Commonwealth Bank will launch a new digital-only mortgage product that will push in-house lending at the expense of less profitable broker-originated loans, igniting frustration within the industry about the major bank cutting brokers out of deals.

Known in the industry as channel conflict, major lenders are going straight to customers threatening to leave for a rival, even after they had already engaged a mortgage broker to find the best deal, brokers say. The customers are offered a better rate than those available to the brokers which, if accepted, means brokers do not earn their commission.