The non-major lender has unveiled a new broker strategy and expressed support for the third-party channel amid heightened scrutiny.
Citi Australia has revamped its mortgage offering in an effort to broaden its appeal to the broker network, while also stressing the pro-competitive contribution of the channel in light of the banking royal commission’s recommendations.
Speaking to The Adviser, Citi’s head of mortgage distribution, Matt Wood, said the bank has developed an “increased appetite” for “substantial levels” of home loan volumes.
Mr Wood noted that the bank had primarily focused on “high-net-worth” clientele, which he described as “affluent and globally minded”, but said that Citi has revised its strategy, broadening its appeal to home loan customers via the broker channel.
Citi launched its new appeal to the broker market with the promotion of its Citibank Basic Mortgage product with an interest rate of 3.55 per cent (3.60 per cent comparison rate) for owner-occupied loans and 3.89 per cent (3.94 per cent comparison rate) for investors.
“We’ve been quite niche for the last few years, and what this offer has enabled us to do is to broaden that and enable us to be a bit more accessible to the wider broker community,” Mr Wood said.
“It enables us to attract a different type of clientele, but probably not as high-net-worth as what we’ve experienced in the past few years.
“The average loan size for the full calendar year 2018 was, on a national basis, $940,000 – substantially higher than our nearest competitor in the market place.”
He added: “Coming out with this offer and promoting it to our partners enable us to widen the net a little bit and just allow that appetite that Citibank has returned to the market with to be quenched.”
However, Mr Wood acknowledged that the scope of the offer is “narrow” to ensure that “service levels don’t deteriorate”, noting that the offer predominately targets refinancers.
“By narrow I mean that there’s an application fee of $399 that applies to it, we’re not allowing it for new purchases or pre-approvals, and the loan repayments are solely principal and interest.
“We’re [also] targeting salaries of PAYG applicants, and an LVR ratio of 80 per cent is the maximum. We’re not allowing cash out to be a part of that.
“It’s really designed for refinance business and for the fairly consistent style of a PAYG applicant.”
Mr Wood also claimed that its credit card offerings, technology platform, and its 13 BDMs would also ensure that brokers can better service the needs of their clientele.
Citi on RC recommendations
The bank also recently released a statement in response to Commissioner Kenneth Hayne’s recommendations in the final report of the banking royal commission.
Citi highlighted the role that brokers play in enhancing competition in the mortgage market, in light of Commissioner Hayne’s call for a borrower-pays model, which the industry has warned would hand power back to the major banks.
“Citi has been following the royal commission closely and has reviewed the findings,” the statement reads. “At Citi, we believe that competition is good for customers and an effective broker distribution channel gives customers greater transparency and choice.”
Citi also welcomed the federal government’s response to Commissioner Hayne’s broking industry reform proposals.
“We welcome the measured approach being taken by the government as they work through the recommendations and find solutions that provide good outcomes for consumers.”