CBA to mortgage brokers: Beat rivals by switching
Commonwealth Bank of Australia is encouraging brokers to advise clients to switch mortgages rather than lose borrowers to competitors.
It comes as new strategies from major and smaller lenders rapidly emerge in response to changing regulatory, funding and marketing pressures, according to bankers and market analysts.
CBA has written to brokers with clients concerned about rising rates to consider seven alternative products that customers can access and switch to online.
"With the introduction of new reference [interest] rates for investment home loans and the change to rates for interest-only investment home loans, you may see an increase in customers wanting to switch product types or change their repayment type," the bank stated in a memo to mortgage brokers.
Competition for mortgage customers is hotting up even as authorities look to slow down loan growth.
The memo went on to outline alternative loan products that it suggests brokers offer to skittish investor and owner-occupied housing customers to keep them on CBA's books.
Westpac and Australia and New Zealand Banking Group are providing incentives for brokers to poach rivals' clients by making it easier to switch, offering lower rates, cash incentives, or dropping establishment fees.
For example, Westpac is offering a $1250 refinance rebate for new owner-occupier or investment home loans with a minimum size of $150,000.
Martin North, principal of Digital Finance Analytics, said CBA's advice should reduce interest for borrowers and decrease bank regulatory capital requirements because older loans are attached to property which has since increased in value, making them less risky.
Read more: http://www.afr.com/personal-finance/cba-to-mortgage-brokers-beat-rivals-by-churning-20170323-gv50n8#ixzz4cTSFAt4U