In a potentially controversial move that could rile direct customers of the National Australia Bank, the company on Monday began offering rate discounts on its flagship Tailored Home Loan to brokers acting on behalf of new borrowers.
Under the new pricing arrangement, customers who sign up for a Tailored Home Loan in a NAB branch or through a mobile banker employed by the bank appear to be ineligible for the rate discounts offered to clients of brokers.
NAB told brokers on Friday that it would be providing “greater price transparency” and cheaper rates for their clients through a tiered pricing structure that delivered discounts to borrowers stumping up large deposits on their loans.
Under the new four-tier pricing system, brokered clients with loan-to-value ratios below 60 per cent will be eligible for the deepest rate discounts while borrowers with LVRs above 80 per cent will pay more.
In a press release also issued on Friday that appears to have been issued only to mortgage broker news outlets and is yet to be published on NAB’s media portal, the bank’s head of broker distribution Phil Waugh said the new pricing system would give brokers “clarity”.
“The tiered LVR offering through our Tailored Home Loans builds on NAB’s commitment to bringing clarity, transparency and simplicity to home lending and makes it easier for brokers to support customers in achieving their home ownership dreams,” he said.
“The refreshed product focuses on lower fees for customers, which we know is important in the current market.”
It is not yet clear whether NAB plans to offer the discounted rates to longstanding NAB customers who take up the home loan product at a branch.
Direct customers of the bank could also miss out fee reductions, which the bank is passing on to brokered customers.
NAB is removing the upfront application fee on the Tailored Home Loan, which it says will deliver brokered customers a A$600 saving.
The bank is applying the new pricing and fees to all owner occupiers and investors who take out fixed or variable rate loans through brokers.
The changes also apply to all repayment profiles, including interest-only and principal & interest loans.
Under the new pricing system, NAB has established four price points on the Tailored Home Loan: an undiscounted rate for “Tier 4” borrowers with LVRs above 80 per cent and discounted rates for borrowers in lower LVR bands.
The biggest rate discounts are being offered to borrowers on LVRs of 60 per cent or less.
Canstar director Steve Mickenbecker said it was unclear whether the pricing and fees would be offered to direct customers of the bank.
He said he was not aware of Canstar being notified of any repricing decisions or fee variations for the publicly offered Tailored Home Loan.
However he said NAB’s repricing for the product sold through brokers was among the most calibrated efforts by an Australian bank to embed risk-based pricing in the home loan market.
“If the major banks weren’t pricing for risk already they would be mad not to in the current environment,” Mickenbecker said.
“I think full pricing for risk