Macquarie Bank to tighten broker commissions
Non-major lender Macquarie Bank said it will reduce trail commission along with a reduced clawback period to all new home loan products.
The changes to broker commissions and clawback structures would take effect for new loans settled on or after 16 October 2017, according to a broker note on mortgage aggregator Connective’s website, which was carried by the Australian Broker.
A new trail commission of 0.15% per annum (plus GST) will be paid on all new products, according to the note.
“These changes support the continued delivery of competitive products, service and pricing in a dynamic home loan environment,” wrote James Angus, division director of Macquarie Bank, in the note.
It said that where a new loan is fully repaid within 18 months of the settlement date, the broker will refund to Macquarie the initial fee, the variation fee or the product change initial fee according to the following:
- Where a new product loan is fully repaid between 0 to 365 days from the settlement date – 100% clawback
- Where a new product loan is fully repaid between 366 to 548 days from the settlement date – 50%.
The move follows recommendations by the Australian Securities and Investments Commission to the mortgage broking sector to reform payments to brokers and aggregators.
Loans recommended by brokers are on average larger and have a higher loan-to-value ratio than loans sought directly by lenders, says a recent regulatory analysis, according to The Australian Financial Review.
More than half of home loans are through brokers (53 percent) with more than $2 billion in annual commissions, or about $4,600 per mortgage, which is about six times the cost of simple advice from a financial adviser, according to analysis by investment bank UBS.
It said that mortgage brokers are adding 16 basis points to a borrower’s cost on every home loan they write.