Most mortgage brokers have received a material increase in clients reaching out for guidance for the first time this year, with the majority reporting increasing worries of rising repayments and the fixed rate cliff.
That’s according to findings by the Mortgage & Financial Association of Australia (MFAA), which surveyed 466 mortgage brokers on the trends they’re seeing in 2023.
“Australian homeowners are concerned about meeting repayments in the wake of persistent rate rises intended to curb inflation,” MFAA CEO Anja Pannek said.
“The vast majority of respondents attribute these concerns because of one key factor that does not represent discretionary spending – their mortgage.”
The Reserve Bank of Australia (RBA) has implemented a dozen rate hikes since May 2022, lifting the cash rate from a record low 0.1% to its current level, 4.1%.
Following the hikes, 93% of surveyed brokers report Australian homeowners are more concerned about meeting their mortgage repayments than they were six months ago.
Meanwhile, 80% said an increasing number of clients are unable to refinance their mortgage as they don’t meet serviceability requirements.
Recent research by PEXA found the number of Aussie homeowners refinancing their mortgages soared 14% year-on-year in the financial year 2023.
Assumably, the majority have refinanced their home loans to take advantage of more competitive rates on offer.
“Our members have customers coming through the door who’ve never used a mortgage broker, because they need support and they need assistance,” Ms Pannek said.
“While this is an indicator of growing mortgage stress, the silver lining is that 88% of brokers report they have helped negotiate a discount with their customers’ current lenders, while 81% have helped refinance a customer with a new lender.”
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And the worst of the mortgage cliff is likely yet to come. A large number of home loans are set to roll off of fixed rates later this year, figures from CommBank suggest.
Australia’s biggest bank’s full year earnings, released yesterday, revealed 9% of the lender’s home loan portfolio will come off fixed rates by December, with another 19% to roll off later.
So far, a third of its home loan-holders haven’t been impacted by the high rate environment, thanks to fixed rate home loans and a months-long lag between rate hikes and repayment increases.
“We expect this concern about mortgage repayments to increase over the coming months with more than 1.2 million borrowers coming off very low fixed rate terms throughout 2023 and into 2024,” Ms Pannek said.
“Negotiating a better deal, budgeting, debt restructuring, or extending the terms of a loan are all in the domain of a mortgage and finance broker, so I encourage homeowners to seek professional expert help, rather than struggling through this on their own.”
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