Regional brokers educate clients on interest rate rise

by Jayden Fennell05 May 2022

As the dust settles on the Reserve Bank’s historic decision to lift interest rates for the first time in nearly 12 years, regional NSW mortgage brokers are helping calm clients and provide them valuable information. 

“As it has been a much-anticipated interest rate move, leading up to the rise we have been discussing with our clients to prepare and discuss whether fixing was the right move for their needs,” said On Point Home Loans mortgage broker Tara Gibbs (pictured above).

“In my 20 years of lending, I had not seen so many consecutive fixed rates hikes in such a short period. In a matter of weeks, we had changed from talking fixed rates in the low two’s to now locking in fixed rates in the mid to high threes.”

Read more: Big four banks lift variable interest rates

Gibbs said the brokerage, based in the South Coast town of Milton, had seen an influx of people move to the area with migration volumes across regional areas still strong.

She said it was important when talking with clients to show what the true impact of interest rates rises would mean.

“Helping our clients avoid anxiety that can be created by larger media steams and chat in real terms is important,” Gibbs said.

“We found by just making that phone call really helped our clients ease their minds about whether to fix or not. With so much hype around fixing loans, it’s not always right for the client and working through those reasons is what we are here for.”

Gibbs said as a relatively new brokerage, a lot of its clients had not seen a rate rise, so mentoring clients to alleviate fear was important.

“We have been really pushing for clients to review their household budgets and encouraging them to come in and see us so we can provide some tools that can assist with budgeting,” she said.

“Assisting clients with the mindset that there are things they can get in control of, in what seems like a very out of control situation.”

Read more: RBA lifts official cash rate

Gibbs’ broker colleague at On Point, Sarah Sakora (pictured immediately below), said the property market on the South Coast was still seeing strong results.

“The property market is incredibly strong,” Sakora said.

“We were seeing prices escalate and people achieving record prices in the local area over the last few months. People who are listing their properties at realistic prices in today’s market are still achieving their desired result. The local property boom is not done.”

Director of Newcastle brokerage Money Links Brenden Lowbridge (pictured immediately below) said educating his clients on interest rate rises and making sure they weren’t swept up in media madness was important.

“It is about educating and calming your clients and ensuring they have the right information, so they make the right decision around their loan,” Lowbridge said.

“As things progress, as brokers we will keep our ears close to the ground and relay information onto our clients. We want our clients to absorb this information from a calmer and educated point of view, so the right decision is made.”

Lowbridge said the next 12 months would determine where future interest rate rises would lead, and the economy needed to withstand higher interest rates.

“In many cases, people jump to conclusions that rates will continue to rise regardless of the fallout it has,” he said.

“The RBA reviews the economy each time it meets, so they are monitoring the potential fallout.”

Lowbridge said he wants to take a proactive approach to the RBA’s announcement with his database by running live webinars for clients, offering consultation calls and spending time with them to make sure they are not misinformed.

“Our clients have been stress tested at 3% higher than the current interest rate, so we know their affordability is there for them and we can remind them of that if that is the case. I also recommend to people if they haven’t already, to start building a cash buffer and have money set aside so as their overall expenses grow, money put aside can combat and make up any shortfall.”

Lowbridge said the Reserve Bank’s decision has not had a chance to impact the local property market yet, however he would not be surprised if Newcastle saw a slowdown in the number of sales occurring as a result.

“Likely in many property markets around the country, there is continued buoyancy. We still have a very low interest rate and people can still afford their loans, so it’s nice to see a more balanced market overall.”