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Mortgage brokers have voiced surprise and dismay at the major bank’s move to focus on home lending growth through the proprietary channel.
After National Australia Bank (NAB) announced that it would be focusing investment to increase mortgage lending through the proprietary channel, brokers have shared their thoughts on the move.
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NAB – which uses the motto ‘the bank behind the broker’ – has traditionally had a strong broker offering and its latest financial results showed that the broker channel has originated 53.2 per cent of the major bank’s $353 billion Australian mortgage portfolio.
The bank is also one of the most popular lenders utilised by brokers. According to Agile Market Intelligence’s Broker Pulse survey for the month of September, for example, NAB was the fifth most commonly used lender by brokers (behind Macquarie and the other three major banks).
Moreover, NAB was the second-highest-rated major bank in the Third-Party Lending Report 2024, with brokers particularly rating its broker website/portal and digital tools/online resources.
As such, the industry has voiced surprise that the new CEO has unveiled a move to increase proprietary channel lending, particularly as nearly three-quarters of Australian borrowers use the broker channel for their home lending needs.
‘Disappointing’
Speaking to The Adviser, Scott Beattie, the founder of Queensland-based brokerage Cube Home Loans, said: “It did surprise me to see this as NAB has previously heavily invested in ‘broker’ work with their former Homeside brand and former ownership of FAST, Choice and Plan. They, of course, also have their Advantedge brands which are white labelled to many aggregators.”
Beattie said that the bank had recently improved its clawback policy for brokers, but flagged that this came in tandem with a reduced trail payment, adding: “So perhaps that announcement was a precursor to this story, where they have announced that they are going to more heavily focus on their proprietary channel.
“For a bank behind the broker, it is disappointing.”
However, the Queensland-based brokers said it was his experience that banks struggle to compete with the broker network when it comes to service.
“Many banks have tried to compete with the broker network with cashback and even by misleading answers at the Banking Royal Commission and or the recent bank remuneration review, but ultimately, broker share keeps growing and importantly, at no detriment to customers,” he said.
“I like to look forward, not sideways, at what others are doing as broker share continues to grow.”
‘Brokers support those who support them’
Phil Rice from EZ Finance also voiced surprise and questioned the economics behind the push to grow proprietary loans.
“While I grasp the Proprietary Initiative Pathway, the financial figures seem off. Boosting the proprietary channel demands hefty investments in additional staff, facilities, real estate and support systems. Plus, you’ll need to ramp up marketing to draw new customers, especially given the short 2.4-year average mortgage lifespan,” Rice said.
“Right now, brokers cover all marketing costs to bring clients to the bank, handle much of the application work, and input data for approvals. They also pre-screen clients, a task bank staff would have to take on if customers came directly.
“Brokers will heavily support those banks/lenders who support them. While banks like NAB and CBA strategise to increase their own market share from within – the same strategies can be adopted by brokers to recommend their CBA and NAB clients [to] move to equal or better alternatives.
“Business is business, and good mutual collaboration in the finance space will benefit all those that work together for the benefit of the consumer.”
Ankur Ahluwalia, mortgage broker at Smartfinn Advisors, said: “NAB’s focus on proprietary lending is a strategic shift aimed at boosting profitability, with early gains already seen in recent quarters. CEO Irvine emphasised that broker loans were returning ‘below the cost of capital,’ supporting the need for this change. By strengthening direct channels like ‘Meet Now’ and leveraging AI-driven customer engagement, NAB aims to optimise both resources and margins.
“However, brokers remain essential, facilitating 74 per cent of new home loans and representing 53.2 per cent of NAB’s mortgage portfolio. If NAB maintains strong broker ties alongside its proprietary push, it may balance profitability with growth.
“It will be interesting to observe how ANZ and Westpac react to this strategy, particularly with ANZ set to release its annual results [today].”
The Adviser has asked NAB to clarify its commitment to the broker channel, but was told it did not have anything to add beyond what the CEO has said.
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