Mortgage Products

The home is the largest single investment and the longest contractual commitment that most people make in their lives. The National's home loan philosophy is to provide customers with choice and control.

The National's growth in the Australian home mortgage market has been significantly faster than the overall market. Our mortgage business in Great Britain has also proved robust, with Yorkshire Bank achieving growth several times that of the market overall.

We have reiterated tailoring as a central message in our mortgage operations across the National Group. In Australia, our emphasis on having a relationship banker for every customer with a National-branded home loan has been an important point of differentiation. The strength of the relationship banking has also helped build our home loan business for the higher income customers in Australia and Great Britain.

Research conducted among Australian borrowers during the year demonstrates that the National's home loan offering is bringing customers tangible benefits. The ability to tailor the term of the loan to an individual's financial needs has resulted in National customers having an average initial loan term of 19.2 years compared with the standard 25 year repayment period.

The National's strength with higher income customers means that our average home loan in Australia is 12.6% larger than other banks.

In Australia, the National's home equity loans through the FlexiPlus Mortgage and the Investment home loans provide competitive strength.

About 60% of our home lending in Australia is through the Choice package for higher income customers. The Choice package was enhanced during the year to incorporate online and telephone share trading, and funds management, together with fixed and variable rate margin lending.

The international scope of the National's business is bringing benefit to customers in each market. The FlexiPlus Mortgage, which has been a very successful flexible credit line in Australia, has been adopted in Great Britain and New Zealand, while New Zealand's Rapid Repay product, has been adapted to provide an amortising line of credit in Australia and Great Britain.

The position of our operations in Great Britain and Ireland in regional centres and small communities has contributed to the development of strong relationships between customers and staff. Yorkshire Bank was recently voted by the consumer magazine "Which" as having the best service ethic in the home loans business.

The home loan business is becoming more competitive in all markets with new suppliers and easier access through channels such as telephone banking, mobile bankers and the internet.

Mortgage brokers are increasingly important. In Australia, they account for more than 20% of all mortgages, and the National's Australian mortgage origination business, under the brand name of HomeSide Australia, has been able to more than double its growth in each of the past two years. During the year, HomeSide's Australian origination operation was integrated with the National's mortgage business.

Recent research highlighted the high quality service that the HomeSide Australia mortgage origination business provided, with the service provided to mortgage brokers ranked first, and HomeSide's products and technology ranked in the top two.

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