Aggregators are braced for a swathe of commission cuts however they are not expected to be as dramatic as those announced by Westpac.
“Many are choosing to take a ‘wait and see’ approach, and will follow the market reaction to Westpac and other lenders’ changes before moving themselves,” said Mark Haron, principal of mortgage aggregator Connective.
The latest Mortgage Business straw poll revealed that 82 per cent of respondents expected further cuts to broker commissions.
However in determining the degree of cuts, according to Mr Haron there will be a greater focus on aligning commission structures with product, the customer and broker performance.
“From our perspective, a reasonable structure would be one that enables brokers to maintain current commission returns, but based on them meeting certain criteria,” he said.
“The problem with current commission structures is that the worst and best brokers receive the same remittance.”
And while commission changes are all but certain, not all lenders are expected to move immediately.
“Some lenders are taking a strong stance on not cutting commissions,” Mr Haron said.
As long as products remained strong, Mr Haron was confident these lenders would be able to improve market share – highlighting the non-bank sector as a possible benefactor.
“Commission cuts are definitely more likely to occur in the banking sector,” he said. “That’s not to say non-banks aren’t under the same funding pressures, but they will hold out and use these changes as an opportunity to improve their market share.”
Michael Osborne, head of sales and distribution at The Brokerage, said while the cost of funds was putting immense pressures on lenders any changes to commissions should be determined carefully.
“Any suggestion of change should be done with a high level of professionalism [and] consultation,” he said, “with the outcomes linked to quality, efficiency and profitability – for all parties concerned.”
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