BNZ to drop brokers for mortgage business

The Bank of New Zealand will ditch mortgage brokers next month and deal with customers directly. It has told brokers their agreements will be terminated from June 1.

Personal financial services general manager Chris Black said brokers had not provided much business.

"Only about 5 per cent of BNZ home loans are originated from mortgage brokers."

BNZ ranks fourth in the mortgage market and has about 15 per cent market share. Mortgage customers do not qualify for the BNZ's reward programmes if they take a mortgage with the bank through a broker.

Mr Black said eight positions in Auckland and Wellington would disappear and it was hoped to redeploy the staff within the bank.

Mortgage Brokers Association chairman Brian Berry said the BNZ's decision was "inevitable" because the bank had not been a supporter of the broker network.

Customers would not be disadvantaged because the mortgage market was so competitive, Mr Berry said.

Brokers would still be required to give the BNZ as an option to customers if the bank offered the best deal, even if it meant not getting paid a fee.

"A broker should be providing impartial advice," he said.

Mortgage lending referred through brokers was estimated to have increased in the last year from 25 per cent of all lending to 29 per cent, Mr Berry said.

High-profile mortgage broker Mike Pero said his company had put the BNZ "on notice" three weeks ago that if it did not improve its service to brokers, he would end the agreement.

"Only a small percentage of our customers wanted the Bank of New Zealand in the first place."

Massey University senior banking lecturer David Tripe said he did not expect other banks to follow BNZ's move.

- NZPA