Serviceability stays the primary cause mortgage dealer shoppers are unable to refinance, in line with a brand new survey carried out by the MFAA.

The height business physique for mortgage brokers launched its second Refinancing and Mortgage Stress survey on Thursday.

The survey, of greater than 440 mortgage dealer respondents, was carried out by the MFAA in February, with the intention of understanding how modifications within the lending market and financial system are impacting debtors.

“The dial hasn’t shifted relating to mortgage holders with the ability to refinance, with our survey indicating that greater than half of mortgage brokers having significantly extra shoppers on this place than six months in the past, once we first ran the survey,” stated MFAA CEO Anja Pannek (pictured above).

In 2023, there have been unprecedented ranges of refinancing with greater than 880,000 loans coming off ultra-low mounted charges final 12 months and an additional 450,000 mounted charge loans  anticipated to run out this 12 months.

Pannek stated the MFAA knew that debtors coming off their mounted charges had been doing so in an atmosphere of markedly greater rates of interest, following 13 rate of interest rises since Might 2022.

The survey additionally revealed that 84% of mortgage brokers have shoppers in “mortgage jail”, an increase from 82% final 12 months.

“We have now heard repeatedly from our members about shoppers who’re good debtors, with a powerful compensation monitor file, being unable to refinance merely as a consequence of buffer charges,” Pannek stated.

“That is even when the consumer’s repayments would truly lower in the event that they have been to modify lenders, trapping extra Australians right into a mortgage jail.

1% buffer for refinances exhausting to entry

Because the first MFAA survey in 2023, some lenders have launched a 1% buffer for dollar-for-dollar refinances. Nonetheless, the survey discovered lenders’ strict necessities for eligibility made it tough to entry financing beneath this feature.

“Whereas 59% of our members advised us that the 1% serviceability buffers have made it considerably simpler for his or her shoppers to refinance, additionally they famous that additional modifications to serviceability buffers would help extra of their shoppers to refinance,” Pannek stated.

“We imagine it’s attainable for lenders to keep up accountable lending and assist extra debtors out of mortgage prisons, by having flexibility relating to addressing the wants and goals of a borrower.”

Pannek stated the necessity for flexibility on buffer charges must be a long-term consideration, even when rates of interest do come down sooner or later.

The survey additionally revealed that 83% of brokers reported their shoppers being extra involved about assembly their repayments than six months in the past.

“This has declined from our survey final 12 months, dropping by 10 share factors from 93%, however stays very excessive,” Pannek stated.

“Rate of interest will increase are nonetheless cited as the principle cause debtors will discover it difficult to make repayments within the coming six months, nonetheless in comparison with final 12 months’s survey this has dropped by near eight share factors, indicating that total debtors are considerably adjusting to present rate of interest ranges.

“We must always not overlook the very fact, nonetheless, that there are additionally many debtors struggling, with the survey indicating that hardship enquiries, whereas nonetheless low, are beginning to improve.”

Pannek stated the insights MFAA members shared within the 2023 survey had been instrumental when it got here to advocacy.

It had centered the federal authorities’s consideration on streamlining the discharge course of for debtors beneath stress via the reinvigoration of the ACCC Dwelling Mortgage Value Inquiry.

“Our insights have additionally been sought out by authorities as they search to grasp what is de facto taking place on the coalface for Australian house mortgage debtors as a part of its broader give attention to competitors throughout the Australian financial system,” stated Pannek.

“The outcomes of this survey will show shifts over time and will likely be instrumental in our continued advocacy on behalf of our members and their shoppers.”

Does the survey mirror the issues your shoppers are experiencing with serviceability? Remark under