Electronic lodgements one way to save commissions

Only one third of mortgage brokers meet even the first of the new list of criteria set by St George Bank to maintain commissions on home loans at current levels.

St George yesterday said it advised brokers of four criteria under which the bank will pay "full commission" to brokers.

These are that brokers must lodge home loan applications electronically; meet or exceed an agreed percentage of conversion of applications to settlement; meet or exceed an agreed run-off rate, and "assist with selling non home loan products during the life of the loan".

Brokers who can meet all the above will still be able to earn up-front commissions of up to 70 basis points and trail commissions of up to 25 basis points.

Those brokers who meet none of the criteria may still earn commissions of 50 basis points up front and a trail of 15 basis points. The latter is the new pricing benchmark set by Westpac last month.

One aim of St George is a superior quality of home loan applications, reducing rework and wasted effort for the bank's back office.

In the short term most brokers look like taking a cut in income from loans originated to St George. Around two thirds of brokers still do not submit applications electronically and it may take some brokers (or their aggregator groups) time to catch up to St George's standards.