Buyer caution big hurdle for brokers

Speaking to The Adviser, Mr Haron said consumers continue to act cautiously when it comes to buying a home.

“Consumers continue to hear about the problems plaguing Europe and this is ultimately affecting buyer confidence,” he said.

“The big challenge for brokers at the moment is getting them to commit to borrowing money and refinancing their current mortgage.

“There will always be people out there that want to buy, sell, upgrade, renovate and refinance. And there are a lot of good opportunities for these people. There are a lot of lenders offering very competitive deals, brokers just need to know the market, understand what is out there and then constantly engage with their existing databse to ensure business opportunities continue to present themselves."

But while Mr Haron believes there are still plenty of business opportunities to be found, consumer sentiment shows no signs of improving in the near future, according to the latest Westpac–Melbourne Institute Index of Consumer Sentiment.

The latest Index fell by 5.0 per cent to 96.1 in March from 101.1 in February.

Westpac's chief economist Bill Evans said the Index has now fallen below the level in October last year prior to the Reserve Bank's two rate cuts in November and December.

“With the Index below the 100 level pessimists clearly outnumber optimists,” he said.

“Sensitivity to interest rates has clearly been one factor responsible for this weak print. The survey in February closed off before it was announced that banks were raising their mortgage rates despite the Reserve Bank having kept the official cash rate on hold. Recall that the survey in February covered the week of the Reserve Bank's Board meeting. At the beginning of the week media reports had led respondents to confidently expect a 0.25 per cent rate cut from the Reserve Bank.

“With the two previous rate cuts in November and December being passed on in full by the banks it is reasonable to assume that many borrowers expected a further cut in the mortgage rate of 0.25 per cent. Instead, mortgage rates were actually increased in the following week with banks raising mortgage rates by an average of 0.10 per cent.”

But while consumers remain cautious and nervous about the future and are therefore less likely to jump into the property market, CHOICE chief executive Stephen Moore said there are still plenty of business opportunities out there for savvy brokers.

“While I agree that the tough environment is a challenge, the message for brokers is really value your existing customer base,” he told The Adviser.

“Make sure you are looking for opportunities with existing customers. Make sure you are asking for referrals and really build the good relationships you have with your existing customers.”