Banks revise commissions and rate discounts
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BN
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29/06/2010 12:00:00 AM
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Brokerage fees and discounted mortgage offers could be under threat as major banks seek to offset increased wholesale funding costs and avoid hiking interest rates before an election.
The Government is turning up the heat on banks not to increase their rates beyond the level proscribed by the Reserve Bank, despite European crisis-induced bank funding increases.
ANZ has lost $40m through elevated wholesale funding prices, from a home loan book of $140 billion. The bank’s chief executive Phil Chronican has told The Australian that banks are already starting to make changes to mortgage packages to shore up their profits.
Westpac increased its interest rates by 20 basis points above the Reserve Bank rate in December last year, sparking public outrage. Westpac has said the first half of this year cost it $120m on its $250 billion mortgage book, as margins reduced by 15 basis points.
Chronican told The Australian that rejigging brokerage commission rates was the way the market was moving at the moment.
Latest Comments
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SD on
29 Jun 2010 09:36 PM
Hmmmmm, ANZ keeps paying trail in year 1, brokers flock to them & then they look at ''rejigging'' their commmission! Got to love the big 4 & the control they have.
Spinner on
29 Jun 2010 10:34 PM
Come on Phil, net margins have increased, even after fattening the financial markets profits within, virtually every measure the Bank has never made more from a customer than it does today. All you will do is force brokers to diversify into risk insurance and planning which means the deal will be done before the customer steps foot into a branch.
Why did you not follow Westpac if the cost of funding is more?. 20 points on $140b covers most of the $40m hole. Pass it on like WBC did. Don''t stitch up the brokers who bring you new customers the branches will never get.