Negativity has entered the mortgage market.
It's no surprise with higher interest rates (and the potential for more), a persistent housing shortage, ongoing inflationary pressures and increased costs of living, rising unemployment, a new budget with revised tax laws, falling house prices and general uneconomic uncertainty, both in Australia and abroad. The mixture has created a difficult backdrop for borrowers.
According to the Mortgage & Finance Association of Australia's (MFAA) August 2026 Market Sentiment Survey, nearly half of mortgage brokers surveyed (49.2% out of 588 mortgage brokers surveyed) said clients are increasingly unable to refinance because of serviceability requirements. That's a stark contrast to the 24.4% of mortgage brokers who said the same thing just six months ago.
The top three concerns reported by brokers were cost of living, federal budget changes and higher interest rates. Meanwhile, 37.9% of brokers said borrowers were feeling neutral about the general financial environment, while just 6.8% said their clients had a positive outlook on the market.
"The concern is the growing gap between borrowers wanting to improve their position and actually being able to do so. That's something we need to pay close attention to, particularly where borrowers are meeting their current repayments, but can't access a lower cost loan," Anja Pannek, chief executive officer at the MFAA, told Australian Broker.
"For borrowers, the message is don't wait until you're struggling," she continued. "Ninety-four percent of brokers are already proactively monitoring their clients' loans. An early conversation gives everyone more options."
And the pressure is expected to continue, with 40.7% of brokers predicting more clients will struggle to meet their home loan repayments over the next six months. But the survey also points to a more encouraging trend.
"While the increase in negative sentiment is significant, there is also a positive story in how mortgage brokers are helping their clients respond,” Pannek said.
In fact, brokers are increasingly stepping in to help borrowers navigate challenges and find ways to reduce the pressure. Over the past six months, 96% of brokers surveyed helped clients secure a discount on their home loan, while 95% helped clients refinance with a new lender. A further 91% helped borrowers restructure their home loan, while 84% provided support with budgeting strategies. The role of brokers also extended to newer clients, with 89% of brokers saying they had helped first-time mortgage-broker clients refinance their loans.
"These results show the value of seeking support from a mortgage broker when lending conditions become more complex,” Pannek said. "The broker relationship is built on trust, not simply completing a transaction. If the answer today is 'no,' the conversation should still provide a pathway forward and a reason to keep talking."
With serviceability pressures making refinancing harder for some borrowers, brokers have an important role to play in helping clients understand what is realistically available to them, rather than simply chasing a new loan.
Pannek said there are several ways brokers can support clients through a tougher lending environment, from setting realistic expectations to exploring alternatives and helping borrowers understand what they can do now to improve their position later.
For some borrowers, the best outcome may not be a new loan immediately. Pannek said brokers should be upfront with clients about what is and isn't achievable, particularly when serviceability requirements prevent them from refinancing.
"Sometimes the most valuable thing a broker can do is tell a client that refinancing isn't the right option today and explain why," she said.
That conversation can help prevent borrowers from wasting time pursuing options that are unlikely to succeed, while also giving them a clearer understanding of what needs to change. It can also provide a roadmap for revisiting their options when their circumstances or lending conditions improve.
If refinancing isn't currently viable, that doesn't necessarily mean a borrower has run out of options. Pannek said brokers can work with clients to examine alternatives, including negotiating with their existing lender, restructuring their current loan or considering different products and lenders.
"Brokers can negotiate with the existing lender, look at restructuring, consider other lenders and products, or help clients understand what needs to change to improve their options in the future," she said. "The value of a broker is being able to look at the whole picture and find an appropriate option for that individual client. Sometimes that's refinancing and sometimes it's getting a better outcome without moving lenders at all.
"This is where brokers play an important role," she continued. "Many borrowers may still have opportunities to reduce their repayments, even if refinancing is not immediately available. The first step is having that conversation early.”
For brokers, that means looking beyond the headline interest rate and taking a broader view of the borrower's financial position. In some cases, a better outcome may come from changing the structure of an existing loan, securing a more competitive deal with the current lender or identifying steps the borrower can take now to strengthen their position for a future refinance.
The key, Pannek said, is starting the conversation before a borrower's options become limited. Early discussions give brokers more time to assess the situation, identify potential alternatives and help clients understand what they can do to put themselves in a stronger position.
In a tougher lending environment, the broker-client relationship doesn't end once the loan settles. For brokers, maintaining that relationship can mean staying in touch with clients, checking in as their circumstances evolve and making sure they know when it may be worth reviewing their loan.
"This environment really demonstrates the value of maintaining relationships long after the original loan settles," Pannek said. "Ninety-three percent of brokers reported returning clients. That reflects an industry built on relationships and trust, where clients come back as their circumstances change.
"With brokers facilitating 81.6% of new residential home loans, that relationship is clearly something Australians value," she continued. "The opportunity is to keep earning that trust by being there throughout the life of the loan, not just at the beginning."
