Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Brokers' choice of lenders is based on service, products and commissions 2
Service is a crucial factor for brokers when choosing a lender 2
Turnaround times are seen as an area in which lenders should improve 2
Brokers appreciate long-term relationships with lender BDMs 3
Lender tracking systems can simplify brokers' work 3
Brokers appreciate the widening product range that has emerged 3
Mortgage package products are becoming more popular 4
Brokers deem flexibility to be a key lender attribute 4
Commissions are an important but sensitive subject for brokers 4
Many brokers find trail commissions more important than upfront commissions 4
Clawbacks were very unpopular among brokers 5
Lenders should reduce uncertainty and promote long-term relationships with brokers 5
Channel conflict and uncertainty threaten the relationship between brokers and lenders 5
Lenders should focus on building long-term relationships with brokers 6
Table of Contents 7
Table of figures 8
Table of tables 9
The Broker-Lender Relationship in the Australian Mortgage Market 10
Service is a crucial factor for brokers when choosing lender 10
CBA is most commonly named as providing superior all-round service 10
CBA is the most commonly used lender in the survey 12
Improving turnaround time is very important to brokers 13
ANZ is regarded as having relatively good turnaround times 14
The relationship with the BDM strongly influences choice of lender 14
WBC's BDMs are highly praised in the survey 16
Good lender IT systems and automated feedback can simplify brokers' work 16
Brokers appreciate the widening product range and features that have emerged 17
Brokers are happy with the range of products offered by lenders 17
An attractive variable interest rate is seen as the most important product feature 18
Mortgage packages are becoming increasingly sought after products 19
Brokers speak well of WBC's package products 20
Brokers frequently mentioned flexibility as a desirable lender attribute 20
CBA is seen as having flexible credit policies 20
Commissions are an important but sensitive subject for brokers 21
Brokers are quite satisfied with commissions paid 21
Median upfront commission is 0.61-0.70% 22
Median trail commission is 0.21-0.30% 23
No lender is seen as having an outstanding commission scheme 24
NAB is seen as having the worst commission scheme 25
Brokers place higher emphasis on trail commissions 26
Clawbacks are seen as unfair if allowed for too long 27
Future Focus 28
Channel conflict and uncertainty threaten the relationship between lenders and brokers 28
The degree of channel conflict has varied over the last years 28
Brokers face a large degree of uncertainty about income 28
Lenders can increase their share of the broker channel by applying a long-term strategy 29
A balance must be found between incentive and security for brokers 29
Brokers will favor lenders that can offer long-term relationships 29
APPENDIX 31
Supplementary data 31
Definitions 37
Bank 37
Broker 37
Clawback 37
Lending commitments 37
Low-documentation loan 38
Mortgage package 38
Non-bank lender 38
Non-conforming loan 38
Refinancing 38
Trail commission 38
Methodology 38
Further reading 38
Ask the analyst 38
Datamonitor consulting 39
Disclaimer 39
List of Tables
Table 1: The major banks all have quite similar commission schemes, 2007 22
Table 2: Non-bank lenders generally have higher commissions, 2007 22
Table 3: No lender is seen as having outstanding commission structure, 2007 25
Table 4: NAB is considered to have the worst commission scheme, 2007 25
Table 5: CBA has gained the top spot in service ratings at the expense of SGB, 2006-07 31
Table 6: CBA is the most commonly used lender, 2006-07 32
Table 7: Index comparing broker satisfaction with different aspects of lender service, 2007 32
Table 8: Broker satisfaction with lenders' representatives, 2007 33
Table 9: Ranked importance of product features, 2007 33
Table 10: Satisfaction with lenders' product range, 2007 34
Table 11: Satisfaction with commission levels and expediency, 2007 34
Table 12: Typical commissions offered by selected lenders, 2007 35
Table 13: Median upfront commissions are 0.61-0.70%, 2007 35
Table 14: Median trail commissions are 0.21-0.30%, 2007 36
Table 15: Suggested changes in commission structure, 2007 36
Table 16: Which company has the best commission scheme?, 2007 37
Table 17: Which company has the worst commission scheme?, 2007 37
List of Figures
Figure 1: CBA has gained the top spot in service ratings at the expense of SGB, 2006-07 2
Figure 2: An attractive variable rate is seen as the most important product feature, 2007 3
Figure 3: 42% of surveyed brokers would choose higher trail commissions and lower upfront commissions, 2006-07 5
Figure 4: CBA has gained the top spot of service ratings at the expense of SGB, 2006-07 11
Figure 5: CBA and WBC have increased their presence in the broker channel since 2006 12
Figure 6: Brokers are relatively dissatisfied with the speed of lending decisions, 2007 14
Figure 7: A quarter of brokers surveyed are very satisfied with the relationship with the lender's representative, 2007 16
Figure 8: Mortgage brokers are satisfied with the range of products offered by their lenders, 2007 18
Figure 9: An attractive variable rate is seen as the most important product feature by brokers surveyed, 2007 19
Figure 10: Brokers are quite satisfied with level and expediency of commissions, 2007 21
Figure 11: Median upfront commission is still 0.61-0.70%, 2006-07 23
Figure 12: Median trail commission is still 0.61-0.70%, 2006-07 24
Figure 13: 42% of surveyed brokers would choose higher trail commissions and lower upfront commissions, 2006-07 26