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Bank’s ultra-low variable rate drives 380pc surge in volumes

by Nick Bendel10 minute read
The Adviser

Aggregator statistics have revealed the significant impact that interest rate cuts can have on where brokers send their business.

The market has recently been impacted by two major variable-rate reductions – Suncorp Bank unveiling a 4.69 per cent rate in early October 2014 and Heritage Bank unveiling a 4.39 per cent rate in late November 2014.

Statistics provided by AFG, Mortgage Choice and Vow Financial show that those rate cuts caught the attention of many brokers.

Heritage increased its market share among AFG brokers from 0.5 per cent in November to 2.4 per cent in December – a jump of 380 per cent.


Suncorp Bank grew its share from 8.2 per cent in October to 9.7 per cent in November, which represented growth of 18 per cent.

Suncorp also made a 157 per cent gain with Vow brokers, with monthly lodgements jumping from an average of $49 million between August and October to $126 million in November.

Mortgage Choice brokers also responded to the Suncorp rate cut, giving Mortgage Choice a 63 per cent increase in volumes.

The bank’s average market share in 2014 was 4.1 per cent, but this climbed to 5.7 per cent in November and 6.7 per cent in December.

Vow chief executive Tim Brown told The Adviser that while lenders can win over brokers with rate cuts they can also alienate brokers if they fail to manage any surge in volumes.

“The problem we see with a lot of these promotions is that they’re very short term – they’re for 60 days or 90 days – and then mayhem occurs in the back office and [brokers] stop using that lender for that reason,” Mr Brown said.

“The feedback is that they would prefer the lender just give a decent rate and back it up with service.”

Mr Brown also said that smaller lenders should not think that ultra-cheap rates are the only way to make an impact in the mortgage market.

“If I was a smaller lender – and I’ve been in that category – I think it’s better if they play in niches and service that very, very well,” he said.

“We’re seeing some of the smaller mortgage managers now getting into overseas borrowers, so they’re being able to fund product that gives them the ability to service that niche and we’re seeing a bit of volume go their way because of that.”

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