Business

NAB bid to stop meltdown in mortgage broker business – The Australian Financial Review


Brokers say the slump is due to more complexity and time taken to get NAB loans approved, higher mortgage rates and tougher terms and conditions. They claim the bank is increasingly risk averse, whereas competitors are providing more imaginative marketing responses to attract nervous borrowers during a major market downturn.

NAB’s share of investor loans has fallen from about 9 per cent to 4 per cent and its market share of fixed rate loans has plunged from 20 per cent to 7 per cent.

“They have appeared to have pulled back,” said AFG chief executive David Bailey. AFG is the nation’s largest network of mortgage brokers, with a combined loan book of about $1.7 billion.

Mortgage brokers blame the slide on better turn around times for applications and lower rates – particularly from Commonwealth Bank and Westpac, the nation’s two largest lenders – and smaller lenders seeking to build market share.

On Monday, NAB will launch a $2000 cash back for customers refinancing their loans. It is also offering a first home buyer special fixed rate of 3.69 per cent and claims an average approval rate of five days for 80 per cent of its applications.

According to the latest Australian Prudential Regulation Authority data, NAB recorded the strongest growth in housing lending among the majors over the past year and half year, with loans up 4.4 per cent and 3.9 per cent respectively. In the past month however, growth slowed to an annualised rate of 1.1 per cent, behind Commonwealth Bank and Westpac.

But NAB is still growing faster than ANZ, whose loan growth contracted by 2.3 per cent in the past month on an annualised basis, the APRA data shows.

It has been 12 tumultuous months for NAB during which time Mr Thorburn and chairman Ken Henry resigned and a boardroom clean-out was started amid attempts to transform the culture.

Advertisement

AFG analysis shows CBA and Westpac, and their subsidiaries, have made gains over all mortgage categories, particularly fixed rate and refinancing.

CBA and Westpac account for about 50 per cent of the nation’s total mortgage market, NAB and ANZ about 15 per cent each, and dozens of other lenders compete for the remainder. Mortgage brokers account for about 50 per cent of new loans.

Westpac is believed to have increased market share with AFG’s brokers by about 45 per cent to 14 per cent, while CBA is up about 13 per cent to 14.6 per cent.

Westpac this weekend launched changes to its fixed-rate range matching recent cuts from the CBA from two to five years for owner-occupiers and investors paying principal and interest.

Westpac and its subsidiaries have increased their share of AFG’s fixed rate business from about 12 per cent to nearly 30 per cent.

Westpac has also nearly doubled its share of AFG’s mortgage investor market from about 11 per cent to more than 19 per cent, while its share of refinancing has grown from around 9 per cent to more than 17 per cent.

CBA has increased its share of AFG’s mortgage business from 13 per cent to more than 14 per cent.

NAB has also increased wholesale mortgage funding rates by 15 basis points, triggering rises across dozens of products offered by mortgage brokers and aggregators.

Advertisement

The bank said it was the first wholesale rate rise since August 2017 and was prompted by “sustained elevated funding cost pressures”.

The wholesale rate increases were announced by Advantedge, which is the bank’s wholesale funder and distributor of white-label loans, which are home-branded loans, a similar marketing strategy to home-branded products found in supermarkets.

White-label home loans are available through more than 85 per cent of mortgage brokers and distributed under the brands of mortgage aggregators and mortgage managers. They are an alternative to loans from major bank.

The mortgage aggregators offering Advantedge products include PLAN, FAST, Choice Aggregation Services, Australian Finance Group, Connective Smartline Astute, Loan Market and LJ Hooker Home Loans.

NAB remains competitive, a bank spokesman said.  Fairfax Media

Let’s block ads! (Why?)



Source link

LEAVE A COMMENT