Brokers reveal what they expect to see in 2024

As we traverse into 2024, members of the broking industry have weighed in on what they expect to see over the course of the new year.

More online lending options and AI

Mortgage broker at Shore Financial, Christian Stevens, told The Adviser that he sees online lending options available to brokers to continue to gain prominence, which could offer borrowers more convenient digital platforms for loan applications and approvals.

“Advances in technology and automation will play a pivotal role in streamlining the lending process, enhancing efficiency, and reducing turnaround times,” Mr Stevens said.

“AI-powered algorithms will enable lenders to assess risk more accurately and customise loan products to individual borrowers.”

Mr Stevens added that blockchain technology could also gain some traction for secure and transparent transactions, along with greener lending options gaining more prevalence in response to growing environmental concerns.

Lending standards to tighten

General manager, lending at Partners Wealth Group, James Thompson, said he foresees tighter lending trends over 2024.

“What I’m seeing in the industry is that we’re at this financial cliff with people coming off fixed rates and that financial pain is starting to flow through along with cost-of-living pressures, which will play a huge role,” he said.

Mr Thompson further stated that it’ll be all the more important and relevant for clients to lean on trusted advisers for assistance.

“Going into 2024, we’re probably in for a ‘batten down the hatches’ type of scenario, but we’ll be able to get through it like we always do,” Mr Thompson added.

Policy changes

For the director of Ming Finance, Ming Yang, 2024 holds a variety of intriguing policy changes among banks.

“Banks are experimenting with which areas they want to go into, such as the big banks being happy to take on clients with self-employed income,” Ms Yang said.

“It will be interesting to see how risk appetites begin to change and who will be leading and who will be following in certain areas.”

Ms Yang said brokers will need to stay on their toes and learn as fast as possible to keep up with policy changes in order to do what’s best for their clients.

“I think people will feel like they need more help in 2024,” she said.

Banks offering better rates

David Thurmond, mortgage broker at Mortgage Choice Berwick, predicted that as the majority of fixed rates expire over the first half of the year, the bigger banks will begin offering better rates as competition ramps up.

“I expect that as there’s more competition for those loans coming off, we’ll start to see the bigger banks coming into play more,” Mr Thurmond said.

“Borrower behaviour will all depend on the RBA and borrowing capacity. Right now, there’s a tonne of interest, but clients just don’t have the capacity to do what they want to.”

He added that he expects to see more bridging finance required: “Two or three years ago, when interest rates were around 2 per cent, clients would keep their existing homes when trying to upgrade, but now they’re having to sell.”

Broker market share on the rise

Chris DiBlasi, director of Saint Finance, expects broker market share to continue its upward trajectory as “consumer[s] seek more financial options in this difficult tightening period” while also driving businesses towards niche lenders.

Furthermore, Mr DiBlasi added that ultimately, trends will be dictated by what’s in store for the economy in 2024.

“With inflation subsiding internationally and recent domestic numbers (albeit monthly CPI figures) heading in a similar direction while the labour market remains strong, some may believe the possibility of a ‘soft landing’ is coming to fruition,” he said.

“However, history would indicate otherwise and a difficult balancing act lies ahead for the RBA if the target inflationary figure of 2–3 per cent does not come quickly enough, leaving higher interest rates for longer, testing the robustness of the economy as household COVID-19 savings dissipates alongside increasing unemployment.”

An industry busy as ever

Phil Stewart, Aussie Home Loans mortgage broker, predicted that due to the full effects of higher mortgage repayments and with existing mortgage holders needing assistance “more than ever”, 2024 will be a busy year for the broking industry.

“I’ve seen households dipping into their savings, equity, or offset accounts to assist with higher mortgage costs and this will take a continued toll on households, who’ll need to revisit their mortgage to save as much as possible, if they haven’t already,” Mr Stewart said.

“Even if I save a customer 0.25 or one rate rise cycle, over a year that is a significant amount to that household[’s] bottom line.”

However, he added that there are “positive signs in the market of growth continuing outside of refinancing”, as prospective home buyers have not yet given up on purchasing their first or next home.

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