Borrowing capacity a key concern, says broker

Clients unable to borrow as much compared to 18 months ago

Borrowing capacity a key concern, says broker

Broker Paul Nelson says the best part of his job is the satisfaction that comes when he and his team fulfil a client’s dream of owning a home or achieving their goal.

“We all feel so lucky to be part of this incredible life journey with them and always feel thankful that they trust us with their massive financial and life decisions,” Nelson said.

Nelson, who was a finalist (excellence awardee) in the NAB Broker of the Year - Regional category at the 2023 Australian Mortgage Awards, became a broker in 2001.

Nelson’s company, Nelson Financial, primarily services Victoria’s Torquay, Geelong and Surf Coast, but also has clients throughout Australia and many of them are friends or family of existing clients.

While most of the work Nelson does is refinancing, there’s also a mix of loans for purchases and construction.

Plenty of challenges for mortgage brokers, says Paul Nelson

According to Nelson, the job isn’t without its challenges, especially when he’s working with clients who can borrow less than they could 18 months ago.

 “The extra work, effort, research, and skill set across our team gives us great grounding to help and assist clients achieve their goals,” Nelson said.

“We are on track to write slightly more in 2023 than 2022 due to extra CRM systems and efficiencies, and a lot more work.”

Nelson said there were many wider issues facing brokers and their clients – including inflation and rising rates which many in the industry believe were impacting borrowers more than ever before.

He doesn’t rule out further interest rate rises but for many clients qualifying for a loan remains the greatest challenge.

“It now requires so much more work, effort, and teamwork [to secure a loan], than it has in the last 10 years.

“The results we are getting are still really good – it just requires more work – which is fine, this is what we are here for after all.”

Nelson said in many ways the rapid rise in rates “threw everyone out” particularly after the former RBA governor Philip Lowe declared there would be no rate rises until 2024.

“We have had so many rate rises, and banks independently increasing their rates outside the RBA, so that’s also been hard.”

Brokers yet to see a major dip in property prices: Nelson

Nelson said while property prices hadn’t returned to their COVID peak, they were still well ahead of pre-COVID prices.

“There has been so much thrown at the property market like GFC, COVID and now rates, the market has held pretty well, and property is still in demand.”

According to Nelson, when rates eventually decrease there will be even more demand from clients who are currently waiting to buy, and demand will further increase because of immigration.

He said the lack of vacant land to build on, and construction constraints, would also play a role in ensuring the buoyancy of the property sector.

“I am just not sure what needs to be thrown at the property market for prices to decrease like we are all led to believe [will happen].”

Customer care is key for mortgage brokers

Nelson said he had a simple philosophy when it came to taking care of his customers: “provide a service to all clients that you would expect yourself”.

“Be open and honest and always be there for clients – be proactive with clients … always keep them up to date and explain the process of why.  Knowledge is power – become financially educated and pass this back to clients.”

Nelson’s clients generally range in age from 25 to 55 and include those who are upsizing or downsizing their homes, undertaking renovations, putting in new kitchens or bathrooms, or adding pools or garages.

“I’m seeing everything in this current environment. My oldest client was age 82 on a 30-year loan term though – event she could not believe it.”

Hard to know what success for a broker looks like

Nelson admitted that it was hard to define what being a successful broker meant.

“Success is hard to quantify, and individual success is different,” he said. “For me it has been long hours, big days and sacrifices by my entire family to achieve our success and happiness.”

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