There is growing concern amongst brokers that increasing competition between Australia’s lenders could lead to greater channel conflict.
Yesterday, JP Morgan bank analyst Scott Manning said in a note to clients that the nation's banks had dramatically increased their average standard variable rate discounts over the last 12 months, from 0.7 per cent to 0.9 per cent.
Mr Manning said that current pricing was now as competitive as it could get prior to diluting group returns.
But while increased competition between lenders is good news for borrowers, some brokers are concerned about the increasing threat of channel conflict.
In the past few weeks, The Adviser has been inundated with comments from brokers who have seen a dramatic increase in channel conflict as a result of increasing lender competition.
One broker said they had received over a dozen calls in the past week from existing customers that have dropped into their local branch to do their banking, only to be “offered a better rate than what their broker has provided”.
"The banks are doing whatever they can to grab a greater share of the $1.2 trillion mortgage market," one broker claimed.
But while brokers believe increased competition in the mortgage market has ultimately led to increased channel conflict, it seems not everyone agrees.
Loan Market’s executive chairman Sam White said there was nothing to suggest channel conflict is on the rise.
“On the whole banks are very supportive of the broker channel and have been incredibly transparent of late. While I have heard about some instances of channel conflict, these incidents have been very isolated within particular branches,” he told The Adviser.
AFG’s Chris Slater agreed and said the incidents he had heard about were seemingly “one offs”.
“There is not a lot of new people coming into the market, so lenders and brokers are competing over what is already in the market. When this happens, there is bound to be some channel conflict. However, that said, the amount of channel conflict we are seeing is not concerning, nor is it something we haven’t seen before.”