Banks set for mortgage-broker fight
The major banks are preparing to battle with mortgage brokers in an effort to regain dominance in the home loan market, according to ABN Amro. The banks want to reclaim the all-important customer relationship and rein in the huge amount of churning now prevalent in the market. ABN Amro said the banks are preparing to demand that mortgage brokers' fees be charged differently with many banks favouring a lower upfront fee and higher trailing commissions. This would discourage the current practice of churning loans. ABN Amro claimed that as the mortgage broker channel continues to grow, the banks' branch networks will be seen as potentially redundant as home loan profitability comes under pressure. ABN said that, in the end, it will be consumer preference that will decide if bank branches or brokers form the major mortgage distribution channel.