Major bank relaunches first-year trail

Announced just minutes ago, NAB has confirmed that from 1 October 2014 it will pay a first-year trail of 15 basis points on all mortgages written via the third party channel.

The lender has also changed trail from month 61 (year 6) to 0.30 per cent – a reduction of 0.05 per cent (excluding GST) for HomePlus and Peak Performance loan products.

These changes will apply to new settlements on or after 1 October 2014.

All other aspects of the commission structure, including the amount of upfront commission, remain unchanged.

In addition, NAB Broker today unveiled a rebrand for its flagship broker-only proposition.

Homeside HomePlus and Homeside Peak Performance loans will become known as NAB HomePlus and NAB Peak Performance – effective from 18 August.

NAB Broker Distribution general manager Steve Kane said the rebrand more closely aligned Homeside with NAB and was the result of extensive broker consultation.

“We will continue to deliver an exclusive broker proposition, and all the benefits that come with that, combined with the benefits of being able to sell using the strength of the NAB brand,” Mr Kane said.

“We are committed to continually evolving our offer for brokers and their clients and understand the benefits and value of year one commissions for brokers,” Mr Kane said.

“As well as a clearer proposition through the rebrand, brokers will receive the added benefit of first-year trail.”

The reintroduction of first-year trail is a firm endorsement of NAB’s commitment to mortgage brokers and reflects the level of profitability that has returned to Australian mortgage lending since the GFC. NAB’s move also piles pressure on the other banks if they are to remain competitive in a burgeoning third party distribution channel.

ANZ and Westpac are currently the only major lenders offering first-year trail although Westpac’s overall commission is the lowest of the big four. Australia’s largest mortgage lender CBA had been widely tipped to reintroduce first-year trail but the bank has remained tight lipped on any potential changes.

NAB’s announcement has garnered strong support from leaders in the broker industry.

Mortgage Choice chief executive Michael Russell told Mortgage Business that the decision highlights the pivotal role that the third party distribution channel plays in the mortgage market.

Mr Russell added that recent talks with a number of lenders should lead to further commission increases in the coming weeks.

“We have been working with a number of lenders to enhance and tweak their commission structure in a bid to support the growth and evolution of the channel, and it is great that we are finally starting to see dividends from these conversations,” Mr Russell said.

“I think there are a lot more positive commission movements to come in the weeks and months ahead,” he said.