Big four banks moving to out-deal mortgage brokers

According to the latest quarterly figures compiled by the Market Intelligence Strategy Centre, fewer than 60 per cent of loans sold by mortgage brokers are financed by one of the big four banks.

The figures come as ANZ on Friday followed its rivals in holding back some of the Reserve Bank's official rate cut, trimming variable mortgage rates by just 20 basis points.

The Reserve Bank cut the cash rate by 25 basis points this month to 3.25 per cent, amid signs of a slowdown in the domestic economy and weakening jobs growth.

The Market Intelligence data shows major banks are substantially underweight on the mortgage-broker channel given they are behind 80 per cent of all mortgages sold in Australia.

For banks, mortgages sold through branches generally are more profitable than those sold through mortgage brokers.

Of the mortgages sold by brokers in the June quarter, 59.8 per cent were financed by one of the four major banks, the MISC figures show. This was down from 64 per cent in the same period a year ago.

This represents the biggest drop in the majors' financing of the mortgage broker channel since the September quarter in 2007.

The MISC figures also reflect regional lenders such as Bank of Queensland and Bendigo and Adelaide Bank becoming more active in selling loans through the broker channel.

Regional players have generally been more reluctant to match the mortgage discounting of their major rivals given their higher funding costs.

In particular, the drop in market share by the major lenders, particularly across the eastern states, was spurred on by a recent decision by bigger players to scrap cash refunds for loans sold through the channel.

Even so, major banks are increasingly relying on mortgage brokers in Western Australia and South Australia where their branch footprint is not as big as in the eastern states.

ANZ, the last of the big four to react to the Reserve's cash rate cut earlier this month, said on Friday it would cut its variable rate to 6.6 per cent. It blamed competition for deposits for the need to hold on to a margin.

Commonwealth Bank and National Australia Bank reduced their standard mortgage rates by 20 basis points to 6.6 per cent and 6.58 per cent, respectively. Westpac lowered its rate by 18 basis points to 6.69 per cent.

Among the second-tier banks, Bank of Queensland cut its standard variable rate by 20 basis points to 6.71 per cent, while the Newcastle-based Greater Building Society lowered its rate by 15 basis points to 6.25 per cent.