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Speaking to Mortgage Business, AFG chairman Kevin Matthews warned that other lenders could fall behind if they are out of step on commissions. This follows NAB’s reintroduction of first-year trail as part of a major restructuring of its third-party offering.
“CBA and Bankwest will now be sitting out there on their own without any first-year trail payment,” Mr Matthews told Mortgage Business.
“While commissions are not the be-all and end-all for brokers, you need to be in the market,” he said.
“If only one or two lenders are out of the market on their commission rates, it stands to reason that their volumes will suffer,” Mr Matthews said.
On Tuesday NAB announced that a first-year trail commission of 15 basis points will apply on all new loans written by brokers from 1 October 2014. The banks also confirmed that Homeside HomePlus and Homeside Peak Performance loans will be rebranded as NAB HomePlus and NAB Peak Performance from August 18.
NAB’s double strike is tipped to have a strong impact with brokers.
AFG’s Kevin Matthews believes that the Homeside brand has always underperformed on its share of broker originated loans because of a lack of borrower awareness.
But according to Mr Matthews, the rebranded NAB ‘red-star’ loans will be an effective move for the bank, particularly when coupled with the reintroduction of year one trail.
“Brokers will be able to sell the red star brand, they won’t have to explain what Homeside is, it will make it easier for them, and inevitably I believe their market share will increase,” he said.
“A combination of both things will work for NAB – there is quite likely to be a multiplier effect.”