St George Bank Ltd will cut commissions to mortgage brokers that don't sell an agreed percentage of the bank's mortgages.
Australia's fifth largest bank said it made the move to offset the cost of higher wholesale borrowing rates caused by the global credit crunch.
Brokers that sell St George mortgages will now get an upfront commission of between 50 and 70 basis points, changed from the previous amount of 70 basis points.
Trail commissions, which are paid over the life of the home loan, will be between 15 and 25 basis points, changed from the previous 25 basis points.
St George said brokers would now have to meet a new range of criteria to get the full commission.
These included selling a certain percentage of St George loans and also trying to cross-sell other St George products like transaction accounts.
"We are introducing these changes after careful consultation with our broker partners and, rather than just cutting commissions, we intend this to be a clear signal that we will continue to support the mortgage broking industry," St George acting group executive retail business George Beatty said.
Westpac Banking Corporation Ltd earlier this month raised the ire of mortgage brokers by cutting its upfront commissions by 20 basis points to 0.50 per cent and its annual trailing commission by 10 basis points to 0.15 per cent.
Analysts expressed fears that Westpac could lose business if the other banks didn't also slash commission to brokers by a similar amount.
Mr Beatty said St George was keen to reward brokers for loyalty.
A St George spokesperson refuted the suggestion that the bank was creating a conflict of interest for brokers by rewarding them for writing more of its loans.
"It's up to the broker," the spokesperson said.
"Their role is to find the best product for the customer, and this is just a way they are remunerated.
"But the end decision ends up with them."
© 2008 AAP
