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Jason Back, founder and director of Broker Essentials, has warned that shifting market conditions mean brokers can no longer rely solely on a single transaction type to sustain long-term business performance.
With the official cash rate now at an 18-year high of 4.85 per cent, both potential and existing mortgagors are finding that servicing a home loan is becoming increasingly hard. Indeed, the average owner-occupier variable rate is now hovering around 6.74 per cent and, with most banks having to apply a 3 percentage-point buffer on top of their carded rate, this has pushed servicing buffers up to around 9.74 per cent.
However, it’s not just mortgagors that require broker support in this new economic environment; so too do business borrowers, and those requiring personal and asset finance.
Speaking ahead of his sessions at the upcoming diversification event, Finance360, Back highlighted that expanding a brokerage’s scope is becoming essential as the mortgage market cools amid a rising rate environment.
“2026 has thrown up some pretty big surprises that the market maybe wasn’t ready for. And from a residential perspective … we’re in the midst of potential seismic changes that may set the landscape for the industry going forward,” Back said.
“Diversification obviously has come back into the conversation piece. Brokers are asking: What else should we be considering from our customer needs’ perspective, but also what drives business revenue and makes sustainable practices?
“I think the biggest opportunity isn’t necessarily finding new clients right now; it’s probably understanding the needs of the clients brokers already have. And, while we’ve got very good at residential mortgages, our clients’ financial needs extend well beyond that.”
He pointed out that residential borrowers frequently have commercial, asset finance, or other financial requirements that are never addressed.
“Most people forget that there’s 2.5 million small businesses out there,” Back said. “Clients that might buy residential property may also be business owners, or investors, or families buying vehicles. And, as we’re an ageing population, they’re thinking about how they’re navigating retirement.
“Diversification allows brokers to broaden their value proposition and become more relevant through the client’s financial journey.”
A major barrier preventing brokers from broadening their offering is the assumption that diversification requires immediate mastery of complex credit specialisations. But Back countered this misconception, stating that brokers do not need to personally write every product they identify.
“The misconception about diversification is that you have to become an expert at everything. And that’s certainly not what we’re saying here,” he said.
“Brokers often assume that they need to get … accredited, they need to find new products, new lenders, and they need to start writing loans themselves. And I think that’s certainly one pathway, but it’s not the only one.
“So, at Finance360, what we’re going to remind brokers is that diversification involves strategic partnerships, or referral partnerships. We want to make sure we can help you better identify the needs of your clients.”
While commercial and asset finance represent natural starting points, Back cautioned against trying to take on too much without the operational capacity or technical experience to back it up.
“Trying to deliver something that you’re not equipped to can be far more damaging,” Back said.
“Brokers really need to consider whether they’ve got the necessary experience, whether they’ve got things like capacity, the systems and the ongoing client demand to justify building out that capability.
“So sometimes when solving the needs of a niche within your existing book … that may not require you building a whole new stream of business. It might just [mean] having a better client referral relationship for those types of clients.”
The four-question framework
To help operators determine where diversification makes commercial sense for their individual brokerage, Back recommended evaluating opportunities through four central questions:
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What problem does the client have?
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Can you solve it?
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Do you actually want to work with those clients in that space?
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Is there enough revenue in that market to make it sustainable?
“As advisers, whenever markets are falling or rising, there is an opportunity … to continue to work with your clients as their adviser, giving the right credit advice, and helping position their future,” Back said.
“Arming yourself with better knowledge and having a better plan about how you’re going to serve your market; that’s going to hold you in good stead going forward.”
Master practical diversification at Finance360
Jason Back will be presenting and emceeing at the upcoming Finance360 roadshow alongside digital marketing specialist Russell Easther, delivering an interactive, workshop-style curriculum to help brokers map out concrete diversification pathways.
“What I’m going to make sure is that people leave Finance360 not with just a notebook full of ideas that’ll never see the light of day again,” Back said.
“We want them to leave with a much clearer understanding of where the opportunities are, which ones suit their business, and then what they do next … connecting all of those into something that brokers can take back and actually apply.”
Finance360 is a free-to-attend event travelling along the east coast this November:
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Melbourne: 17 November at Zinc at Federation Square
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Sydney: 19 November at The Epping Club
Seats are strictly limited. To register for your free ticket and see the full event agenda, click here.
[Related: Major new diversification event, Finance360, launches]
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