Following a recent spate of commission hikes a non-bank lender has claimed they will do little to sway brokers.
Lenders including Westpac and AFM
have recently announced boosted commissions for brokers, and Mario Rehayem, head of third party at Pepper
Home Loans, says he expects other lenders to follow suit.
Rehayem has labelled commission hikes as an “easy win” for lenders, but says the incentives are far from the top of brokers’ wish lists.
“Brokers will maybe try out some of these lenders because they’re paying more commissions, but they will always end up relying on consistently high levels of service.
“Yes we will see commission hikes in some areas of the industry and we will see incentive programs, but at the end of the day any broker who has been in the industry long enough will understand that service will play first.”
Last week the specialist lender announced the launch of its first prime product, Pepper
Essential, which Rehayem says pay 0.85% commission upfront as well as 0.15% commission from day one.
“But we’ve never highlighted that we’re paying the highest commission in the industry with regards to a product that matches that kind of rate, because that’s not what this is about; this is about high quality service… no credit scoring, no mortgage insurer attachments, really innovative and backed with the best service available in the market.”
With the current strong RMBS market non-banks are in prime position to compete with the big four, says Rehayem, while he also encourages new entrants into the specialist lending market.
“When all the lenders start to compete for markets share they really start to get competitive in not only commissions but they actually look for all sorts of ways to better their competitors.
“Competition is good and we will always welcome new entrants who might want to come in and play in our space, we really welcome that because at the end of the day if you’ve got more people flying the flag of specialist lending it’s going to make our job a little bit easier get the message out.”
Strong competition and pressure from the non-majors has spurred a number of lenders to cut rates in recent weeks, but Rehayem doesn’t expect this to continue long into the future.
“The majors can play that game and non-banks can play probably in small droves, but it all depends on the market. I don’t expect rates to continue to keep on dropping ridiculously this year. I think it’s either going to plateau for a while or most likely rates will go up at the back end of the year.
“But in saying that I believe the broker market is very, very strong this year and should probably pick up another 2-3% of total mortgages in the country, so I think brokers are in a very good position - and I think lenders know that and they’re going to have that huge focus on the broker market to ensure they get their products to the buyer.”