Bank clients switch to mortgage brokers
A GROWING number of Australian bank customers are using a mortgage broker to secure a new home loan, as the major banks remain dominant in the market.
A new study by the Market Intelligence Strategy Centre found that broker-written mortgages rose by 7 per cent in the December quarter, which took the value of business to $14.18 billion over the three months.
The result was the first positive growth in broker-originated loans in five quarters. In the December quarter of 2009, there was a 13 per cent decline.
The major banks have been reducing the fees and commissions paid to mortgage brokers in a bid to attract customers directly to cut back costs.
"The growth came as the broker channel effectively shrugged off the effects of successive rate rises in earlier periods," the report said. "The better result also came on the back of a generally more active mortgage market in the broker channel.
"The major banks provided marginal growth in the September quarter despite tighter lending criteria and their early efforts to encourage more responsible broker lending practices from their distribution partners."
The MISC report also found that the smaller lenders had grown their share of broker-written loans from 11.2 per cent last year to 14 per cent.
The increase was attributed to the securitisation markets re-opening and providing the lenders with greater access to wholesale funding.
The major banks dominate the Australian mortgage market, holding more than 80 per cent of all home loans.
The two Sydney-based banks, Westpac and CBA, have the biggest market share, ahead of NAB and the ANZ.
"Variable rates were ultimately adjusted in the quarter, but some major banks lessened the impact with several offsetting measures of discounted fixed-rate specials and fee waivers," MISC said.
"Both the ANZ and NAB took the initiative early and Westpac soon followed."
Queensland-based Suncorp in the quarter offered a 25-basis-point discount to the standard variable rate for broker loans and BankWest a 10-point commission bonus to brokers for "high quality" mortgage applicants.
NAB has restarted its "Break Up" marketing campaign with the other major banks, with its offer to pay the exit fees for Westpac and CBA customers expiring at the end of this month.
Posted by Scott Murdoch - The Australian on 14th April, 2011 | Comments | Trackbacks
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