NAB have just announced their first half 2019 results and they are very interesting, here’s a summary of the key points:
- NAB’s mortgage book grew by 3% in 1H2019, which represents $9bn in new mortgages
- Of the $9bn in new mortgages, 93% came from mortgage brokers (with the remainder coming from NAB’s branch network and subsidiary uBank)
- The mortgage portfolio for NAB’s business bank and private bank fell by $600m
- Approx. 60% of NAB’s mortgage book is now home loans, and the remaining ~40% is for investment loans
- The proportion of Interest Only loans decreased from 27% down to 22.4%
- NAB’s bottom line was hit by $525m in customer related remediation costs, off the back of the royal commission
- The reputational damage caused by NAB’s failings highlighted during the royal commission led to resignations of the chairman and CEO
- NAB has not supported the two recommendations from the royal commission which relate to broker remuneration
- NAB recognises that group’s increased exposure to the mortgage broker channel has come off the back of a shift in market preferences… “We need to be aware of that and position our business around it” said Phillip Chronican, interim CEO
Both political parties are now supporting mortgage brokers, and with results like this you can understand why. Borrowers are clearly choosing mortgage brokers as their channel of choice.
In regards to broker remuneration the Coalition government has said that if re-elected it would maintain the status quo for at least 3 years, reneging on its initial plan to remove trail commissions from 1 July 2020.
The Labor party is now proposing to stop trail commissions, however it has proposed the introduction of a fixed upfront fee (paid by banks to brokers), capped at 1.1% of the loan amount – this is nearly double what we currently get paid upfront.
Like NAB, none of the banks have supported the recommendation from the Royal Commission that the consumer (rather than the banks) should pay for broker services.
It’s hard to change consumer preferences and 60% of all loans are now being originated by the broker channel.
For NAB to start ‘positioning their business’ around brokers is a smart move.
—
Long Property blog content provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. Nothing on the Long Property website constitutes legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
Credit Representative Number 493530 authorised under Australian Credit Licence 389328
