Loan Base's Andrew Loucas says buyers have new concerns in a changing market
With rates rising and inflation impacting the economy, property buyers have to deal with a whole spectrum of unfamiliar issues.
Clients worry about overpaying as home values continue to moderate, whether to get a fixed or variable loan, and borrowing capacity.
Andrew Loucas, senior mortgage broker at Loan Base, recently chatted with MPA about the issues prospective buyers are bringing to brokers.
“There’s been a lot of information for borrowers to take in and understand how their situation is changing, as the environment is changing at a rapid pace,” Loucas said. “Clients are worried they will pay too much in the current climate, and are particularly wary about over-committing themselves financially.”
Loucas said that current homeowners coming off record-low fixed rates are sometimes confused about what options are now open to them.
“Many were keen to fix rates when we had record-low home loan rates on offer. However, in the span of a few months that completely flipped on its head,” he said. “Given the large increases in fixed rates we’ve seen, clients are now more inclined to go variable.”
The decision to go with a fixed or variable rate often comes down to the individual borrower’s outlook on the future. However, there are a range of new factors to consider in the current environment.
“We’ve had to educate many of our clients on some impacts to borrowing capacity,” Loucas said. “With spaces for the First Home Loan Deposit Scheme running out, more clients are asking about lenders with no or reduced lenders mortgage insurance.”
Read more: A broker-led model helps navigate a changing property climate
Loucas said brokers were also having to explain debt-to-income ratios, the importance of living expenses as inflation rises, and an increasing number of new loan products.
Still, the pandemic years have made borrowers savvier in some ways – particularly when it comes to digital mortgage products.
“Clients are more willing to obtain a home loan without leaving the comfort of their home,” Loucas said.
Borrowers are also shopping around more, he said.
“We have found clients are also becoming self-educated, as they aren’t simply taking the lending option their local branch has offered, but instead consider the options of two or three lenders,” he said.
