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If business is slow, providing plenty of information and bedding down relationships with new clients will pay dividends when they decide to apply for a loan, Francis Wilkins writes
The Australian property market of 2011 – now behind us – was peppered with negative sentiments as well as uncertainty about where it was heading.
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The European debt crisis and a troubled US economy kept consumer confidence low, affordability continued to be a major issue and even some of the favourable loan packages now on the market were developed on the back of a bitter price war between the big banks.
With interest in the market now likely to increase, however, brokers should seize the initiative and present a positive face to clients and referral partners to maximise the chance of this year being more profitable.
Now is the time to build on the ‘fact find’ provisions and requirements of the NCCP. Regardless of what happens in the market, brokers should aim to position themselves as trusted advisers so that even if their clients remain potential borrowers for the moment, they will be ready to move in and help as soon as the clients become actual borrowers.
They should work with clients to do the following:
Establish goals: Obviously, brokers are not permitted to provide financial advice. However, clients seeking a loan – in any market – have taken a brave step and a broker should ensure they have already set or are in the process of setting goals around the type of property they want to buy and how they want to reschedule repayments/extra lump sum repayments. Where they have not yet consulted a financial planner or other professional, this is obviously an opportunity to point them in the direction of a referral partner.
Set expectations: With falling interest rates and the prospect of a reinvigorated market on the way, borrowers may well have a lot going for them. However, they need to have an idea of what they can achieve in the next few months – as well as what they might not be able to achieve in the short term. In particular, the rates and other attractive aspects of the majors’ loan packages that emerged during the price war may not continue through 2012.
Ensure clients see their loan in the context of their broader financial plan: NCCP effectively requires brokers to do this when assessing the suitability of a loan for a particular client. However, in the current market, showing clear concern about how a loan would mesh with a borrower’s other commitments will go a long way to cementing a trust-based relationship. Laying out all the options, particularly given that mortgage stress and default levels remain high, will not only help a client avoid over-commitment but underline your commitment to a duty of care.
Ensure they are aware of developments in the broader market/economy: The fact that ‘GFC 2’ is seen as a real possibility underlines how important it is for potential borrowers to be financially educated. They need to be more aggressive in following market and broader financial trends as these are the things that will shape the lending environment of the next few months. They can’t afford to see their loan in isolation from broader economic developments. Brokers can provide the resources and show them how to stay updated.
Some analysts are now cautiously positive about the property market in the coming months, but we’re not out of the woods yet by any stretch of the imagination. The opportunity that currently presents itself to all brokers involves showcasing their expertise as service providers, not just processors of applications. The work may not be flooding in just yet, but by supporting clients taking tentative steps into a recovering market, they will be well placed once they believe it’s time to approach a lender.
