Bonus commission offers continue
Banks are offering bonus commissions so regularly that it’s almost become the norm, says one broker.
Friday, June 27th 2014, 6:00AM
by Susan Edmunds
ASB announced yesterday that it was continuing its offer of bonus commission for another three months. ANZ followed suit, extending its own bonus commission offer.
ASB’s general manager of product and strategy, Shaun Drylie, said even with the bonus offer, the ASB commission deal was still slightly below the market level. “We want to make sure we remain competitive.”
Drylie would not say exactly what the commission level was, saying it varied depending on the volume of business being written. But it is believed to generally be a base of 0.6% plus a 0.15% bonus.
ANZ offers 0.7% and a bonus of 0.15%. It contacted brokers yesterday to tell them it was continuing the bonus offer.
ASB also announced it was offering a workplace package, similar to those offered to other associations and large organisations, to mortgage brokers for their own residential lending. They will qualify for 1% off floating rates for two years and a 50 basis point cut to fixed rates.
Drylie said the bank was keen to foster and grow its relationship with mortgage brokers, with whom it had worked since the early 1990s. “Some banks don’t deal with brokers as actively…. Others haven’t had the same length of relationship, they’re more fairweather friends.”
He said a lot of business had been built up from customers who wanted to deal with brokers. ASB was focused on offering a service proposition to brokers and a product to their customers, he said.
The bank was looking at ways to keep the engagement level up. “As other banks play harder we have to regroup and ask what else we need to do to keep that engagement.”
Broker David Windler said there was growing recognition of the value of third-party distributors for the banks. He said all the major lenders had bonus offers of some kind.
“It’s good to have another bank roll over the bonus commission, if one stopped they all might. It’s almost the norm, they’re all around that 0.;15% level and everyone is rolling them over… it shows ongoing support from major lenders for broker businesses. There’s definite competition between lenders around the remuneration model, they want to keep a level playing field with each other so they’re not perceived to be missing out. There’s been more over the last 12 months than we’ve had previously.”
The arrival of smaller banks wanting to edge into the Auckland market, such as TSB, SBS and The Co-Operative Bank were putting pressure on the bigger lenders, he said.
Westpac is also offering 0.7% and a 0.15% bonus.
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