CoreLogic suggests that mortgage brokers who are looking to specialise in certain markets such as refinancing must qualify their leads. Otherwise, they could be wasting valuable time and money chasing leads in the wrong markets.
National Market Data May Be Misleading
At present, the mortgage market in Australia is driven by a high percentage of refinancing related events. These events include restructuring of home loans, finance top-ups and lender switching.
CoreLogic data suggests that refinancing accounts for around 70 percent of activity across their platforms. While purchases account for 25 percent of CoreLogics activity, construction 5 percent, and mortgagee in possession less than 0.5 percent.
Over the last 12-months to April 2016, CoreLogic estimates that approximately 339,100 homes and 133,100 units have sold across Australia. Based on year-on-year data, home prices have dropped by 3.7 percent over the last 12-months, and unit sales fell by 9.7 percent over the same time. Data collected also suggests that over 60 percent of home and 70 percent of unit sales are occurring in capital cities.
However, CoreLogic feels that this information may be misleading to brokers even though it gives them a system overview, as it pertains to a national market and not to a local. Therefore, CoreLogic suggests that brokers who are seeking to grow their business focus their attention on understanding their local market dynamics especially in relation to refinancing, purchases and construction activity.
How a Broker Can Focus on the Local Market
CoreLogic believes that a mortgage brokerage business typically grows by using marketing, leads and referrals, and while all of these methods have positive actions, they also have challenges. It is also important for mortgage brokers to remember that many local areas diverge from the national market and its averages. So by knowing where these areas are in relation to your clients needs refinancing, purchasing or construction you can give yourself a market edge.
It is vital that a broker also considers whether the information they have found in relation to a local market is up-to-date, detailed enough to make it actionable and if this information can support client communications.
CoreLogic feels that finding information that provides insight which is actionable is the key to building a successful brokerage business, regardless of whether the brokerage is general or segment focused. Typical sectors of the market that brokers may focus on include:
First home buyers: Brokers need to look at local market data so they know what property is available and has recently sold, what areas are the most affordable, and which areas are best suited to the clients budget.
Downsizers: Knowing the value of the clients existing property and how quickly stock is moving in the area will enable a broker to provide their client with choices that are relevant. Its also important for a broker to work out what the average discount on property that is selling is and if this will have an impact on the clients level of finance.
Upgraders: Before buying, a broker needs to know how much the clients existing property is worth, and what areas they are seeking to purchase a new home in, and why. Its also important to ascertain whether it is the style of home or a particular area that the client is attempting to upgrade.
Investor:A broker needs to know which areas and dwelling types represent the best value for an investor. By understanding buying and selling trends, a broker should be able to determine which areas have the highest rental yield and capital growth.
As a mortgage broker, you should have a sound understanding of the industry so that you position yourself as a go to person for a client. Build as much rapport as you can with each and every customer, and break information down so that its easily understood and digested by your client. If you do not know an answer to a customers question, then tell them you will do some independent research and give them an informed answer shortly.
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Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!