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With interest rates expected to drop at the RBA’s February meeting, brokers should prepare for the possibility of borrowers refinancing.
“Historically, rate cuts trigger refinancing surges as home owners seek better deals. When rates dropped in 2020–21, over 256,000 refinances occurred in Queensland, New South Wales and Victoria alone. More than 1 million Australians refinanced between September 2021 and September 2022, and even in a high-rate environment, refinancing increased by nearly 14 per cent in FY23,” said Corey Smith, FICO’s Australian senior account executive
“With rate cuts expected in 2025, starting as soon as [tomorrow], banks will likely compete aggressively on pricing, driving another wave of refinances. But this time, the challenge isn’t just volume – it’s risk. FICO’s research found that one in three Australians believe it’s acceptable to exaggerate their income to secure a better mortgage deal. Lenders need to scale approvals efficiently while mitigating fraud and first-party misrepresentation.”
Smith added: “For mortgage brokers, this means ensuring faster deal flow – but also greater reliance on technology to ensure clients are matched with loans they can afford and that applications are processed seamlessly.”
With this in mind, how can brokers get ready for an influx of borrowers looking to refinance? According to Smith, efficiency will need to be top of mind.
“Brokers now facilitate nearly three-quarters of all new home loans, making them key players in a competitive mortgage market. With rate cuts on the horizon, speed will be a major differentiator – brokers will favour lenders who can approve loans quickly, accurately and with minimal friction.
“Lenders are turning to AI-powered mortgage decisioning to streamline approvals, dynamically price loans and detect fraudulent applications in real time,” he said.
Smith noted that brokers who work with lenders who embrace these advancements will benefit from:
- Faster pre-approvals: AI-driven automation reduces back and forth, speeding up loan approvals.
- Smarter income verification: Real-time data analysis ensures borrower details are validated instantly.
- Risk-aware lending: Advanced fraud detection protects both brokers and lenders from problematic applications.
“Brokers who understand these technologies will be better positioned to match clients with lenders that offer seamless refinancing, giving them an edge in a fast-moving market,” Smith said.
Further to this, AI can be extremely beneficial for dealing with extra workloads. Through streamlining, brokers who have a grasp on AI will be better suited for a refinancing surge.
“AI is becoming essential for brokers to stay competitive. As lenders speed up approvals, brokers need AI-driven tools to match clients with the best loans instantly, verify income in real time and flag risks before submission,” Smith said.
“AI also helps brokers retain clients by identifying refinancing opportunities before borrowers start shopping around. Automated workflows reduce manual processing, allowing brokers to focus on advising rather than admin.”
“In a fast-moving market, AI isn’t replacing brokers – it’s helping them close deals faster, reduce risk and provide a smoother experience for clients,” he said.
