While the threat of challenging market conditions was the biggest issue facing brokers this year, increased competition within the industry was also a major concern, according to the findings of a new survey.
Lender HomeStart Finance polled 70 brokers and found that 35% were worried about uncertain market conditions, 27% were concerned about tighter product restrictions, and 22% thought finding new customers amidst greater competition was a big issue.
Surprisingly, disruption by fintech was not on the radar with only 1% of brokers seeing this as a significant threat this year.
Beating the competition
HomeStart CEO John Oliver told Australian Broker
that mortgage brokers need to find new ways of bringing customers through their doors. In 2017, a key way to do this is by being present online, he said.
“The current generation of first-time buyers are tech savvy, so it’s essential for brokers to target these potential clients through online channels, including social media, and having a strong web presence to compete with the other online services and brokers.”
Social platforms such as Facebook can be used to target specific groups, Oliver said, although organic audience reach is becoming more limited. As such, brokers may need to pay to promote their businesses through these avenues.
The traditional method of word-of-mouth can also never be overrated, he said.
“Being trustworthy, offering a good service to your clients, and having a variety of loan options will result in them recommending you to their friends and family, which may result in new customers.”
Added product criteria and restrictions from lenders such as increased deposits to avoid LMI both equalled another major challenge for brokers, Oliver said.
“To overcome this, it is vital that brokers have a broad panel of lenders and a wide range of products to choose from, as this may help offset some of the restrictions they encounter.”
He suggested brokers look at lenders such as HomeStart Finance which offer alternative products such as low deposit home loans and mortgages for graduates.
“These products ensure that a broker has a wide range of solutions for clients who may not fit mainstream loan requirements.”
Surviving in a uncertain times
Unfortunately, the biggest concern for brokers – challenging market conditions – was ultimately out of their control, Oliver said.
“Housing affordability, unemployment rates and job insecurity are all having an impact on the number of Australians making it into home ownership. In turn, these market factors have led to a tightening of lending criteria, further impacting on home buyer numbers. For brokers, this means a reduced pool of potential clients.”
To be in the best position to overcome these challengers, brokers need to stay educated about any changing conditions. Having a variety of lenders and a broad range of products is also a great way to deal with any upcoming market shifts, Oliver said.
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