioned as the conduit between the endless amounts of information available and what borrowers need,” Mr Carlson said.
“However, much of this information can be too high level, based on anecdotes or [is] not current. Brokers need more than information, they need trends and data at a granular level, they need insights that can be easily translated to actions.”
[Related: Aussies in the dark on refinancing prospects]