ANZ first to cut broker commissions
ANZ/National Bank is proposing to cut the upfront commissions it pays mortgage brokers by to 45 basis points from June 1.
Thursday, April 19th 2007, 5:04PM
by Jenny Ruth
The bank is currently conducting what it calls "consultation" but the New Zealand Mortgage Brokers' Association (NZMBA) has slammed that as being "a sham."
ANZ/National is also proposing to extend its clawback provisions on brokerage for loans that disappear from its books from 12 to 18 months.
It also wants to impose a fee for loans that are approved but not drawn down. Generally, mortgage brokers have no control over whether their clients decide to draw down loans.
NZMBA chairman Geoff Bawden and chief executive Megan Salt today sent an email to the organisation's more than 1,000 members alerting them to ANZ/National's proposals and telling them that if the bank is successful, this will have a huge impact on brokers' businesses.
"If everybody follows suit, this is a 25% per cent reduction in (brokers') upfront income," Bawden says.
The NZMBA is recommending that its members refuse to agree to any such reductions and that they point out to the banks that mortgage brokers now account for nearly 40% of all mortgages written in New Zealand.
"You must use your 40% market share to show your strength when directing business, as long as the interests of your client come first," the NZMBA email said in what was clearly a declaration of war against the banks.
Starting from September 2004 and led by Westpac, the major New Zealand banks successfully withdrew from paying mortgage brokers trail commissions, typically between 0.15% and 0.25% of the loan value.
Then, as now, the major banks all cited the squeeze on banks' profit margins resulting from the ongoing war for market share.
Bawden says the big difference since then is that mortgage brokers' share of the market has grown from between 25% and 30%. He says there's a lot more unity in among brokers this time around too.
He says he understands the banks, most of which are Australian owned, are not intending to cut broker commissions in Australia.
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