NAB offers carrot to brokers

National Australia Bank will keep its foot on the home loan accelerator with its decision to lift the up-front commission it pays to many home loan brokers. The new commission, of 65 basis points, applies from January 2012.

Two-thirds of NAB's accredited brokers will receive a rise in up-front commission of either five or 10 basis points. Its highest-volume introducers already receive a commission of 65 bps.

Up-front commission in the industry ranges from around 40 bps to 70 bps.

In a circular to brokers, NAB tied the simplification of its commission structure to the improved quality of loans submitted by all brokers, Quality improved with last year's introduction of a revised credit law and of a new credit licensing regime in Australia.

Competitive dynamics may also be a factor in the decision, given the historically low levels of credit growth in Australia at present.

NAB is growing its home-loan market share faster than any other major lender in home loans. The bank reported growth of around 22 per cent in home loan balances in the year to September 2011, or three times overall market growth.

Two-thirds of its home loan growth comes through its branded and third-party origination networks, with the latter seemingly a more important source of new business than the bank's branch network.