Serviceability stays the primary purpose mortgage dealer purchasers are unable to refinance, in accordance with a brand new survey performed 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 performed by the MFAA in February, with the goal of understanding how modifications within the lending market and financial system are impacting debtors.

“The dial hasn’t shifted in relation to mortgage holders with the ability to refinance, with our survey indicating that greater than half of mortgage brokers having significantly extra purchasers 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 mounted charges final 12 months and an additional 450,000 mounted fee loans  anticipated to run out this 12 months.

Pannek mentioned the MFAA knew that debtors coming off their mounted 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 purchasers in “mortgage jail”, an increase from 82% final 12 months.

“Now we have heard repeatedly from our members about purchasers who’re good debtors, with a powerful reimbursement monitor file, being unable to refinance merely as a result of buffer charges,” Pannek mentioned.

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

1% buffer for refinances onerous 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 troublesome to entry financing beneath this selection.

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

“We imagine it’s potential for lenders to take care of accountable lending and assist extra debtors out of mortgage prisons, by having flexibility in relation to addressing the wants and aims of a borrower.”

Pannek mentioned 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 purchasers 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 mentioned.

“Rate of interest will increase are nonetheless cited as the principle purpose 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 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 beneath stress via the reinvigoration of the ACCC House Mortgage Value Inquiry.

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

“The outcomes of this survey will reveal shifts over time and might be instrumental in our continued advocacy on behalf of our members and their purchasers.”

Does the survey mirror the issues your purchasers are experiencing with serviceability? Remark beneath