Mortgage aggregators say that most lenders have committed to pay trail commissions to brokers on thousands of home loans subject to extended repayment holidays.
Brokers have been concerned that banks and other lenders would freeze trail commissions on mortgages at the end of September when pandemic-related borrower relief packages were due to expire.
However, lenders are now giving brokers confirmation in writing that they will meet trail payments even though borrowers are continuing to defer repayments on more than 9 per cent of all home loans written by APRA-regulated lenders.
Home lenders are trying to build goodwill with brokers even though the standard practice in the broking industry is for trail payments to be suspended when borrowers miss scheduled loan repayments for two consecutive months.
The trail payments are being honoured by ADI-lenders because APRA has instructed banks not to classify deferring borrowers as “non-performing”.
Suncorp is the latest bank lender to reassure distribution partners that it will continue to stump up trail commissions for originating loans subject to protracted deferrals.
Lenders are now offering four-month extensions to repayment holidays.
“We are writing to let you know that your brokers will continue to receive trail commission if any of their customers have been approved for an additional four months loan deferral with Suncorp due to COVID-19,” Suncorp told mortgage aggregators in a memo on Monday.
“The extension of the trail commission is part of our commitment to supporting our broker network and their customers during this challenging time.
“Suncorp is working with impacted customers as they approach the end of their six-month deferral to determine whether an additional four-month extension is required.
“We know that many brokers run small mortgage broking businesses which is why we made the decision to continue to support them with trail commission over this additional period.”
APRA recently reported that home borrowers were receiving temporary repayment relief from banks and credit unions on A$229 billion worth of mortgages at the end of August.
On 31 August Suncorp had $3.6 billion worth of residential and business loans subject to temporary repayment deferrals.