Bank of Queensland has announced that it will no longer deal with mortgage brokers even though 22% of its new home loans were sold through this channel in its latest half year.
"This is a strategic decision that we have been working towards for several months, and follows our considered decision two years ago to reduce our dependence on mortgage brokers," the bank’s managing director David Liddy said.
"Any short-term reduction in mortgage sales growth due to our decision to withdraw from the mortgage broker market will be more than offset on our bottom line through improved sales through our own expanded branch network and a reduction in distribution expenses."
The bank has 133 branches in Queensland and is planning to open 100 more in New South Wales and Victoria by August 2006.
Liddy says the decision to withdraw from the mortgage broker market will improve the bank's profitability.
"We are different from the major banks, which have a mature branch network and so achieve productivity gains through the broker channel. In our case, the broker-originated loans provide too low a yield to pursue as we move forward. In effect, we are growing sufficiently fast organically without the need for mortgage broker-generated loans," Liddy said.
"I wish to stress that this is no criticism of the mortgage broking industry."
Mortgage brokers "have performed an important role in returning face-to-face service to the home lending market in Australia over the last few years," Liddy said.
