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New data from the Finance Brokers Association of Australia indicates brokers could be missing out on refinancing opportunities from customers who are still choosing to go direct to lenders.
The FBAA’s Australian Mortgage and Rental Affordability Survey, conducted by McCrindle Research, found 22% of Australians with a mortgage are currently considering refinancing.
However only about half of those customers with a mortgage who have already reached out for financial help chose to go to a broker, with the other half choosing to approach a lender directly.
Given finance brokers currently write more than two thirds of mortgages, FBAA CEO Peter White (pictured above left) said the results were a “wake-up call” for the industry and served as a warning not to get complacent.
“This survey tells us that borrowers are taking measures across the board to reduce their costs as they deal with higher repayments, and one option is to refinance,” White said. “We must be more proactive at this time, reach out to every one of our clients and check in on them to ask how they are travelling and how we can assist.”
White said the data did not reveal everything, such as whether a customer first went to a broker, but was then directed to go to their lender as a first option to restructure their loan facility.
However, he said the message was that the broker channel can always ‘up the ante on what we have done’, and that there was a clear opportunity for brokers to capitalise on the refinance wave.
Loans On The Run director Tim Rodda (pictured above right) said there had been an increase in customers seeking out refinancing from his Melbourne-based brokerage, through refinancing had always been important.
“We are definitely seeing more clients who are cashback focused in the initial interview or phone call – so the carrot-dangling by banks has definitely had an effect,” Rodda said.
The brokerage pointed out to rate-shopping customers that there would always be further costs later down the line with those deals – Rodda said this was evident in loans written over the last 15 years.
“We give them options and pricing, and if that means they receive a cashback, great. But in most instances, we are dealing with non-cashback deals that provide better rates and service.”
Rodda said in a rate-driven market there were definitely some people “panicking and rightly so about rates”.
However, he said that pricing across the board meant there was not a major disparity on new-to-lender deals, and that in most instances it was the loan term that was influencing the decision to move.
“We are seeing this from new clients,” Rodda said. “We continue to call our existing clients about repricing, and if it triggers refinancing them, we do that. But we certainly have a conversation about whether they want to stay with their lender – if so, we endeavour to do whatever we can to make this happen.”
Rodda said it was important brokers did not take a blanket approach to refinancing their book.
“I think it is important not to just say, ‘right, let's reprice our loan book’ - or refinance your loan book for that matter. You initially won the deal because of your service, knowledge and options for clients, so continue to do this for them and they will remain loyal for a very long time.”
He said refinancing could be the only option, as banks giving token discounts to existing customers rather than repricing at the new to bank rates was like “a red rag to a bull” for clients and brokers.
“It really is what is in the client’s best interests - it is what works for them,” Rodd said. “Our business has always had that focus and it stands us in good stead, not only for our residential clients, but additionally our commercial and SMSF clientele who have also seen exorbitant rates rises.”
Customers who have sought financial assistance were asked by McCrindle how likely they were to recommend going to a bank or a broker to help with navigating financial challenges.
White said brokers were named by clients as the better option, with 43% of those customers giving brokers a rating of between 8 to 10, while only 33% rated banks between 8 to 10.
However, he said those words must be backed up by personal and proactive service. “It’s simple – don’t expect people to call you. Contact them and give them service lenders cannot,” he said.
White said how brokers captured refinancing business would depend on the composition of their database, who they were speaking to, and their available resources.
Ideally it would be more than just “flicking clients an email”. White said best practice would be picking up the phone to make close personal connections with customers.
“This might seem a bit ‘101ish’, but it is easy when you are busy to forget the simple things – these are the kind of drivers that will take us from 70 to 80% market share,” White said.
“It’s about reaching out and genuinely wanting to help, not just sending a marketing email, which can be cold at times. It is reaching out and showing you genuinely want to help these people.”
What approach are you taking to winning repricing or refinancing business? Share your thoughts or stories on this topic in the comments section below.
