Work must be done to increase broker awareness, says FBAA
New research from the Finance Brokers Association of Australia (FBAA) has highlighted growing uncertainty among property buyers and renters despite the prospect of interest rate relief on the horizon.
According to the FBAA Buyer Renter Index Research report, just over half (53%, to be precise) of renters looking to buy a residential property in the next two years believe it is a good time to buy.
Yet they are also facing a period of heightened instability in the rental market, with 54% of renters citing concerns that they will be forced to move or not have their contract renewed.
Meanwhile, 74% of renters say they face difficulty finding a suitable rental property in the first place, while more than a third of research participants expect their incomes to lag house price growth over the next five years.
FBAA’s managing director Peter White (pictured) said the results were unsurprising.
While “the Australian property dream is still well and truly alive… governments must work harder to help people achieve it,” said White.
He also threw doubt on interest rate relief coming sooner rather than later. “There has not been an interest rate change since 2023 and it would not surprise me if they again left it unchanged this week,” he said.
The Reserve Bank of Australia (RBA) is due to announce its latest rate decision this Tuesday, February 18. Although the market broadly expects a 25-basis-point reduction to the cash rate, it is far from a foregone conclusion.
Potential rate cuts aside, “the clear message from this research is that people are crying out for help and support in the area of government and regulatory policies”, said White. “They desperately want to own property but are demanding action to help them.”
But if the research sounds like would-be first-home buyers lack trust in the powers that be, the same cannot be said of their attitude to mortgage brokers.
A total of 60% of prospective buyers either ‘trust to some extent’ or ‘trust completely’ mortgage brokers. This is a higher percentage than lenders or bank loan officers (58%) and real estate agents (53%), and nearly on par with financial advisers (61%).
While 10% of prospective buyers said they ‘don’t trust at all’ or ‘don’t trust very much’ mortgage brokers, this was the lowest across all four segments.
Credit: FBAA Buyer Renter Index Research
Walking the walk
Broker trust becomes even more pronounced once a deal has been completed, with 91% of those who engaged a broker for their last home loan saying they either completely or somewhat trusted brokers. Only 1% said they completely or somewhat distrusted brokers.
Post-deal trust in the direct-lending channel was markedly worse, with 81% saying they completely or somewhat trusted lenders, and 7% saying they completely or somewhat distrusted lenders.
Brokers will now have the chance to put their solid reputations to test amid the changing market dynamics.
One key finding in the FBAA survey revealed that 54% of prospective buyers plan to purchase a property, with less than 20% paid as a deposit.
While this is a far stretch from the 95% loan-to-value (LTV) or even 100% LTV loans that occasionally crop up, it “signals an increasing need for brokers to be well equipped in government schemes, guarantor loans and LMI, with careful attention to risk”, said the FBAA.
Brokers also have work to do in regard to customer awareness.
According to the FBAA, four in 10 people “lack a decent understanding of what a broker can do for them”. Awareness is particularly low among those who don’t already own property, with 17% having “little to no understanding” of what a broker does, compared to 9% of property owners.
“What many buyers don’t realise is that there are often more purchasing options than they realise and some of those options can only be accessed through a finance and mortgage broker,” said White.
“Despite the industry’s success we should not be complacent,” said White. “We know that our customers trust us and that more borrowers choose to use a broker but we should never take that for granted.”
FBAA partnered with CoreData to carry out the survey. The total survey attracted 1,251 responses, split across buyers, renters and renter-buyers.
