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Jessica Darnbrough
More than 60 per cent of brokers believe there is now enough margin in lending to increase commissions and some banks are tipped to follow Maquarie's lead.
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According to a recent straw poll conducted by The Adviser, a majority of the 712 brokers believe Australia’s banks have the capacity to raise upfront and trailing commissions.
This sentiment comes just days after Macquarie announced it would lift the upfront and trail commission it pays to its broker partners.
According to a statement from the bank, Macquarie will lift the upfront it pays its brokers from 0.60 per cent to 0.65 per cent. In addition, the lender will increase its trailing commission from a flat 0.15 per cent to 0.20 per cent from year four onwards.
Speaking to The Adviser, AFG’s general manager Mark Hewitt said he wasn’t “surprised” to see Macquarie increase its broker commissions.
“Over the last 18 months we have seen a lot of incremental changes to broker commissions – the vast majority of which have been upward changes,” he said.
“Macquarie’s decision to lift broker commissions sends a strong signal to the market that they are hungry for business. We are pleased to see them lift commissions, because it ultimately enhances competition in the lending space. That said, I don’t think we will see the majors follow suit. While there is a little bit of margin in the lending space at the moment, the world economy is very up and down, which could affect margins down the track.
“I think the major lenders especially are very comfortable with the business they are generating at the moment and will not be looking to pull any prices levers.”
Mr Hewitt’s comments were echoed by Mortgage Choice chief executive officer Michael Russell who said the majors are comfortable with the “current economics of broking”.
“The majors won’t look to lift commissions any time soon. That said, I wouldn't be surprised to see Australia’s second tier players introduce commission incentives as a way to generate greater business,” he said.
“I don’t think there is enough margin in lending to warrant the big players lifting their broker payments.”
