Home loan platform CEO points to resilience in the mortgage market
Lendi co-founder and CEO David Hyman (pictured) often jokingly refers to property as Australia’s second national sport - our intrigue with the property market aptly reflected in Lendi’s recent survey of 1,100 Australians. In it, 61% of participants said their property ownership goals hadn’t been affected by COVID-19 or the wider economic environment. For Hyman, this goes to show just how resilient the market really is. He told MPA that this poses significant opportunities for brokers.
“There’s probably two ways to think about it,” he said. “One is on the refinance side. Because rates have come down so significantly there is a large number of customers that are still on older, expensive rates, so there’s a huge opportunity for brokers to target refinancing opportunities with their customer base.
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“The other side is from a purchase perspective. Even though prices are going up, the cost of money, on the interest rate, has meant that homeownership is more affordable for more people.”
Even though there was a lot of refinancing activity from March to June last year, there still remains plenty of opportunity for brokers to tap into, he said. This is largely because the lowest rates in the current market are on fixed rate home loans, while a lot of existing borrowers are paying higher interest on variable rate loans. Variable rates haven’t dropped as much in recent months, representing a significant saving for those in a good position to fix.
“If you have an owner occupier customer who’s on a variable rate and they’re not looking to move there’s a really strong case for them to take out a fixed rate given where we are in the interest rate cycle,” he said.
In terms of purchasing, Hyman pointed to the falling unemployment rate and rising participation rate, explaining that both were good for the property and broker markets.
“Hopefully, we start to see more supply coming on the market as there is a bit more economic certainty,” he said.
On the recent RBA report that pointed to a 30% property price rise over three years, Hyman said this, coupled with Lendi’s findings, revealed just how strong the Australian property market is.
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“A lot of people have made a lot of money in property over time, either through their principal place of residence or through investing,” he said. “Given the low-rate environment, given the other tailwinds like potentially changing or removing responsible lending obligations as they relate to mortgage loans, I think you don’t have to take too many stretches to see how the RBA prediction might come to pass over the next few years.
“Australian borrowers have been very fortunate that the Australian response, and ultimately the recovery off the back of COVID-19, has been really strong. The support from the government just means that there’s a lot of resilience in the market and borrowers have really benefited from that.”