3 ways to deepen client relationships in a challenging market

Proactive conversations now can deepen client relationships and build a loyalty dividend that can last a lifetime. 

Mortgage brokers are stepping up to help their clients navigate more adverse market conditions, with rising interest rates and inflation potentially putting some borrowers under pressure. 

The mortgage broker panel at Pepper Money’s Insights Live 2022 event was a lively discussion on the opportunities and challenges for brokers today. The message was clear: proactive conversations now can deepen client relationships and build a loyalty dividend that can last a lifetime. But you need to invest time and effort – and consider how else you can provide value.

 “There’s never been a moment in our lifetime that presents such challenges and opportunities for our industry,” said Pepper Money’s General Manager, Mortgages and Commercial Lending, Barry Saoud.

“If this isn’t a catalyst to expand your offering, I don’t know what will be – because demand will drop,” urged Stuart Donaldson of Accendo Financial. New home loans declined 4.4% in June, signalling a cooling in activity that will – along with a valuation reset – inevitably impact commission income.  

“Your piece of the commission pie can be largely attributed to the value of housing and the number of homes that are selling,” said Core Logic Research Director Tim Lawless. “That is going to come down, but there are still plenty of opportunities.”

Get ready to refinance

Tim expects to see a short, sharp slowdown in the property market – with prices coming down 10% to 15% nationally, and larger falls in Sydney and Melbourne.

This will impact valuations. Katrina Rowlands of Mortgage Success emphasised the importance of setting realistic expectations with borrowers. “When I have a client who expresses surprise that rates are going up, I have to say; ”they were zero, where did you think they were going to go?’”

“I say it nicely,” she adds. “I think it’s so important to use our experience – to let them know where we see potential pitfalls, and to add value by sharing that information before they’re halfway through the process.”

Brokers looking for growth should focus on investor and next-home buyer demand, according to Tim. “Investors are becoming a larger portion of the market, about 21% of new mortgage demand. They are less impacted by higher interest rates and motivated by extraordinarily tight rental markets and rising yields.”

The other looming opportunity is a sizeable ‘refi cliff’. “Expect a surge of activity starting February 2023, as people come off fixed rate loans,” noted Tim.

Ex-broker Ruan Burger of Success & Broker advises brokers to take proactive steps ahead of this expected refinance activity.

“Your aggregator software should be able to tell you who’s about to come off a fixed rate, and you need to tell them what that will look like. This is your moment to do what is right – and if you do, you’re also creating an opportunity for a referral. They may have friends in the same situation,” he said.

Solve more problems for more clients

Beyond home loans, Stuart sees enormous opportunities to leverage strong client relationships into new revenue streams.

My one piece of advice to brokers is to do something to diversify your business today. Talk to your Pepper BDM and get accredited. You need to build resilience in your business model.

With seven in 10 mortgages being placed through a broker, Stuart says they should feel confident their clients want to deal with them. “They love you. They’re time poor, you’re independent, you’ve got the market covered, you get them the best deals.”

And that means understanding their broader needs – from asset and vehicle finance to commercial properties, and even health insurance or foreign exchange. “Many clients are also business owners, and there’s a lot we can do,” urged Stuart. “Take the step now, and in six months you’ll have new business streams. You’ll de-risk your business and scale.”

Understand your value

Ultimately, the success of this strategy will come down to how well brokers can explain their value in the market. Katrina says this is a huge opportunity to create lifetime clients.

“I want to be the person clients call first to discuss their options. I like to take the pressure out of the process by asking them what is on their wishlist, and what keeps them awake at night. They just want to know someone cares, and when they feel that they are immediately calmer. You’ve taken the pressure from their shoulders.”

Katrina describes her value as “helping people’s dreams come true.” In the current market, that also means protecting those dreams. By asking the right questions, and providing knowledge and reassurance, brokers can put themselves in the best position to win a client’s business – for life.