MORTGAGE Choice shares fell further and analysts say other lenders may follow Westpac's lead to broker commissions.
Mortgage Choice shares closed 8.70% or 9 cents lower at 94 cents on the trade of 5.44 million shares – after falling 26.07% or 36.5 cents on Monday.
According to UBS, Westpac has cut upfront commissions to Mortgage Choice from 70 basis points to 50 basis points, with trailing commission cut from 25bpts to 15bpts on all new business starting late June.
UBS said whilst the Westpac have always had a volatile relationship with the broker channel, and as Mortgage Choice’s number seven or eight lender, the commission cut has limited impact.
However, UBS said the risk that other lenders will follow is high.
“With weak Feb housing loan data surprising on the downside we have cut our approval growth forecasts, but forecast a two year market share recovery given Mortgage Choice’s higher quality loans and the potential for lenders to aggressively cut commissions to higher churn, smaller brokers,” UBS said.
Australian Property Journal
