Sort My Finances - Mortgage Broker

FIVE WAYS MORTGAGE BROKERS CAN HELP BORROWERS

Over the past few years, borrowers have been challenged like never before with rapidly rising interest rates catching many off guard.

When interest rates are changing, borrowers need to be proactive in how they manage their mortgage. This is why working with a mortgage broker can be incredibly valuable.

Here are five ways mortgage brokers can help borrowers in the current environment:

Guidance on interest rates
With interest rates changing and a huge range of products on the market, it’s difficult for an average borrower to stay on top of what certain lenders are offering at any given moment. Mortgage brokers continually stay on top of both market trends and product offerings.

Whether interest rates rise or fall, mortgage brokers are well positioned to compare your options and find an appropriate solution to your needs. Mortgage brokers have their finger on the pulse when it comes to what the market is offering at any point in time.

Access to a variety of lenders
A significant advantage of working with a mortgage broker is gaining access to a diverse range of lenders. When interest rates rise, brokers can use their knowledge of different rate structures to compare lenders offering more favourable terms for various borrower profiles. Having more options to compare, means that borrowers will have the best opportunity to obtain a more suitable loan product.

Negotiating better terms
Contrary to common belief, mortgage rates are negotiable. Mortgage brokers advocate on behalf of borrowers, actively securing competitive rates and terms through effective negotiation. Leveraging their communication skills and relationships with banks, brokers can ensure borrowers receive the most favourable terms, contributing to significant long-term savings.

Financial solutions
Mortgage brokers understand that each borrower is unique and focus on building individualised strategies and solutions. By understanding personal financial circumstances, brokers can offer solutions that align with each borrower’s specific needs and goals.

Access to professionals
Beyond mortgages and lending, mortgage brokers are able to connect borrowers with a network of professionals, including financial advisors, accountants, etc. This additional layer of support ensures that borrowers not only receive guidance on their mortgage but can also access comprehensive financial advice from other professionals.

THE BUILD-TO-RENT SECTOR SET FOR A STRONG 2024

The build-to-rent sector (BTR) is set for a strong year ahead, with Australia’s surging population growth likely to drive increased demand for both rental properties and student accommodation.

In 2023, the build-to-rent and purpose-built student accommodation industry recorded its best year yet, according to MSCI. Commercial residential deal activity increased 77% to just under $3 billion in total last year, with the BTR sector seeing over $2.2 billion in transaction volumes.

Head of Real Assets Research for the Pacific region at MSCI, Ben Martin-Henry, said BTR was a “bright spot” in a year that was challenging for many commercial asset classes.

“We’re starting to see more and more projects come out of the ground after being in development for a number of years,” Mr Martin-Henry said. “Given the population growth that we have had, there should be no shortage of people taking up this space, so it should continue to boom.”

BTR has benefitted from a number of government changes, including the withholding tax rate for managed investment trusts being cut, due to come into effect in July 2024. The changed capital works tax deduction depreciation rate has also assisted the sector.

Martin-Henry said 2023 saw some asset classes (like office buildings) experience value downgrades and slowing transaction volumes – but that might start to present opportunities for developers.

“The first quarter might be quite a big quarter and if it’s not, then we’re in for another slow year,” he said. “Last year, we had the big issue where the gap between what buyers were willing to pay and what sellers were willing to accept was so large, it was one of the largest gaps globally, so there was simply no movement.

“So, with valuations moving, which I suspect they have done, you will start to see sellers having to adjust their pricing if they want to dispose of some of these assets and that will start to spur the market.”

Mr Martin-Henry said higher interest rates are slowing the market down, but that could start to change in 2024. “Everything is taking a little bit longer to get across the line at the moment because of cost of debt issues and general uncertainty,” he said.