AIB to cap mortgage brokers’ commission

AS figures reveal an upsurge in demand for mortgages, AIB has announced it is capping the commission it pays brokers.

The bank is planning to cap the commission it pays mortgage brokers at €1,500 from September 1.

Last year, AIB cut the commission by half from 1%, while other lenders also reduced their payments to brokers as funding costs soared.

In its half-year results this month, AIB said it maintains “an active focus on costs in this difficult revenue-generation environment.”

Operations manager at Irish Mortgage Brokers Karl Deeter said the move was “frustrating” and estimated that about half of his business goes to AIB.

“From our point of view, the bank is moving job losses into the intermediary channel and away from its own branch network,” he said.

Meanwhile, figures released by the Professional Insurance Brokers Association (PIBA) show that in the second quarter of this year first-time buyers accounted for half of loans issued through its services, a 28% increase on the previous quarter.

Director of PIBA mortgage services Rachel Doyle said: “A confluence of factors emerging in the market is improving affordability and may mark the beginning of a turnaround. House prices have fallen back into line with the average industrial wage.”

She said this was reflected in PIBA’s latest statistics which show the average loan size was down 15% from €223,000 in quarter one to €190,000 in quarter two.

Ms Doyle added, however, that lenders have become much more cautious.

“Just some of the stipulations attached to granting loans now include a record of savings, bank statements showing salary credits, and overtime is now generally disregarded.

“In the course of just a year the banks have gone from one extreme to the other.

“This over-zealous approach, if allowed to continue, will delay recovery.

“Normal prudent lending practices must be restored to the marketplace and that requires more urgent intervention by the Government,” she said.