Commission changes help non-bank lender
The move by ANZ/National Bank to cease paying mortgage brokers trails seems to be paying of in increased business for Pacific Home Loans, says company founder Roger Poulter.
Monday, August 29th 2005, 6:35AM
by Jenny Ruth
The value of his firm's settled loans was up 8% in June compared with the same month last year and was up 31% in the six months ended June compared with the same six months last year.
The Real Estate Institute's figures show the number of houses sold in June was down 4% to 8,025 compared with 8,367 in June last year.
Earlier this month, ANZ Bank joined its sister bank, National Bank, in deciding to cease paying mortgage brokers its current 0.25% trail commission from October 1.
With ASB never having paid trail commission and Bank of New Zealand refusing to deal with mortgage brokers at all, that leaves Westpac as the only major bank still paying trail commission.
Pacific Home Loans pays 0.6% up front commission to new broker customers and a 0.15% trail commission for each year the loan remains on its books.
That compares with ANZ's up front commission of between 0.625% and 0.7% and a further "at risk" component of 0.2%.
"We're treating brokers better than the main stream bank are treating them at the moment," Poulter says.
Pacific has also cut its pricing of "lo-doc" loans. While traditionally the interest rate charged on low doc loans is about a percentage point higher than for prime loans, Pacific is now charging the same interest rates on them as it does for prime lending, he says.
Borrowers wanting to borrow above 65% of a property's valuation on a lo-doc loan will still have to pay for lenders mortgage insurance.
While the experience so far is that default rates on lo-doc lending are similar to that on prime lending, Poulter says it's a bit early to be too dogmatic about that.
His firm has been providing lo-doc loans for about 18 months. "We won't get a true picture until it's been about four years."
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