When I started putting thoughts together for this article, I was working on announcements that "unemployment could go as high as 20%" as a result of this economic shutdown. On my way home this morning from what is likely to be my final school drop-off for a while, I hear that Westpac economists are predicting "as high as 11%" so a lot less.
Nonetheless, let's be like the medical professionals and just work on the doomsday scenario at 20%.
20% of the population being without work is NOT going to translate to mortgage brokers losing 20% of their income. 6% of the population was already unemployed. A large number of the extra 14% will be casual workers and not the type of earners that would get up on a home loan application anyway.
So, let's use easy numbers then and assume that all of the above means that only 10% of your existing customers (trail commission) and potential customers (up-front commissions) will drop out of the frame for you.
An increasing number of lenders are proactively announcing that a stop in receipts of mortgage repayments will not translate to a stop in payment of trail commissions to brokers. Even if it did and we factor in the entire 10% discussed above, what does this look like in your cash flow forecasts?
I'm assuming and hoping it's not a disaster for you. Maybe the lifestyle is curtailed for a while. Maybe for years while we recover from this economic crisis but try to put it into some perspective.
What can you do?
In any case, there are plenty of clever things that you could do to take advantage of the opportunities that present themselves at the moment. You need to keep your clients sticky.
Banks are offering a lot of relief at the moment to small businesses and consumers. However, what we are seeing is that much of it requires the customer to go direct to the lender - cutting out the broker in the process.
- Be proactive. Reach out to your clients that might be in line for this credit help and offer to assist them. Be their middle person. Stay in their frame of thinking. Don't let the banks steal your clients because you stood by and watched.
- Interest rates are dropping. Review your clients' situations. See if there are better options you can refinance your clients into. Even if there are not, be in touch with your clients to let them know that there are possibilities out there and that you are thinking of them.
- Look for other markets. Here's an opportunity - there will be plenty of wealthier folks out there, maybe even on your books, that are now State-bound by travel restrictions and won't be spending their cash on holidays etc. Property prices are about to get smashed. They're bound to be looking for an investment bargain and they'll be looking to utilise cheap cash to do that. What an opportunity!
- Either way, reach out! Compose a friendly, virus-free newsletter to your clients, letting them know that you are thinking of them in this trying time and that you will still be there beside them when we come out the other side.
Stay safe, folks. If you need someone to talk to, my Team and I are here for you. Just call 1300 817 662.
QED Risk Services