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The Big Story: Brokers move in as banks go it alone

The banks are adjusting their interest rates independently of the RBA - creating a business opportunity for brokers.

Video transcript below:

Donna Sawyer, Australian Broker News TV
Donna Sawyer:
 Hello, I am Donna Sawyer and you are watching the Big Story on Australian Broker News TV.

The banks are going it alone by adjusting their interest rates independently of the RBA and that’s creating a business opportunity for mortgage brokers.  Ken Sayer of Mortgage House says smart brokers are reconnecting with clients to help them make sense of the confusion.
Ken Sayer, Mortgage House
Ken Sayer:  Brokers that are very close to their clients and stay in touch on a regular basis will see the fruits and realise an upside very quickly.  
Sarah Wells, redconcierge
Sarah Wells:  Brokers are finding now with the disparity between what one bank offers and another bank offers and also the fact that we starting to see the move out of line of the RBA, it’s certainly presenting a great opportunity for brokers, particularly when [we are always] are looking to find out what could be best offers available in the marketplace.  
Tony Bice, Finance Made Easy
Tony Bice:  The media that we have seen over the last couple of, over the last week or two has created the opportunity I think if  a broker leverages off that opportunity and provides the key advice, well they can do very well out of it.
Donna Sawyer:  And given the question remains over whether banks would choose to pass on any of the future RBA cash rate moves, what are brokers telling their dazed clients.  Sarah Wells of redconcierge says clients are looking for advice on fixed and variable loans.
Sarah Wells:  Most of my clients are asking me at the moment to have a crystal ball on what’s going to happen.  Fortunately, I don’t.  Generally what I am certainly seeing is a bit of a trend away from the big four.  There was a move towards the big four banks during the GFC when people were confused and concerned about I guess you know the imminent issues in the banking system.  There does seem to be a lot more trend at the moment towards people looking at some of the second tier and smaller institutions, but now it’s funny to see them also pass on rises in their cost of funds as well.  So I think my advice to my broker colleagues so they listen to your clients and try and get them to let you know what their concerns are over the next couple of years and then find a lender and a product that’s going to suit them.
Ken Sayer:  I have, I am going to call it a hybrid approach.  I think the official cash rates will continue to drop over the short foreseeable future.  However, bank margins have to increase, which is not going to cancel out, I think that the consumer can expect a lower drop or a slower drop in interest rates because some of it will be absorbed as it drops.  So my advice to clients and I usually don’t, but right now I am into negotiating a fixed rate loan for at least one to two years and keep a portion of that loan variable.  What we used to do in, many years ago we used to suggest a 50:50 split.  My mind is a very sharp 1 to 2 year fixed rate for say 75% of that loan and keep 25% variable.
Donna Sawyer:  Tony Bice of Finance Made Easy says there is also an opportunity for brokers with many home owners wanting to refinance.
Tony Bice:  I think the best way for a broker to capitalise on this opportunity is to go out a short sharp newsletter, either online, take every opportunity to talk to clients, even if it’s ringing 5 clients a day.  If you ring 5 clients a day and just say hello and then bring up in your conversation the fact that what’s happened and the confusion around it, I think that most of those clients would be attracted to listening to an alternative.
Donna Sawyer:  For more on interest rate advice and other industry news, click around the Australian Broker News website.  I am Donna Sawyer and I will see you again next week with the Big Story.