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Don't expect higher commission rates

Everyone acknowledges mortgage advisers are having to do more administration work in running their business, but the chances of a pay rise appear pretty much non-existent.

Tuesday, November 15th 2022, 6:00AM 3 Comments

The large majority of home loans written by mortgage advisers go to the big four banks, but two chief executives have ruled ruled out increasing commissions.

ANZ, Westpac and BNZ have each released their annual results recently. TMM asked ANZ and Westpac about increased commissions (BNZ refused to do an interview).

Westpac chief executive Catherine McGraith said: “If I'm entirely honest, I haven't thought about broker commissions on a go forward basis, so can't give you any insightful observation on that.”

When asked if she would consider it, she said: “I think it's like everything, so you'd need to look at the full financial case around it.”

ANZ chief executive Antonia Watson responded that as house prices increased so did adviser remuneration.

"There are two cohorts of job groups whose whose wages have gone up with house inflation rather than actual inflation, and they're mortgage brokers and real estate agents.

"So I think they've done pretty well over the last few years as the average mortgage size has increased. So they've probably had that compensation already."

When it was pointed out house prices are coming back and the amount of commission will decrease she responded: "I didn't hear that argument on the way up."

The good thing she says are that house prices are not predicted to come back to where they were two years ago or two and a half years ago pre-Covid. 

BNZ refused an interview with its results announcement.

TMM's view

Tags: Antonia Watson ANZ Catherine McGrath Commission Westpac

« Mortgage Link spices up its home loan offeringRBNZ cleared of criticism over handling of pandemic »

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Comments from our readers

On 16 November 2022 at 11:33 am JeffQV said:
I think Clawbacks are a more pressing subject and all lenders seemingly inability to refer a Customer back to their Adviser. By not doing so the Customer is not making an informed decision if repaying a loan early.

This goes against CoFi so I hope lenders can change. All it takes is a one liner saying something like 'your loan was introduced to us by an Adviser, please check with your Adviser around any possible costs that may be incurred when repaying early'.
On 16 November 2022 at 12:47 pm Andy the adviser said:
"So I think they've done pretty well over the last few years as the average mortgage size has increased. So they've probably had that compensation already."

That sounds pretty arrogant to me. Yes, the house prices did go up, and cash incentives to borrowers went up, but the 10-20% increase on .6% of the loan amount (not the property value) is not that helpful, especially when our own compliance costs , levies and licencing costs outstripped everything else.

The banks should be thankful to advisers for providing close to 50% of their home loan business now, especially as we are carrying a lot more of their costs (less need for them to provide retail outlets and staff) and we are weeding out the poor proposals before they get to the bank doors.

Personally, I think the banks would be in big trouble right now if the adviser business suddenly stopped.
On 16 November 2022 at 2:22 pm Noel Bowl said:
I wonder when the BIG boy (or girl) banks are going to read the FMA edits - I wonder when they will realise that the term "mortgage broker" does not- no longer exists.

We are accredited (well we should be as 15 March 2023 is fast approaching) -we are mortgage and or insurance "advisers" we are NOT brokers. Re the comment above about the banks arrogance- you are right the adviser channel is a serious acquisition channel for the bank +++ 50% of all of their home loan business but it is only Sovereign Home Loans that genuinely respects- nurtures the the adviser - lender- client relationship. The bank have always held the power (and the cheque book) but one day logic will prevail- "claw back" are obscene- a money grab for the banks- the Commerce Commission and FMA should go in guns a blazing. Personally I would rather have a lower upfront commission and no claw backs but I am but ONE mortgage- insurance ADVISER- I am not a broker because if I was I would not exist!!!

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 ▼6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 ▼6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - ▼7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 ▼7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼6.79 - -
Co-operative Bank - Owner Occ 8.40 ▼6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 ▼7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 ▼7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - ▼6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 ▼7.74 7.29 6.59
SBS Bank Special - ▼7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 ▼6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

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