Recludo CEO Tim Brown reckons hard times breed opportunity
If there is one overarching conversation permeating the mortgage industry right now, it is how to navigate the choppy waters ahead.
Some of the more anxious economists are warning that the Australian economy is veering into a doomsday stagflation scenario, while investors are starting to get aggressive on pricing as they seek to hedge against a perceivably riskier home lending environment.
As the ongoing war in the Middle East and closure of the Strait of Hormuz cause energy price shocks to be felt around the world, mortgage holders 
are rightfully nervous.
They have already borne the brunt of two cash rate rises from the Reserve Bank of Australia (RBA), with more all but certain to come.
Westpac dropped a bombshell earlier this week when it declared that three successive interest rate rises – in May, June and August – are in store, taking the cash rate peak to 4.85%.
In uncertain times like these, the true essence of being a mortgage broker materialises.
“When conditions get harder, the role of a mortgage broker becomes clearer,” reckons Recludo chief executive Tim Brown (pictured, above). “In rising markets, the job is often transactional. In tightening markets, it becomes strategic.”
“Clients are no longer asking, ‘how much can I borrow?’, they’re asking, ‘what should I do next?’. That is a fundamentally different question, and it’s where brokers add the most value,” he says in a chat with MPA.
Borrowers are facing pressure from all directions. Monthly repayments are rising as the banks start to pass through funding costs, leading to more restrictive borrowing capacity.
“This is where the conversation changes,” says Brown. “It moves the broker’s role from facilitator to adviser. It becomes about understanding risk, structuring for flexibility and planning beyond the next transaction. Not just securing a loan but helping clients make decisions that will stand up over time.”
Brown is already seeing this dynamic play out. Borrowers are looking to refinance in order to create certainty, while fixed and split loans are back in vogue. Offset strategies matter more than ever and brokers are spending more workshopping scenarios.
“This is exactly where the broker model is strongest,” says Brown. “Lenders provide products. Brokers help clients understand what those products mean for their situation. And in a market like this, that difference matters.”
But the going isn’t just getting harder for clients – brokers are also having to adapt their own businesses to keep up with these changes.
“More compliance, more administration and more technology all sit behind what a client ultimately experiences,” Brown notes.
“For clients, that makes the choice of broker more important, not less. The brokers who can step back from the transaction, take a longer-term view and guide clients through uncertainty are the ones who stand out.
“Because when the market is easy, almost any option can work. When the market tightens, the structure of the loan and the quality of the advice become far more important.”
The choppy waters are unlikely to calm any time soon. For Brown, that spells opportunity “for brokers to play a more meaningful role in their clients’ financial decisions. To provide clarity when the environment is uncertain. And to help clients make decisions they will still feel confident about in two or three years’ time”.
