In a sign of growing financial awareness, more and more Australian borrowers are taking extra steps to educate themselves and explore their options before making major financial decisions, says Adelaide-based mortgage broker Bechara Boutros.
"People are being more cautious," Boutros, of Loan Market Vantage, told Australia Broker. "Money, for some people, it's hard to come by. And the cost of living, we hear about it all the time, for some families, it's quite expensive. So I think for a lot of people, it's: money is hard to come by; they want to be cautious; they want to be mindful. They don't want to be stretched."
In fact, while recent developments have generally worked in favour of borrowers — such as rising consumer confidence, easing inflation, lower interest rates and stable employment conditions — uncertainty continues to cast a long shadow over the economic outlook.
Reserve Bank of Australia governor Michele Bullock underscored this in her latest address, referencing "uncertainty" more than 130 times while explaining the central bank’s decision on interest rates. She emphasized that both global and domestic unpredictability will heavily influence future monetary policy. Adding to the complexity are ongoing geopolitical tensions, including fluctuating trade tariffs, which contribute to market volatility. Meanwhile, rising property prices remain a barrier for many aspiring homeowners and present challenges for those looking to upgrade.
It’s little wonder, then, that borrowers are taking a more measured approach, carefully researching all available options before making any commitments.
Boutros, for one, said he’s seen a clear uptick in borrowers proactively reaching out to understand what they can afford and what their lending options look like.
"I think there's a degree of responsibility," Boutros said. "Consumers have started to educate themselves, do more pre-work, more research and their own homework. They're taking their money and their financial position a little bit more seriously. A lot of people are reaching out to say, 'Hey, can you tell me what I can do? Can you tell me what my options are?’
"And I can't say that's always been the case. When money is easy to come by, so to speak, and rates are cheap, a lot of people don't do that pre-work. They just go ahead and do what needs to be done, because a lot more becomes affordable. When the market is squeezed, property prices go up, bank policies have shifted, and interest rates may or may not be higher."
At the same time, the lending landscape has grown increasingly competitive, with more lenders vying for borrowers’ attention by offering attractive rates and incentives. In the wake of Tuesday’s interest rate decision by the RBA, dozens of lenders responded by cutting their own variable rates. As a result, consumers now have a broader range of financing options. But navigating them can be complex. Not surprisingly, many borrowers are increasingly relying on brokers to help them navigate the growing range of loan products, compare offers and identify the most suitable solution for their financial situation.
One example of the more technical considerations borrowers are now aware of is servicing buffers — currently an extra 3% that lenders tack on to the borrower's interest rate during the assessment process to ensure they can manage repayments if rates rise.
"A lot of consumers are now talking about servicing buffers," Boutros said. "I don't think 10 years ago, many consumers knew what a servicing buffer was.
"As a broker, you have to be very well informed," he said. "You have to give [the borrower] the time it requires to understand their position, understand what they're trying to achieve, understand what's in their best interest. Help them navigate that process.
"Some people say, 'Can you do some research for me?' Which is obviously a pleasing sign to see,” Boutros said. "Sometimes the answer is, 'You can't do what you're looking to do today. And here's why. And here's some potential things that can help you.' Sometimes the answer is, 'Hey, you can actually do a lot more than what you were even thinking. And here's what that looks like.' So it is the education piece, but you can't educate someone if you yourself aren't across the changes, the rules, the policies that lenders apply."
But the trend toward financial caution seems to be influenced by more than just the most recent interest rate chatter or concerns over cost-of-living pressure. Several events in the past few years, including the pandemic, have significantly altered consumer behavior, Boutros said.
"The last few years have been volatile," he said. "And the landscapes changed before COVID, during COVID, and after COVID, and has probably realigned some people's financial smarts and financial knowledge. I think people just want to be a little bit more educated, a bit more informed.”
