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A majority of brokers believe that the removal of exit fees will make non-bank products easier to sell.
According to The Adviser’s latest sentiment survey, more than 66 per cent of brokers believe they will have fewer problems recommending non-bank products to their clients now that exit fees have been scrapped.
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Of the 322 respondents, just one third felt non-bank products would be harder to sell.
Todd Hunter, director of wHeregroup, said non-bank products may be easier to recommend now that they have removed their exit fees.
“Non-bank lenders have always had to be competitive in the mortgage space and this will only make them more competitive,” he said.
But while Mr Hunter agreed the products would be easier to recommend, whether or not he will advocate non-bank products to his clients will rely on the lenders’ individual clawback policies.
“Clawbacks will play a large part in determining whether or not a broker offers a non-bank lender’s products,” he said.
“Brokers should not be penalised if a borrower decides to refinance with another lender. There are a million reasons why a borrower needs to refinance. There could be a death in the family or the bread winner could lose their job. As far as I am concerned, upfront commission is our payment for introducing a client to a lender. If the borrower decides to leave that lender that should affect our trail, but not our upfront commission.”
Mr Hunter’s comments were echoed by eChoice Home Loans’ Tony O'Halloran.
Mr O'Halloran said the future competitiveness of non-bank lenders would come down to their clawback policies.
“They have all said they will have to introduce clawbacks once exit fees are scrapped as they need to recoup their fees. While I understand the need for clawbacks, I will wait and see what these clawbacks are before I start strongly advocating their products to my clients,” he said.
