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ISCOVER
Staff Reporter
Three years after becoming the first lender to introduce a ‘price for risk’ approach to mortgages, NAB Broker’s innovative program is still going strong.
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"When we launched price for risk, it was a first for the industry. We wanted our broker partners to deliver a benefit to their customers when the proposed lending had a lower risk profile," NAB Broker's general manager, distribution, John Flavell said.
"Price for risk was a proposition that customers could only obtain through a broker. We knew that for this approach to be effective, a broker needed to be able to deliver this benefit to their customers on the spot, when they were sitting with customers at their kitchen table or in their living room.
"It took our competitors about 18 months to see the potential of our pricing structure and seek to copy our approach.”
Under the price for risk structure, customers receive tiered interest rate discounts based on total Homeside lending and LVR. For example, for lending under $250,000 for LVR up to 75 per cent, the applicable rate is 5.85 per cent.
"Price for risk is an innovative win-win structure for both the ultimate borrower and for our broker partners. It gives brokers a great proposition to take to their best clients, and it rewards customers for taking on less risk or for doing more business with NAB," said Mr Flavell.
"The structure also works from the bank's perspective, helping us to maintain a high quality loan book while still remaining competitive in the market. Sustainable and responsible competition is an important priority for us.
"Price for risk is one important demonstration of our commitment to innovation and spotting gaps in the market. This year also marked the fifth year of ramped trail commissions, with some of our brokers now seeing the maximum trail coming from long-held relationships.
"In addition to these innovations, we're determined to keep at the front of the market with our products and service, and we're continuing to invest in the broker channel in 2013."
