ISCOVER
Nearly three-quarters of brokers believe the refinancing activity will increase over the next six months as rates drop further.
The latest bimonthly broker poll carried out by the Finance Brokers Association of Australia (FBAA) has revealed that brokers are bracing for a surge in refinancing activity as the rate-easing cycle continues.
The poll of 100 FBAA broker members, undertaken by CoreData between 26 and 29 May, found that while refinancing activity had been tracking along steadily (with 51 per cent of respondents saying that there was ‘medium’ refinancing activity from clients in the current interest rate environment), the majority were expecting this to grow.
The survey found that 72 per cent of brokers expect an increase in refinancing activity in the next six months, with only 2 per cent forecasting a decrease.
Two-thirds of broker respondents said they expect to see a ‘moderate’ increase in borrowers looking to a new lender for a better rate, while 6 per cent expect there to be a ’significant increase’.
Around a quarter (26 per cent) do not expect to see any change.
The optimism comes as the market expects interest rates to fall further this year. Indeed, according to the major bank economists, there will be at least two more reductions to the official cash rate in this rate-easing cycle, with some forecasting there to be three.
Given the expectation that rates are going to fall further, refinancing activity has been lower than average in the past few months. Indeed, figures from aggregator Australian Finance Group (AFG) recently revealed that refinancing activity from its broker members dropped to a record low of 19 per cent, with AFG suggesting that borrowers were likely holding off in anticipation of future rate cuts.
Speaking to The Adviser about low refinancing rates, AFG CEO David Bailey said: “There can be less urgency for borrowers to refinance in a falling rate environment, while they assess how things settle and their current lender reacts.
“People also tend to be reluctant to lock in a fixed rate early in the cycle, should rates drop further.”
As well as an increase in refinancing demand, brokers responding to the FBAA survey also expect to see an uptick in business on the back of the Albanese government’s pledge to enable all first home buyers to access the Home Guarantee Scheme and build more homes for first home buyers.
One of the election promises from the Albanese government was to remove income and placement limits for the First Home Guarantee.
As such, from January 2026, all first home buyers will be eligible to purchase a home with a 5 per cent deposit without lenders mortgage insurance (LMI) needed.
The change expands the existing scheme by removing income and property price caps, widening access to prospective home buyers.
The FBAA survey showed that 68 per cent of brokers expect demand for mortgage broking services to increase off the back of this move, and that 89 per cent of brokers were confident in their capability to guide clients through government support.
FBAA managing director Peter White AM said brokers who make the effort to understand the initiatives could reap the rewards.
“Following Labor’s pledge to give all first home buyers access to 5 per cent deposits and invest $10 billion to build 100,000 homes, 68 per cent of brokers expect increased demand for their services, with 9 per cent foreseeing a significant rise,” he said.
“With this expanded access, brokers must be well-versed in the new 5 per cent deposit rules and other government schemes to support buyers entering the property market.”
[Related: Banks reaffirm August rate cut following shock July decision]
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