Education the key to helping clients coming off fixed loans
The Reserve Bank’s decision to keep the official cash rate steady, and the prospect of rate cuts possibly from mid-year, provides a much-need confidence boost for the market, says a leading Adelaide mortgage broker.
Leah Busby (pictured above) is the director of Blackfish Finance, based in the seaside suburb of Glenelg. Blackfish Finance was ranked the No.2 AFG brokerage in Adelaide in 2023. Busby was also named an excellence awardee in the Equity-One Broker of the Year – Productivity category at the 2023 Australian Mortgage Awards.
Busby said the RBA’s call on Tuesday was a great relief, especially for clients coming off their low fixed rates, “that it’s not going to keep escalating”.
“It makes a difference for clients in regards to their affordability,” Busby said. “For the last two years, when a client has been goal setting to buy a property, we’ve been making sure that they’re aware that every time interest rates go up you can borrow less.”
Knowing that rates had started to steady, provided the market more confidence in regards to clients seeking to buy property. “Hopefully the rates will start to come down later in the year,” she said.
While the number of home loan inquiries the brokerage received hadn’t changed much, Busby said conversations were being held with customers advising them that if interest rates fell, they could borrow more.
“Some clients might pause on their purchasing power and if they’re not in a rush to buy a house in the next three months, potentially in the next six months they might be able to spend more and get back into that price bracket they wanted to get into,” she said.
Busby said there had been a surge of first home buyers wanting to find out about the various government grants and schemes available to them. “We’re also seeing a big demand in clients wanting to upgrade their family home,” she noted.
Looking ahead, Busby said interest rate cuts and improved bank pricing on loans would boost refinances and lift activity for brokers.
Customers moving off fixed rate loans
The majority of Blackfish Finance’s loan book were clients on variable rates, but Busby said she also had a mix of clients on fixed rate loans – some were on 1.99% coming to the end of a five-year term and others were in the middle of a three-year term on 3.99%.
Busby said the brokerage worked closely with fixed rate clients to make sure they were aware of the current rates and what’s likely to happen in the market in coming years, talking them through the pros and cons of fixed and variable rate options.
Customers whose fixed rate loans were ending typically faced moving on to variable rate loans around the 6% mark, while the lowest available four-year fixed rate available was 5.69%.
Busby said Blackfish Finance had been educating clients for the past two years about rolling off low fixed rates onto higher variable rates, including reaching out on social media, “to get them as ready as possible”.
For the last six months, Busby has been telling clients to adjust their repayments ahead of the rollover.
“This does two things, it either gets your home loan repayments in advance, or it increases your savings, but most importantly it’s changing your lifestyle,” she said.
Blackfish Finance enjoys diverse client base
Busby has been a broker for more than 15 years and while many of Blackfish Finance’s clients are in Adelaide, the brokerage has clients across Australia, including first home buyers, property investors and refinancers.
“Online Teams meetings really support us being everyone’s ‘local’ broker, we’re just online more now for local and interstate clients,” she said.
Busby is the only loan writer and is supported by a team of six – three para brokers and three admin staff. Attached to the brokerage is Blackfish Financial Planning and a conveyancing arm.
“We have three arms to the business, so can help clients with all of their finance, insurance and property needs,” she explained. “We help the clients have a whole circle of experts to help them.
“Our client base has evolved with the business, the first home buyers we helped 10 years ago are now in family homes and buying investment properties and we’ve helped them with car and business finance too.”
Busby said most business comes through word of mouth – “we get great referrals from people who have been told to call us for help”.
While some brokers believe long hours and personal sacrifices are necessary to achieve success, Busby said her babies have always come before her business.
“I still coach their basketball teams and do all the school runs,” Busby said. “If your system and team is set up correctly, you design it around you. Clients are busy too; they understand. They know that it doesn’t change the outcome or help they get from me.
“The technology available now can really help people streamline and work smarter. Keep updating and improving your system as you learn something new. Spend time learning from brokers you’d like to work like.”
Busby said the best part of being a broker is finding the solution and helping people with their goals.
“I just love that we’ve been on the whole life journey with so many of our clients,” she said. “First home buyers, getting a partner, becoming parents, then family home and investment properties. I love it.”
Asked to provide a tip to other brokers to help grow their business, Busby said: “Educate everyone, be clear and honest. If it’s going to be hard work, explain why based on their situation.”
What conversations are you having with your clients about interest rates and the likelihood of rate cuts? Comment below