GLOBAL SUB-PRIME CRISIS

BANKILEAKS

Click on our Secret Library of Evidence ------>

    BANKILEAKS Secret Library

Loan Application Forms (LAF's)  

    Bank Emails to Brokers  

    Then Click on 'VIEW NOTEBOOK'

Join us on facebook
 

facebook3           facebook2 

BFCSA
MORTGAGE
DISTRESS SOS

What BFCSA Does...

BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

Visitors

Articles View Hits
447274

Whistleblowers' Corner!

To all mortgage brokers, BDMs and loan approval officers! 
Pls Call Denise: 0401 642 344 

"Confidentiality is assured."

Cartoon Corner

Lighten your load today and "Laugh all the way to the bank!"

Denise Brailey

Led by award-winning consumer advocate Denise Brailey, BFCSA (Inc) are a group of people who are concerned about the appalling growth of Loan Fraud around the world. BFCSA (Inc) is a not for profit organisation in the spirit of global community concern and justice.

Click on the Cluster Map.

  • Home
    Home This is where you can find all the blog posts throughout the site.
  • Categories
    Categories Displays a list of categories from this blog.
  • Bloggers
    Bloggers Search for your favorite blogger from this site.
  • Login
    Login Login form

BFCSA: CBA to mortgage brokers: Beat rivals by churning. Borrowers at risk

Posted by on in ROYAL COMMISSION URGENT
  • Font size: Larger Smaller
  • Hits: 157
  • 0 Comments
  • Print

CBA to mortgage brokers: Beat rivals by churning

Australian Financial Review Mar 26 2017 5:17 PM

Duncan Hughes

 

Commonwealth Bank of Australia is encouraging brokers to churn mortgages rather than lose borrowers to competitors who are offering hot incentives to switch lenders, analysis of offers reveals.

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 strategies involving its existing product range.

"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.

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 strategy of mortgage churn 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.

Other lenders, such as Pepper Group, a specialist residential mortgage and consumer lender, are overhauling their distribution and marketing strategies to fill gaps they believe are appearing in the market.  

For example, applicants with unlimited defaults will be considered by Pepper so long as they are linked to a specific credit event, such as divorce, job loss, or an illness.

Alternatively, at a time when most competitors are requiring bigger deposits it is considering up to 95 per cent loan-to-value ratio applications for owner-occupier and investor loans.

A spokeswoman for the lender said it has changed its marketing and distribution strategy but the credit policies remain the same.

Record RMBS issue

Pepper, which also provides white label products to third parties, last week issued a record $900 million in residential mortgage backed securities.

"Even at these record-breaking levels we can attract and retain a diverse pool of investors who see value in investing in residential mortgage backed securities," Pepper Group's chief executive Mike Culhane said about the strength of institutional demand.

Changing market strategies across the residential mortgage market reflect increasing strong demand for Melbourne and Sydney real estate, regulatory pressure to control investor lending, rising funding costs and need to maintain net interest margins.

CBA, the nation's largest mortgage provider, is overhauling the use of mortgage brokers, who have traditionally provided more than half of recommendations, in anticipation that volume-based incentives will be axed in response to Australian Securities and Investments Commission's proposed mortgage industry reforms.

The bank is believed to be focusing on quality of loan applicants, continuity of deal flow and value of customers, rather than sheer volume of loans, according to industry services. The imminent purchase of the outstanding 20 per cent take in Aussie Home Loans will boost capacity to monitor third parties.

It is also concentrating on better branch mortgage sales.

 

"Not only is this improvement important from a profitability perspective, we also believe it reduces risk given evidence of systemic mortgage misrepresentation, particularly via the broker channel," said UBS Securities analyst Jonathan Mott.

Last modified on
Rate this blog entry:

Comments