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Recent moves by the banks to cut broker commissions are likely to see broker sentiment swing back to the non-bank sector.
Seventy-one per cent of respondents to a recent Mortgage Business poll said they believed brokers would favour non-bank lenders as a result of the recent bank-driven commission cuts.
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But not all in the industry are convinced. Connective principal Mark Haron said the reality may differ considerably.
Mr Haron said while “emotionally, brokers still want to support the non-bank sector”, many non-bank products were not attractively priced in the current market.
“When it comes down to business, brokers need to choose the appropriate product for their client and interest rate is a major consideration,” Mr Haron said. “When pricing improves I think brokers will support the non-banks as much as possible.”
Brian Jones, managing director of Homeloans Ltd, pointed to disruptions to capital markets as a driver for non-banks to potentially review commissions. But other forces were at play.
“Non-banks are more unsettled by the funding cost issue and the resultant de-risking process, so broker commissions – while certainly under close watch – can be dealt with more strategically than via compulsion,” Mr Jones said.
Mr Jones said the non-bank sector had a 12 month window to re-position itself in readiness for the return of normal conditions and to capitalise on changed economic structures.
“Current conditions have clearly indicated that the banks are unable to cushion their customers from capital market fluctuations,” he said. “This flows onto business acquisition costs where the banks have made reductions and the non-banks are still observing.
“The likelihood is that non-banks will have to adjust their offerings but commission is not the only detriment of loan volume.”
Straw poll
Will we see a broker swing to non-bank lenders as a result of bank commission cuts?
Yes: 71%
No: 24%
Not sure: 5%
