Budget breakdown with Andrea McNaughton

The first Federal Labor Budget in almost a decade was billed as a ‘Responsible’ response to the pressing economic challenges, according to Treasurer Dr Jim Chalmers.

LMG Managing Director Andrea McNaughton looks at aspects of the Budget of particular interest to mortgage and finance brokers.

Borrowers

The Budget estimated the official cash rate will peak at 3.35% in the first half of 2023.

The extension of initiatives such as the Help to Buy Shared Equity Scheme and the Regional First Home Buyer Guarantee would provide assistance to borrowers who were struggling with raising a deposit amidst the rising cost of living.

“What we're seeing is borrowers are still keen to get into the market, but supply is a roadblock,” said Mrs McNaughton. “Since interest rates began to move in May, Loan Market has seen a 46% increase in the number of pre-approvals across the network compared to the same period last year.

“The Help to Buy Shared Equity Scheme will continue to give another 10,000 home buyers each year the opportunity to purchase with an equity contribution from the Government of a maximum 40% for a new home and 30% for an existing home.

“Since interest rates began to move in May, Loan Market has seen a 46% increase in the number of pre-approvals across the network compared to the same period last year."

“The Regional First Home Buyer Guarantee supports another 10,000 new homeowners outside of the capital cities each year.

“Additionally, the National Housing Accord is a tri-government agreement with the private sector to deliver one million affordable homes into the market.”

Rising interest rates and the cost of living - September quarter data showed annual price growth of 7.3% driven by gas and building costs - placed a greater onus on brokers to be across the spectrum of client solutions.

“Because clients are facing pressures from every angle, brokers are having to review more products to meet tighter servicing from lenders,” said Mrs McNaughton.

“Brokers can expect more clients will reach out to them to manage interest rates and cost of living increases.”

Small business

Mrs McNaughton said small businesses and self-employed workers will need assistance to navigate the challenges of the coming years.

“The Government is seeking to address national debt and also put a handbrake on inflation by cutting spending,” said Mrs McNaughton.

“With the cost of living still rising, consumers will continue to review their spending, lessening the amount of money circulating in the economy.

“There’ll be a role to play for brokers in assisting SMEs and self-employed clients through the immediate and medium-term challenges with loan reviews, cashflow-lending and other assistance.”

Expanded childcare and parental leave

This week, Loan Market held its Leading Ladies Retreat at Byron Bay, bringing together female brokers from all over Australia.

In April this year, the MFAA reported that female brokers accounted for only a quarter of the industry - a new low.

“While there’s been a trend of women leaving the mortgage broking industry, Loan Market has bucked the trend and increased its numbers of female brokers, through support networks including Leading Ladies of Loan Market,” said Mrs McNaughton.

“$4.7bn to make childcare more accessible is important in helping parents make the return to the workforce, while the extension of the paid parental leave provides a bit of extra peace of mind in those early years of parenthood.”