BankWest has beefed up its new retail banking presence with the launch of a new discounted loan priced 75 basis points below the average standard variable rate loan.
Called the Rate Tracker home loan, the recently launched honeymoon rate product is the first in BankWest’s Happy Banking initiative, which the bank hopes will “revolutionise the way people bank with friendlier more personal stores”.
But while the new product is well geared for the bank’s ambitious new retail drive, brokers will have to accept a reduced up-front commission if they are to make the product available to their clients.
“We are paying less upfront [commission] to the broker but more in trail. This encourages the broker to promote the length of life of the loan and strengthen their relationship with the customer long-term,” Phil Colton, BankWest's head of broker sales, told Mortgage Business
According to Mr Colton, the product was designed to offer consumers an attractive product in the current high rate environment and to encourage the broker channel to maintain longer lasting relationships with their customers.
While AFG’s general manager of sales and operations Mark Hewitt believes customer retention can be expected to be a key characteristic of products launched in 2008, he has warned lenders to think carefully about the way they restructure broker commissions.
“Competition in the industry is always good – but we have to retain value for those in the industry too,” he said.
For Warren O’Rourke, Mortgage Choice’s national manager of corporate affairs, while Rate Tracker may not align with commissions attached to other products, they have decided to make it available to its brokers.
“Whilst the commission rates being offered on this product are below the norm, and it does not recognise the effort that Mortgage Choice brokers bring to the transaction, we have decided to embrace it,” he said. “While it is a limited offer, it still will benefit the consumer.”
“As far as what other lenders might do, that is their court in terms of their capacity/cost profile to deliver a similar product,” Mr O’Rouke said.
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