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Brokers are braced for a fresh wave of bank rate hikes in the wake of St George’s 20 basis point rise to its variable-rate mortgages on Friday.
The St George rate hike came only days after the RBA decided to leave the cash rate unchanged.
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Steve Lambert, acting CEO of National Brokers Group, said any increase in rates across mortgage lenders would depend on each bank’s individual circumstances.
Mr Lambert said that the increased cost of funds would most likely have the same impact on all banks, “and so, sadly, we might see further rate hikes across the board”.
Michael Osborne, head of sales and distribution at The Brokerage, criticised the timing of the bank’s rate rise in light of the banks’ recent justification to cut broker commissions.
“With the recent commission reductions announced generally to offset the cost of funds, it would be disappointing to see [other] mainstream lenders further lift their rates for consumers,” Mr Osborne said.
Whether other banks will follow St George’s lead and raise rates is an obvious concern for the third-party industry, however aggregation and brokerage groups feel confident that their businesses can weather further rate rises.
Mr Lambert said challenging market conditions was “a good thing” for the third-party channel and that the current correction would drive innovation across the third-party distribution channel.
According to Mr Lambert, National Brokers Group will pursue alternative income streams, which will include financial planning as well as building proficiencies in cross-selling and client services.
Will Davies, managing director of brokerage Scope Lending, said that regardless of further rate hikes his team would remain focused on building their business.
“We are mitigating any threat to volumes by concentrating, for example, on strengthening customer relationships and maximising conversion rates.
Published: 08-07-08
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