CBA trims mortgage commissions

Commonwealth Bank yesterday advised mortgage brokers of cuts to commissions that come into force next quarter.

CBA cut the up-front commission to 50 basis points from 70 basis points as the typical commission paid to brokers.

Brokers may earn up to another 15 basis points, with five bps paid where brokers lodge 90 per cent or more of submissions online, five bps paid where loan applications meet a quality target (that is, with no rework) and a further five bps where settlements exceed  80 per cent of the value of loan applications lodged.

Most brokers would meet the final incentive target though many would struggle to meet the first two.

CBA eliminated the trail commission paid in the first year and cut the trail commission paid from the second year onwards to 20 basis points, down from 25.

The new commission structure represents a cut in commissions of about one sixth on a loan with a life of four years, assuming brokers qualify for one of the three incentive payments.

CBA's new commissions are not as severe as those of Westpac or of St George.

Brokers say that new business flows to Westpac are well down in recent weeks. Business flows are said to have increased significantly to CBA recently, though this may change.