Mortgage brokers prepare for a tough winter – they must now diversify to survive
Link copied to
Mortgage brokers are on the front line of property and are vital to a healthy property market. With a tough market ahead, it’s time they got serious about diversifying their offerings, according to mortgage marketplace Hashching.
Like crypto investors, mortgage brokers are no stranger to the boom and bust cycle of markets and interest rates.
With Canadian real estate down as much as 13%, speculation now turns to what will happen here in Australia. Can it, somehow, avoid the worst of a global correction in asset prices like with the GFC?
The trigger for Canada’s correction is its cash rate rising, now currently at 1.5%. With the Aussie cash rate currently at 1.35%, Hashching polled its network of hundreds of mortgage brokers to see what they think the future holds.
It’s not all bad news. By the end of this calendar year, most (45%) of the mortgage brokers said they expect the discounted mortgage rate at most major banks to remain lower than 3%. A small contingent (11%) however are incredibly bearish – expecting borrowers to face a rate with a 4 handle by the end of the year.
It’s not just interest rates at work in our market either – headlines around the nation of struggling builders have had their impact on borrower confidence. Over half (55%) of the respondents noted they have impacted interest in new builds since the start of the year.
CEO Arun Maharaj said: “Our mortgage broker network can often be a bit of a canary in the coal mine for the market. Whilst it’s certainly not a landslide, the sentiment is clearly turning more negative.”
With mortgage brokers providing a vital competitive force in loan originations, a prolonged downturn in the property market could mean that rates stay higher than they need to be for longer.
“The property market is a fickle beast. Mortgage brokers are used to a feast or famine cycle, but a prolonged downturn in the market isn’t in many brokers’ working memories. If too many are forced to shut up shop during an anticipated downturn, it almost certainly will mean a worse result for consumers in the long run.
“To avoid this, brokers need to think about gaining access to new revenue streams, whilst sticking to the core skills that they do best.”
Mortgage marketplace Hashching notes that with surging inflation, interest in solar power, insulation and other high-cost renovations is likely to remain strong despite the downturn in the market.
“Thinking laterally and partnering with other types of services is going to become what sets apart the winners and losers of the downturn,” Maharaj said.
“To make the transition work, mortgage brokers will need to have a solid CRM and be willing to tap up old contacts with an offer around services like solar, insulation and so on.
“The problem is, often mortgage brokers don’t invest in customer tracking and management technology during the boom years, which makes the transition so much harder in leaner times. Perhaps this time will be different!”
This article was developed in collaboration with Hashching, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.