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

The height trade 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 adjustments within the lending market and economic 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,” mentioned 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 fastened charges final yr and an extra 450,000 fastened fee loans  anticipated to run out this yr.

Pannek mentioned the MFAA knew that debtors coming off their fastened charges had been doing so in an surroundings 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 yr.

“We’ve heard repeatedly from our members about shoppers who’re good debtors, with a powerful compensation observe file, being unable to refinance merely because of buffer charges,” Pannek mentioned.

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

1% buffer for refinances laborious to entry

For the reason that 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 below 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 adjustments to serviceability buffers would help extra of their shoppers to refinance,” Pannek mentioned.

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

Pannek mentioned the necessity for flexibility on buffer charges needs to 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 yr, dropping by 10 share factors from 93%, however stays very excessive,” Pannek mentioned.

“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 yr’s survey this has dropped by near eight share factors, indicating that general debtors are considerably adjusting to present rate of interest ranges.

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

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

It had targeted the federal authorities’s consideration on streamlining the discharge course of for debtors below stress by way of the reinvigoration of the ACCC Residence Mortgage Value Inquiry.

“Our insights have additionally been sought out by authorities as they search to know what is de facto occurring on the coalface for Australian dwelling mortgage debtors as a part of its broader concentrate on competitors throughout the Australian economic system,” mentioned Pannek.

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

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