A new report has revealed six megatrends that mortgage brokers should have on their radar during the final months of 2022 and looking ahead for next year.

On Friday, October 21, NAB launched Market megatrends 2022: Uncovering the opportunities for brokers, a practical guide to navigating Australia’s fast-moving property market.

In partnership with Core Logic, they have identified six key market forces or “megatrends” that are shaping the broker marketplace today and into the future. We summarise them below:

The pace of change

As property markets reacted strongly and swiftly to extremes in economic activity over the COVID period, conditions are now returning to pre-COVID-19 norms.

Overall, transaction activity and price movements may see less volatility in the years ahead. The housing market is also experiencing a downswing in areas so we will see a normalisation in house prices and values.

A softer landing

Returning migration, high rental demand, strong mortgage serviceability and fewer listings might already be stemming property price falls.

This will create a softer landing than expected from the 30% upswing in home values in less than two years and the subsequent slowing in the market.

The rise of investors

Rent values rose 10% in the year to September, meanwhile gross rental yields nationally rose 3% from January to September. Rising yields coupled with lower purchase prices could create opportunities for the investor segment of the market.

These increases are due to multiple factors including the spreading out of tenants across markets as people wanted more space during COVID-19. People opted for a home office in the second bedroom rather than a housemate. There was also a lot of sell-off of investment properties as people were cashing in on record highs, which in turn constricted rental supply.

First home buyers in prime position

Vendors discounting from the listing price increased to 4.2% in the three months to September. Meanwhile, time on market increased to 33 days up from a recent low of 20 days.

These trends indicate a shift from a sellers’ market to a buyers’ market which favours first-time buyers. Falling home prices and extended government guarantees are supporting first home buyers to take their initial steps onto the property ladder.

The refinance boom

Refinance volumes reached almost $19bn in August which was in part due to the fixed rate expiry bubble which would continue to flow through into mid-2023.

The challenge for all lenders in this competitive market is to provide customers with attractive loan propositions while remaining sustainable from a business perspective. Debt-to-income ratios are top of mind, with a focus on DTI ratios that are less than six times.

Cost of living pressures continued to surface, with no signs of slowing, so consumers are feeling the pinch with six in 10 Aussies switching to cheaper branded products and one in two being more cautious of their spending.

A digital revolution

Automation and technology, along with process improvements and product simplification were making the end-to-end home lending process quicker, simpler, and smarter. The ability for brokers to give an answer on the spot is powerful, because if an answer can’t be provided on the spot, the majority are being given within 24 hours.

While there are still plenty of opportunities, everything hinges on how customers are thinking and feeling right now. Brokers are well positioned to provide much-needed guidance to help customers navigate the market. 

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