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MFAA Prosper : Mortgage and Finance Brief 06
With the dust now settling after the GFC, lenders across the market are reviewing their strategies – and, as a result, their products – for the coming years. Once-standard commissions and trails are being ditched in favour of strateg ies that, lenders say, reward quality rather than quantity. The likes of Westpac and St George have hit the headlines recently after announcing new commission structures, which came into force on 1 November. Once the favoured lenders for many brokers, Westpac and St George deny wanting to slow down mortgage lending through the broker channel, stressing instead that the new commissions are desig ned to reward quality applications from brokers with high conversion rates. “ We want to support brokers with high conversion rates and good loans,” says Chris Collins, media spokesperson for St George. “Thirty per cent of brokers on our list have conversion rates over 90%. Those people are going to be better off.” Westpac also says it wants to improve the longevity and quality of its loan book sourced from the broker channel. “These minor changes that include the extension of clawback,” says Emma Copeman, media spokesperson for Westpac, “are about ensuring we can continue to build sustainable long-term relationships with our customers by alig ning broker incentives more closely to our customer requirements, and encouraging longer loan life from broker-originated home loans. “The changes also benefit brokers who offer ongoing quality service and advice about Westpac's mortgage products, policies and associated services that ensures customers receive great service experiences throughout the life of their home loan.” The base Westpac and St George broker commission rate is 0.50%. The new commission pay ments structure has a 50% clawback on up-front commission pay ments for exit before 24 months, while there is a 100% clawback on exits before 12 months. There are bonus ongoing rates for brokers with conversion rates on applications they submit to Westpac of more than 70%, and there are bonus commissions paid for loans that last more than four and five years. St George is cutting back its commission in year one by 0.15%. There are other changes, all desig ned to improve longevity and cut pay for short, problem loans. This focus on quality is nothing new, however. It has been at the core of big-name lender focus for a number of years. “Our strateg y is all about quality,” says Kathy Cummings, CBA Executive General Manager, Third Party Banking. “Quality pays for both broker and the customer as an accurate and complete application settles faster. We introduced quality metrics in 2008, and we haven’t changed our Quality quantity? Mortgage & Finance Brief takes a look at the changes some of the big-name lenders are making to their commission offer, their ongoing focus on quality and the opportunities this presents for non-bank lenders. Words Jason Br yce and Martin Wanless “We want to support brokers with high conversion rates and good loans. Thirty per cent of brokers on our list have conversion rates over 90%. Those people are going to be better off.” Mor tgage & Finance brief | 13 News
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07