BankWest has beefed up its retail banking presence with the launch of a new discounted loan priced at 75 basis points below the average standard variable rate loan.
Called the Rate Tracker home loan, the recently launched honeymoon rate product is the first in BankWest’s Happy Banking initiative which the bank hopes will “revolutionise the way people bank with friendlier, more personal stores”.
But while the new product is well geared for the bank’s ambitious new retail drive, brokers will have to accept a reduced up-front commission if they want to include the product in their suite.
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“We are paying less upfront [commission] to the broker but more in trail. This encourages the broker to promote the length of life of the loan and strengthen their relationship with the customer long-term,” Phil Colton, BankWest’s head of broker sales, told Mortgage Business.
According to Mr Colton, the product was designed to offer consumers an attractive product in the current high rate environment and to encourage the broker channel to maintain longer lasting relationships with their customers.
AFG’s general manager of sales and operations Mark Hewitt said that customer retention would be a key focus of products launched in 2008, but warned lenders to think carefully about the way they restructured broker commissions. “Competition in the industry is always good – but we have to retain value for those in the industry too,” he said.
Warren O’Rourke, Mortgage Choice’s national manager of corporate affairs, said despite Rate Tracker’s different commission structure, Mortgage Choice would make the product available to its brokers.
“While the commission rates being offered on this product are below the norm, and it does not recognise the effort that Mortgage Choice brokers bring to the transaction, we have decided to embrace it,” he said. “While it is a limited offer, it still will benefit the consumer.”
He added: “As far as what other lenders might do, that is in their court in terms of their capacity/cost profile to deliver a similar product.”
