Giving borrowers confidence in a changing market

Pepper Money CEO Mario Rehayem

This is the moment brokers will show their true value as trusted advisers.

After a decade of low interest rates, the market has changed gear – and the pace of that change is causing some borrowers anxiety. This is the moment brokers will show their true value as trusted advisers.

Over 1,000 brokers and asset finance introducers attended Pepper Money’s Insights Live 2022 event in July, in person or online. And with more than two-thirds admitting they had never worked in a rising interest rate environment before, attendees were keen to understand how to help their clients navigate the changing conditions.

As the intensity of recent property lending activity eases, brokers are also looking for new ways to sustain their business growth.

“I think the challenge right now is significant and real,” said Stuart Donaldson of Accendo Financial, during the mortgage and commercial broker panel discussion.


We have seen off the GFC, the Royal Commission, and COVID lockdowns, and we’ll see this through as well. And do I see opportunity? You bet I do. Because there has never been a more important time for your clients to reach out and talk to a finance professional.


According to the MFAA, seven in ten residential home loans are now placed through a mortgage broker –  a new market share high. As the finance professional Australians trust more than any other, brokers have an opportunity – and a responsibility – to guide their clients through their options.

A return to more ‘normal’ settings

“It’s vital to get out on the front foot and talk to customers,” said Anthony Moir, Pepper Money Treasurer. “The speed of change may feel confronting, but you can reduce their anxiety by explaining how we’re returning to more normalised levels, and what it means for them personally.”

In his Market Outlook presentation, Anthony unpacked the underlying factors at play, including an inflation spike that may be less transitory than initially expected.

The RBA increased the official cash by 1.25% over the previous three months, and the major banks expect it to continue rising – with ANZ predicting 3.35% by November 2022. Anthony noted non-banks need to pass that hike in funding costs along, because all their funding comes from wholesale markets, while banks may get 50% of their funding from retail deposits.

Seize the day

While Anthony expects cost of living pressures to be temporary, with more stability in 2023, now is the time to start talking with clients about their options. He suggested segmenting your client base into three categories:

Look for clients hit by interest rate rises

Challenged clients

Clients who bought a property at a market high and who were assessed at an interest rate low are likely to find the rate rises hardest – and could even face a negative equity situation. Contact these clients first, while they still have options.
quick home loan review

Shift clients

Suggest a quick home loan review for clients with some equity but limited cash flow. Debt consolidation and budgeting guidance could help them feel more in control.
strong clients

Strong clients

Stay in touch with clients who have a strong equity position and savings buffer, and help them make sound financial decisions by showing what a 1-2% rate rise could mean for them.

With around $200 billion in fixed rate loans about to mature from October 2022, it’s also important to position your business to ride the refinance wave. “Those customers will get an absolute rate shock,” said Anthony. “And if you don’t have this discussion with them, someone else will.”

Dr Louise Mahler’s keynote on vocal intelligence and neurolinguistics also provided valuable techniques for having difficult conversations like this. She suggested taking three steps:

  • Acknowledge the situation – but avoid saying ‘I understand’
  • Reflect the situation back to them, so they know they’ve been heard
  • Answer their question clearly.

Sustaining your growth

In his closing remarks, Pepper Money CEO Mario Rehayem noted that when markets change, people get nervous. “The one thing that hasn’t changed is the importance of understanding your customer base – so you can be the expert that can take away their anxiety,” he said.

“Rates can go up and rates can go down, so the only way to be sustainable is to focus your business beyond the rate or product,” he added. “Look at the service you provide. Those interactions are what set you apart from dealing directly with the bank, and from other brokers.”

With Australia relatively well-placed to weather an economic slowdown, brokers are in the ideal position to make sure their customers are too. The most important thing is to understand how these market shifts will impact individual clients. By helping them navigate the complexity, you will be in the best position to retain their business – and make them a customer for life.


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