Looking ahead in 2015 – is that opportunity knocking?
2014 was a fantastic year for mortgage brokers with many writing record volumes as the industry-whole accounted for 1 in every 2 loans written, and the opportunities for mortgage brokers are unlikely to stop there with housing market conditions expected to remain favourable in 2015.
So what is in store for the Australian economy this year?
With the cash rate at an all-time low, housing construction demand levels high, strong credit growth figures and rising property prices (particularly in Sydney and Melbourne) it would be easy to expect interest rates to be heading north sooner than south; but that is the interesting scenario in which we find ourselves with some of the country’s leading economists predicting the cash rate to fall as low as 2.0% this year, a prediction that is strengthened by recent unemployment figures which hit a 12-year high of 6.3% in November.
RBA Governor Glenn Stevens has indicated he is happy with the cash rate at the current level, so either way; it appears an all-time low interest rate environment may continue right through to 2016 – which should result in plenty of opportunity for mortgage brokers.
According to CoreLogic RP Data, median house prices in Australian capital cities grew by 8.4% year on year in 2014, led by Sydney’s outstanding 12.7% growth and Melbourne reporting a 7.8% increase – is it sustainable and can we expect more growth? They are the questions everyone is asking.
With rates expected to remain at low levels, possibly even decreasing, housing market activity is expected to remain high. Whilst the growth rate in Sydney and Melbourne is expected to soften a little they are likely to continue growing, but at a much more modest pace; Brisbane is expected to regain ground previously lost; and Adelaide and Hobart may experience modest growth also.
Commercial property is expected to continue to perform well following accelerated demand from investors in 2014, as they chase the much better yields Commercial property affords over those provided by traditional Residential investments.
Cost of living
OPEC (or the Organisation of the Petroleum Exporting Countries) has certainly looked after us at the bowsers so far this year, following their defiant stance to keep oil production levels high when demand dropped; oil prices have been drastically reduced – meaning cheaper fuel and importantly more money in consumers’ pockets each week.
However, this has been partially offset by the Australian dollar falling (at US$81c at time of writing), and with Governor Stevens announcing he would like it to fall further to around US$75c, the cost of imported goods and overseas holidays are likely to increase.
With soft wage growth predicted that is unlikely to outpace the economy it appears whilst there is a short term win for consumers wallets, the longer term effects are likely to be fairly neutral.
So what does this all mean for mortgage brokers and the mortgage industry generally in 2015? It smells very much like opportunity to me.
Plans for 2015
We have so many great plans for the New Year and we will begin to update you on these initiatives shortly, but I can tell you in 2015, we will be releasing new products, enhancing our existing product range, launching a new advertising campaign and expanding both our credit and sales teams to further improve our reputation as the “brokers choice” of specialist lenders.
Plans are not untypical with the coming of a New Year as it is a time of optimism, and while our plans are well advanced and have been in the making for some time, it is also for many, a time for reflection.
Did I achieve my goals? Am I setting new ones? Who can forget those New Year's resolutions that so often fall by the way-side "I’m going to manage my finances better", "I'll start saving again" or, "we will take that long promised holiday".
Often, in order to pursue the financial goals mentioned above, the setting of a new budget and a complete review of the financial situation is required in order to make them happen, which for many can mean refinancing.
Whilst this financial makeover may be a straight-forward process for many, some of your clients may encounter a few financial road blocks along the way, owing to exceeded credit card limits (even more so when those Christmas expenses come home to roost) or the odd missed payment or default on their credit report which won't pass the bank's credit score even if you try.
Whether it is to consolidate debts in order to start fresh and move forward, a simple equity release exercise to make the overdue holiday a reality, or perhaps even to buy that investment property, we can assist as our broad range of products have been designed to remove these very road blocks, allowing you to meet your clients’ requirements and objectives.
Watch this space!
We look forward to bringing you more news on La Trobe Financial and our products as we head into 2015, so watch this space and we wish all of our business partners a very successful 2015.
So where the banks' won't help, La Trobe Financial probably can. Do what hundreds of brokers do and call our credit team directly on 13 80 10 or arrange an appointment to see your Senior Manager Client Partnership in person to discuss these opportunities.