Newcastle Permanent Building Society has reported a significant increase in its broker network through new partnerships with two major aggregators.
During the 2016/17 financial year, the lender brought in total home loan approvals of around $2.2bn with approximately 55% coming through brokers. This volume has increased over the past year because of increased relationships with the aggregators.
“Our relationship with mortgage brokers has a history,” CEO Terry Millett told Australian Broker
. “We started off initially with Mortgage Choice
a little more than 10 years ago. Then a little less than 10 years ago, we bought on PLAN and we then started a relationship with AFG and Connective
a little over three years ago.”
During the past year, Newcastle Permanent had really started to “ramp up” the relationships with these latter two, he said.
“When you look at our home loan portfolio as opposed to new approvals, about 42% of our home loans were originally originated from mortgage brokers. Certainly, the expansion of our mortgage broker relationships to include AFG and Connective to complement Mortgage Choice and PLAN has increased us towards the industry average.”
Newcastle Permanent’s home loan portfolio now sits at $8.5bn thanks to a growth rate of 8.5% over the financial year. This includes $494m of home loans refinanced from the four major banks and their subsidiaries.
“We refinanced almost half a billion dollars in home loans from the four major banks and their subsidiaries and now have almost $2bn in home loans in the Sydney market, showing that customers are voting with their feet for a better way of banking with us.”
The lender now has a network of approximately 1,300 accredited brokers. Of these, around 400 come from AFG and 400 from Connective. The lender’s value proposition brought on this influx of brokers, Millett said.
“We consistently have better value interest rates and fees than the four major banks, and we maintain that over time. That’s a key part of our value proposition. We also have really high quality products.”
“And of course when customers come here, they’re a lot happier than when they go to the major banks.”
Newcastle Permanent’s customer satisfaction levels sit at 93% which is around 13% higher than the best of the big four banks, he said.
The lender was also extremely careful in its lending, Millett added, pointing to its 90 day arrears rate of 0.1%.
“That’s six times better than the average of the four major banks. Why I’m making this point is not just about the credit quality. We’re particularly concerned that we don’t want our customers to get into any difficulties. We know what an experience that’s like for people so we tend to be more careful in that.”
As well as brokers, Newcastle Permanent uses an “omni-channel” strategy, writing loans through a salaried sales force of mortgage lending managers (mobile and in branch) as well as through its call centre and digital channels.
Overall net profit for Newcastle Permanent sits at $38.9m for the 2016/17 financial year.
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