Where to start?
2019 brought highs and lows to the mortgage broking industry, and it’s been fascinating to watch it all unfold.
At the beginning of the year we were on the edge of our seats, wondering if the Royal Commission outcomes would spell the end of mortgage broking all together! But things are looking much less bleak now, and in fact with rates at an all-time low, mortgage broker services have never been more in-demand. We’re seeing lots of our clients’ business flourishing and expanding.
Here’s our take on how this year has shaped our industry, and what you can do to get ahead in the future.
Key moments of 2019
The Royal Commission outcomes
The abolition of trail commissions and the requirement of fee for service business models would have been a huge blow to the mortgage broking industry. Thankfully, many of the scarier recommendations in the final Royal Commission into Banking and Finance report submitted on 4 February haven’t been taken up by the Government, and mortgage brokers look safe for now.
We were impressed to see how the industry banded together over this issue, particularly the MFAA’s moving Broker Behind You campaign. This prompted many industry players and consumers to sign a petition in support of the value that mortgage brokers provide.
The Federal Election
This year’s Federal Election was a big one. Roland summed up the situation and what was at stake in a short video.
Several weeks before Election Day on 18 May, the Liberal Party announced that it would not be abolishing trail commissions for mortgage brokers as recommended by the Royal Commission. Instead, Scott Morrison announced that the situation would be reviewed again in three years’ time.
Of course, Liberal did win the Election in the end, causing our industry to breathe a sigh of relief. The economy could be headed in quite a different direction had Labor come into power. Scott Morrison has also announced plans to introduce a first home loan deposit scheme, allowing first home owners to buy property with only a 5% deposit.
RBA rate cuts
After a shaky start to the year, things picked up mid-year with the RBA’s two consecutive rate cuts in June and July. A further cut in October brought the rate to an all-time low of 0.75 – spelling good news for mortgage brokers able to assist customers in renegotiating new rates for their home loans.
APRA serviceability regulations changes
Changes in regulations around serviceability assessments also came in early July, meaning further positive outcomes for the lending space. APRA announced that authorised deposit-taking institutions will be able to set their own minimum interest rate for use in serviceability assessments, using an interest rate buffer of at least 2.5 per cent over the loan’s interest rate.
For borrowers, this means a significant shift to a common barrier of entry when it comes to serviceability for home loan. It presents another huge opportunity for mortgage brokers to assist home buyers.
Open banking
Another twist this year has seen is regulation changes in regards to open banking. The new Open Banking and Comprehensive Credit Reporting rules that have come into play allow customers to request for banks to provide financial data to mortgage brokers. This will allow brokers to better assess a client’s financial position and spending patterns, so they can offer more suitable and helpful solutions. It’s becoming easier for brokers to get the best results for their clients.
What brokerages can do to stay on top in 2020
With so much change to the industry this year, it begs the question of what business owners and mortgage brokers can do to protect themselves for the future.
We sat down with Jason Back of Broker Essentials earlier in the year to absorb his insights into what brokers should be doing now to fortify themselves for 2020 and beyond.
Plan ahead now
More change will come in the future, its inevitable, and it’s worth asking ‘what if?’. Think about how you’ll survive if trail commissions are scrapped in three years’ time, and consider what your customers need.
Bring it back to the customer
As scary as 2019 has been for our industry, many have viewed it as a necessary and good thing. The Royal Commission was intended to improve consumer experiences, and that’s what we’re trying to achieve every day. See this as a great opportunity to look at how you can improve your service and take better care of customers. Have conversations with them to work out what they really need from you and how you can offer that.
Understand your value and expertise
Heading into the future, you should have a solid understanding of what you uniquely offer to clients and the industry. What is your unique point of difference? Look at how you can stand out as a specialist in the market, and focus your efforts on that.
Bolster your team
Candidates are likely to feel insecure and unsure about their future with all the industry changes taking place. This is an opportunity for you to offer an outstanding employee value proposition and attract the best talent to your business. Demonstrate how committed you are to employee growth and happiness, and showcase what you’re doing to respond to shifts in the industry. By hiring the right people now, you’ll be in an excellent position to survive and thrive in the future.
If you’re feeling rattled after a big year, we’d love to help you create a strategy for your business or career to get back on track and feeling confident again. Reach out for a free consultation with our expert team!
