Adam Brown has spent most of his professional life working with mortgage products and financial brokers.
Over the course of his career — which spans more than 25 years and includes his current post as National Australia Bank (NAB) executive of broker distribution — Brown (pictured) has watched the number of borrowers in Australia using brokers for their financial needs jump from a small fraction to roughly 76%.
Today, as the world navigates an increasing number of geopolitical tensions, and Australians try to juggle inflationary pressures, interest rate movements and an election year, Brown said the role of the broker has become even more significant.
"The opportunity for brokers is what I would label as quite dynamic, meaning lots of change," Brown told Australian Broker. "As we have political instability overseas, as well as an election in Australia, there are a number of things that are changing that are going to impact our economy and our industry. And what we do know to be true is when there is change and when there is a little bit of uncertainty, brokers play a really critical role in supporting customers."
Australian Broker sat down with Brown to hear more of his thoughts on the market, how the global environment is impacting Australia and what brokers need to know.
Earlier this month, the Reserve Bank of Australia (RBA) decided to hold the official cash rate (OCR) at 4.10%, much to the chagrin of mortgage holders and investors who were hoping for some added rate relief.
"What's happened over the last few years, we've had rates increasing. We had, up until [February], we had 13 consecutive rate increases," Brown said. "We were coming out of COVID-19 and we had 13 rate increases, cost-of-living pressures have gone up and we had instability around the globe in terms of elections and what's happening in the war and so forth."
But in February, the RBA did provide some solace to homeowners by ending its rate-hikes streak and knocking off 25 basis points off the nation's benchmark rate — the first time rates were reduced since November 2023.
Brown said the sudden surge in both business and consumer confidence that followed was "not surprising."
"I think with the rate cuts, it just gives a little bit more relief for households. And they've needed it," he said.
"Home lending in the first quarter, at least this year, has been really quite strong," Brown said. "It's well up on last year, and we are seeing a lot of pre-approvals. That is, customers looking to get their finances in order to confidently go and bid. Because we've still got a scarcity of housing, and the scarcity of housing is meaning house prices are continuing to be pretty strong and resilient. And we've got different pockets of the national market performing in different ways. And so customers are having to be ready with approvals in principle. So there is an increased number of approvals in principle in the market. And definitely increased levels of activity. And we are seeing, in the run to Easter, increasing numbers of listings too."
Even on the other side of the planet, brewing geopolitical tensions — including faraway wars and US President Donald Trump's sweeping tariffs — are having an impact on Australia's economy.
"What will be interesting for our country this year is that we're heading into a federal election. And we've got Trump who's been brought into America with some policies that will impact Australian businesses. The announcements on tariffs is just one of them," Brown said. "The questions are, will what Trump has done with tariffs impact some Australian businesses? Does that then impact confidence? Does it have potential impacts on inflation or other things? Those are the big unknowns. And that is where the advice of brokers and the advice of people in our bank — and brokers being up-to-date on research and available tools that we make available to people through research papers and articles and things like that — becomes critically important. Because customers will be turning to brokers for advice, as well as turning to the bank for advice."
He added that Australia's geographic distance from the rest of the world also comes with some advantages.
"There's been a bit of global instability; there's been recessions in other parts of the world. But in Australia, Australia has been managing the turbulence in terms of economic factors," Brown said. "We've ridden that wave reasonably well. Customers are still paying ahead in their mortgages. Our average customer, over the last three years, has been paying ahead in their mortgage."
But Brown warned that averages "can mask some people who are having a tough time. Those cost-of-living pressures and the increasing interest rates have affected some pockets of our customer base more significantly than others. And so looking at averages is something you need to be a bit careful about, because it can mask those who do need the help."
That's why, when asked, the executive had a number of tips and tricks for brokers to be successful.
"Take advantage of the education resources that NAB makes available to brokers," Brown said. "We're the number one big bank in the country and we do a lot of work and research on business sentiment, as well as consumer sentiment. We publish papers around economic trends; we just launched our mega-market trends report in the back half of last year. That identifies some things that we see happening over the next 12 to 24 months. And of course, our BDMs have great knowledge as well. So my key message is brokers should take advantage of the resources we make available to them. They're not hard to find and talk to us about it.
"The other thing that I would say is brokers just really need to stay up to date with what's going on around the economy and around home lending more broadly, at things like professional development days, conferences, education sessions," he said. "They're all ways to upskill in knowledge, share information and stay current. I think that's the best way to support customers.
"Also, one thing that I get feedback on from brokers is on looking to diversify their businesses, services," Brown added. "That can take a couple of different forms. Many brokers start off doing residential lending. But there are lots of opportunities in and around commercial lending. We see the growth of commercial lending through brokers growing, or outstripping growth, compared with residential lending, in terms of speed of growth. We're also seeing brokers stepping into asset finance, whether it's for cars, machinery, or other goods. That's a way of diversifying away from purely residential lending. And during times of economic uncertainty, having the referral sources or experience in different lending types can help you weather some of those uncertainties."
