Australian conveyancing industry braces for fixed rate fallout
The Australian conveyancing industry is bracing for an onslaught of sale transactions this year.
News of what might befall the Australian property market this year was revealed after the Reserve Bank of Australia (RBA) predicted 800,000 Australian households will be exiting fixed rate home loans at different periods throughout 2023.
Speaking at a Senate Estimates hearing earlier this week, RBA’s head of the economic analysis department Marion Kohler said estimates are “somewhere in the high 800,000 [mortgages]”.
He explained that the majority of mortgagees facing the harsh reality are those who fixed their mortgages for two years in 2021 during the Australian property boom.
Australian conveyancing SaaS technology leader, triSearch, said the fixed rate mortgages coming to an end this year could result in many mortgagees having to default on their loans.
triSearch National Sales Manager, Mitchell Burge, said if even a quarter of those mortgagees default on their home loans and opt to resell, the conveyancing industry will be pushed to the brink.
“We’ve seen the busiest periods of the conveyancing industry flash past us in the last three years or so during the COVID-19 pandemic property boom,” Burge said.
“The biggest difference then, was that demand for property was so high that contracts were being constructed and signed within two days of hitting the market.
“If 200,000 mortgages are defaulted on this year, Australian conveyancers will need to work at an unprecedented rate once again.”
Burge added that an influx in sale contracts will be met with few home buyers, causing a backlog of properties for sale.
“During the pandemic, many of our conveyancing clients would generate contracts within five minutes using our electronic contract tool, send it to the agent, and receive the notice of sale all within the same week,” he said.
“If the defaulting comes to pass, we’ll see a huge spike in sale transactions being met with fewer home buyers in the market.
“With firms sending invoices post settlement, if conveyancing firms are sitting on multiple sale transactions without any buyers, many of those firms will start to feel considerable financial strain.”
Burge warns that Australian conveyancers should be weary of the potential incoming swing in demand.
“Conveyancers can prepare for the potential spike in sale contracts by switching to more efficient technology solutions and upskilling their staff.
“If conveyancers use more cost-saving options such as using digital solutions like electronic verification of identity, contracts, and signature tools, they will be able to produce large quantities of sale contracts while minimising financial strain to the business.
“I urge all conveyancers to seek help from their technology provider to see what options are available to reduce costs and improve efficiency.”