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NR may pay retention proc fees

Northern Rock may bow to peer pressure by paying brokers proc fees for home movers, as part of a customer retention drive.

This would follow similar moves by competitors such as HBOS which last year introduced proc fees for existing as well as new business.

Speaking to Mortgage Strategy on the day NR released its 2006 results, Dave Jones, finance director-designate at NR, says: “We are particularly good at retaining customers who come to the end of their existing products. What we are not so good at is retaining home movers so we are placing more emphasis on them now.”

However, the timing of this move and level of proc fee are yet to be decided.

Chris Cummings, directorgeneral of the Association of Mortgage Intermediaries, says this is a trend that is likely to continue as banks fight to tackle customer churn and minimise the writing of loss-leading new business.

NR saw a 27% rise in pre-tax profits to 626.7m for the 12 months to December 31 2006.

It has pledged to increase its branch network by 28 centres to 100 over the next four years and will also increase its number of business development managers.

Jones says he expects the housing market to continue to be buoyant in 2007.

He adds: “The total mortgage market will be slightly higher than in 2006, at around 360bn given the continuing low unemployment and rising population.”

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