The rising cost-of-living sees the rise of the mortgage broker
Australia has seen the cost-of-living rise in recent times – petrol, groceries, electricity, transport to name a few. Add 2 consecutive interest rate rises to that, and it’s fair to say people are feeling pain in their hip pocket.
As Australia recovers from a multitude of disasters – COVID-19, bushfires, droughts and floods – we’ve made it to the other side. And it’s expensive.
The Consumer Price Index (CPI) increased by 2.1 per cent in the first quarter of 2022, and 5.1 per annually according to figures released by the Australian Bureau of Statistics. These increases are the largest seen since the introduction of the GST over 20 years ago.
Core Inflation, the cost of goods and services excluding the food and energy sectors, also rose 1 per cent to an annual rate of 2.6 per cent.
Global events, such as the war in Eastern Europe and the subsequent sanctions imposed against Russia, has seen disruption to freight, international shipping and supply of oil.
This extra pressure on household budgets is being felt. We’ve seen inflation rise, with the Reserve Bank responding swiftly. With thousands of borrowers never having experienced an interest rate increase before, there are many Australians that are taking a long, hard look at their household budget.
Mortgage repayments have risen – and will continue to do so. This has prompted both borrowers and lenders to forecast the future – will people be able to continue to afford their home loan repayments?
Households with no or little savings buffer could be more vulnerable to mortgage distress as we continue to see the cost-of-living rise. However, with fixed rate borrowing having peaked last year, this should provide some reprieve until their fixed term rates expire.
And in this period of changing interest rates, mortgage repayments and updated budgets, home owners are seeking advice, support and comfort – from Mortgage Brokers. The rising cost of living has also brought the rise of the mortgage broker.
Now is the time to connect with your clients and offer your guidance and support. With average loan terms lasting 25-30 years, broker relationships are important. With the long-term commitment of a mortgage, borrowers’ needs will change – as we are currently seeing.
With many lenders offering incentives, discounts and products for borrowers to refinance their existing mortgages, many borrowers are looking at the options available to them. Utilise your CRM and social media to keep in touch with your clients, keep them informed, and build and foster your client relationships.