Navigating the ‘rocky’ economic horizon

Q. What is NAB’s current perspective on the economic landscape and the challenges facing borrowers?

We still see some underlying pressures in the economy, alongside ongoing global uncertainty, which is contributing to a more cautious overall environment. While inflation remains elevated, NAB expects the next move in the cash rate is likely to be downward, although timing remains uncertain.

Despite these challenges, Australian businesses and households have shown resilience, and unemployment remains low. There are also elements of wage growth, which is providing customers with a degree of confidence.

However, confidence remains vulnerable to shifts in the economic environment. Recent customer sentiment data – across both consumer and businesses – suggest confidence is already starting to soften.

Q. What shifts is NAB observing in lending patterns at the moment?

NAB is observing lending conditions move into a more balanced phase, as housing market momentum moderates following a period of strong growth. Demand is increasingly being supported by first home buyers, whose share of new housing market activity has risen to 40.7 per cent, while investor participation has softened.

We are also seeing more lending pivot towards refinancing, with customers actively exploring alternative lending options. Where lending flows would typically split around 60 per cent purchases and 30 per cent refinancing, that has recently shifted to be closer to 50:50. This shift suggests borrowers are increasingly engaging brokers and shopping around for more competitive rates and structures.

Q. How does sentiment differ across various Australian states?

Optimism is strongest in Queensland, South Australia, and Western Australia. They have had a pretty good run of increasing house price growth, relatively strong local economies, and net population growth… so there is really high sentiment there. However, a lack of housing supply remains the key constraint and dominant issue in these states. In contrast, we’re starting to see a little bit of a slowdown in NSW for the first time in a while, after a long period of sustained growth. Victoria has also been softer for longer, with more subdued conditions reflected in borrower and broker sentiment. The broker sentiment is therefore definitely different in each state.

Q. What should brokers be doing day-to-day to guide their clients through these market changes?

I’d be encouraging brokers to bring forward their check-ins with clients. Now is the time to be doing it. It’s a really critical step for all brokers to take.

In periods of uncertainty, customers are looking for reassurance, and brokers play a critical role in providing that. Some customers will be seeking refinance, while others may be in strong financial positions and looking to extend credits or invest, particularly in states where growth remains solid.

This means brokers need to stay close to clients’ evolving needs, as opportunities will differ depending on individual circumstances.

Q. Are there any areas of lending that NAB is targeting at the moment?

We’re the number one business bank in the country. Supporting the self-employed is a key part of what we do.

The mass affluent customer segment (customers with footings greater than $850,000) is also a really important segment to us. NAB has developed a ‘Premier’ proposition for these customers, offering a more tailored experience, including enhanced service models and dedicated support channels.

Importantly, for broker-introduced customers, NAB is staying away from direct lending conversations, recognising and respecting the broker’s role in managing that relationship.

Instead, the focus is on delivering strong day-to-day banking and service experiences, complementing the broker relationship.

Q. What should brokers be preparing for in the financial year 2027?

I’d say prepare yourself as best you can for increasing competition. That’s the first thing that I’m seeing moving into FY27: more competition.

With the economy being a little bit uncertain and a little bit rocky, how can you differentiate yourself? How are you contacting customers and what are the conversations you’re having with them? Because if you’re not doing it, someone else will.

And thirdly, what are you doing to upskill yourself and your team when it comes to technology? That could be using new tools that are available, driving efficiencies in your business, safeguarding against fraud and scams, or taking the next step in growing your business.