Don’t Ask For Discretion At The Bank!!

Branch-Manager Sorry. We had to say that. 

It seems we have upset a few mortgage specialists from a certain bank that shall remain unnamed.

Apparently people are reading our articles about branch discretion (i.e., selective discounting) and then marching into bank branches asking for discounts off the “special offer” rates. Imagine that.

A few mortgage specialists tell us this has put them in bit of a “pickle.”

One email we received states: 

“By quoting our "best client" rate on your website, it is an indication that all clients can get that rate "just for asking."  We have very little negotiation room left and, if we give it to ALL clients, we have nothing left to offer those clients who truly are deserving of a better rate.”

Makes you wonder, eh? 

Are you deserving?  :)

  1. Rob,
    I seem to have missed the article where you gave the best rates. I have articles mentioning branch discretion, but not the one with the “best client rate”.
    you wouldn’t think it would be a crime to point out that link and upset the bankers, would you :-)
    Cheers.

  2. Too funny. Knowledge is power.
    The banks make their money (especially at renewal) because people either don’t have the knowledge or the time. A broker
    will save people time and gives them the knowledge to make the best decision.
    Canadians are a loyal bunch and survey after survey has shown that once the bank has the mortgage, the other business will follow. People don’t like to switch after that. Young people are more likely to switch and use a broker.
    The banks have chosen individual negotiated discounts as a strategy and it has been very successful to this point.

  3. In all fairness, the banker in the email is right. Why should I get the same rate as my much more wealthy father who has more assets with the same bank? There has to be room for further discounts to those clients who are more valuable. I know that in our society we like to think we are all equal, but in reality we are not, nor in certain cases should we be treated as such. This is one such case.

  4. I’m not surprised. I got email from people claiming to be bank employees about my article last week which talked about banks buying people with rates alone and how I referred to them as “$30,000 a year personal bankers”.
    I take them with a grain of salt.
    I understand why they’re concerned. The big banks have quite a bit of overhead that other lenders don’t. They’re trying to be everything to everyone by offering bank accounts, loans, credit cards, insurance, investments, but without compromising on their profit margins.
    As such, it’s not feasible for them to just offer rock bottom rates for everyone.

  5. To me what is strange in the first place is that people don’t realize that mortgage rates are negotiable. Don’t people negotiate prices for cars or large furniture prices? Mortgages are a big expense, so the same naturally applies. And come on: any decent mortgage specialist should know this and be able to negotiate accordingly!

  6. Lior, not all bank mortgages are handled by “$30,000 a year personal bankers.” As a vetren of the bank system and the broker system, I can tell you that there are several very good specialists that work for the banks, along with several good brokers as well. Please don’t blanket all of the banks with the same statments as each of the big 6 have different operating models within their businesses. They must be doing something right, or the broker market share would be much more than what it is today. I support both sides, as long as statments made are truthful and informed.

  7. When bargaining, knowledge is power. Homeowners are fortunate that in the case of mortgages, a good knowlegeable broker verses the banks will nearly always provide better service, better price and for lack of a better term, “not screw you around”. Consumers are slowly waking up to this fact but old habits die hard.
    One last note, many consumers are unaware that GIC rates are fully negotiable with F.I.’s too. Like mortgages, the best GIC rates are nearly always found with independent financial brokers and the funds are guaranteed. Hence the “G” in GIC. Put your hand up if you already knew that?

  8. You know considering how many of the people that read this article are brokers I am amazed no one has pointed out the obvious facts. The bank sales people have some discretion as to rates they can apply but bear in mind that alot of these people get a bonus at the end of year based on volume but also rates. SO, if they give away all their rate discretion they only get a bonus on volume. To really hit the big bonus numbers they have to hit both the volume (size of mortgage) and rate (how much that mortgage makes the bank).

  9. Gritty,
    I think you miss the point. Of course some people will not get the reduced rate. The guy who wrote the email is a dumba$$ because he’s complaining that he has to tell the people that they are not the best customer. This site never said that everybody will get the best rate it simply said to call their branch and try to get it. In the end the bank can say “No” to whoever they want. I think the guy’s problem was that he didn’t want to have to explain to his customers why they wont get the lower rate. In other words, he doesn’t want to do his job.

  10. AKS, can you tell me what banks pay bonuses on rate? In my experience, in branch as a banker, as a mortgage specialist and as a broker, the only place where you were potentially paid more if you sold a higher rate was as a broker (yes, that was a few years ago, and not so much now). Can you back up your claim on that point?
    Howard, I think you are on point with your comments.

  11. Personally, I’d rather do business with someone like ING than a regular bank. They give good rates to everyone and you don’t have to get on your knees and beg for them.

  12. If you think a 7 year at 4.95% is a better deal than a 5 year at 3.8%, you are betting that 5 years from now, 2 year rates will be ~8.8%.

  13. The reaction of the bank mortgage specialist illustrates the true value of this website! It’s rare that an information source is as balanced and as accessible to those with various levels of financial knowledge. I’m a better ‘customer’ for reading it regularly. Thanks Rob & Melanie!!

  14. Funny how with all the doom and gloom stories to scare everyone into fixed, some institutions are lowering their variable. Thank you RBC, after finally moving your variable, now ING went even lower with 1.95% 5 year variable and a tax free savings account paying 3%.
    Rates will eventually rise so get the best discount off of prime while you can and make sure you can opt into a good fixed rate with no penalty. Best of both worlds.
    A special little note of disgust to Scotiabank, not only have they not lowered their variable from 2.25%, they have raised their ‘save now, save later’ special.
    Thank you Rob and Melanie for your great site.

  15. Hi John: It was this story
    JD: You’re so right.
    Gritty: The bank system is centered on the concept you mention (i.e., more assets/more business with the bank = better mortgage rates). Customers do have an alternative though. There are lenders with everyday low pricing for everyone (as long as you qualify). This is also how mortgage planners operate as well. Over time, I think we’ll see less and less pricing segmentation at the banks as competition heats up.
    MC: You’re absolutely right about there being many highly professional mortgage specialists at the banks. We know some exceptional mortgage specialists that make $200,000+ a year and you don’t get there by giving folks garbage rates and bad advice. Unfortunately, by definition, there are fewer “exceptions” than “rules” when it comes to bank reps. Some might argue the same thing about brokers, but the difference is that the broker model of selling multiple product lines (versus one at the bank) translates into more choice and transparancy for consumers.
    Banker: Yesir. Old habits do die hard.
    Howard: It’s unfortunate that some people in the mortgage world make more off of consumers that know less. It’s a cold reality and survival of the fittest I guess. Fortunately, homeowners are becoming savvier every day thanks to the net…
    Informed Reader & Mike: Thanks for the thoughtful feedback!
    Cheers,
    Rob

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