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For many home loan borrowers, the current market conditions are something they have never experienced before, as mortgage rates go on a sustained period of hikes.
Resolve Finance general manager for distribution Sandy Paravizzini said brokers are in a key position to provide support to borrowers who are now at risk of stress.
“Many clients will look to refinancing, and this will define activity in 2023 — there are a range of ways mortgage brokers can support their clients around this activity,” he said.
Here are the areas where brokers can help borrowers amid the current market conditions:
Mortgage maintenance
According to RBA’s estimates, more than 800,000 fixed-rate loans are due to expire this year.
Mr Paravizzini said this means that many borrowers will see repayments leap by hundreds of dollars monthly.
“Brokers will play a pivotal role in ensuring our clients are getting the best deal — the opportunity to engage with clients at all points in their mortgage journey has never been better, further demonstrating the value of our profession,” he said.
Considering fixed rates
While there could potentially be fears in getting fixed rates right now due to expiring terms, Mr Paravizzini said they will remain popular, especially for borrowers who understand the importance of certainty in payments.
“Brokers can engage with their clients about fixing their rate to offer them another lever they can pull,” he said.
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Seeking deals from other lenders
Borrowers might end up paying for “loyalty tax” if they decide to stick with their current lender. Mr Paravizzini said it might be easier to explore the market with the help of mortgage brokers.
“After all there is a healthy amount of competition in the mortgage market, lenders are keen to remain very competitive, even in a rising interest rate environment,” he said.
“We can educate our clients on the potential to negotiate with their lenders and to remind them, ‘if you don’t ask, you don’t get’.”
Factoring in other loan features
Amid the period of rate rises, interest rates are not the only factor to consider when refinancing.
For instance, it might be beneficial to consider lenders offering cashbacks or those providing loans in line with Government incentives.
“Mortgage brokers can provide their clients with the information and knowledge they need to access these benefits,” Mr Paravizzini said.
“It is worthwhile reminding all clients and potential clients that talking to a broker and looking at the options available comes at no cost to the borrower and with no obligation — there really is nothing for them to lose.”
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Photo by kanchanachitkamma on Canva.
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