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Tighter credit has cooled broker loan growth, says NAB chief

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James Mitchell 2 minute read

NAB CEO Andrew Thorburn says tighter home lending criteria and recent pricing and policy changes have led to more ‘subdued’ growth in its loans originated via the third-party channel.

NAB recorded a modest 1.6 per cent increase in broker-originated home loans over the six months to March, down from 4.6 per cent growth during the previous half.

Mr Thorburn said several factors contributed to the bank’s weaker mortgage growth through the broker channel

“The broker piece came as a result of two things. One is we did make quite a number of credit policy changes for risk reasons in the first part of this half and volumes dropped off as that happened,” he told The Adviser.

“Secondly, and more significantly, the investor home loan cap of 10 per cent per annum. We were above that and much of that comes through that channel so we had to really step back from that for a period.”

Mr Thorburn’s comments came as NAB announced its $3.3 billion half-yearly profit yesterday.

The NAB boss shed light on a recently announced review into remuneration and commissions.

The Australian Banking Association (ABA), chaired by Mr Thorburn, last month revealed that banks would conduct a review into product commissions as part of a six-point plan to improve transparency and confidence in the sector.

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“The principle was that we need to have remuneration systems inside banks that do not conflict with good customer outcomes so that the customers we have really believe that the price and products and services they are getting are the right ones for them,” Mr Thorburn said, adding, “That’s the goal. We need to ensure that incentive systems reflect that.”

“Under the mortgage broker piece, ASIC [is] already doing a review into the incentive schemes in the mortgage broker channel and we should let that play out. That is already under way and obviously important. But all the banks are going to be going back and doing a review of their own practices.”

In a trading update, NAB said it remained committed to building relationships with mortgage customers introduced via broker channel.

Over the six months to March, the bank recruited more than 500 brokers across its aggregators PLAN, Choice and FAST, a 14 per cent increase.

[Related: ANZ chief has firm eye on mortgage brokers]

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Tighter credit has cooled broker loan growth, says NAB chief
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James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.

 

 

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