HSBC Bank Canada finally did what many insiders have expected for over a year. They shut their doors to mortgage brokers.
“We plan to concentrate on growing our business through our network of over 140 bank branches,” said HSBC Bank Canada spokeswoman Sharon Wilks. (See this Globe Story)
HSBC says it will honour all existing broker commitments.
Besides going into a branch, Wilks said customers will now need to apply for a mortgage “online or work with one of our telephone-based relationship managers.”
None of this is a complete surprise. About a year ago, HSBC began dealing with only its top 100 brokers. Many industry executives saw this as HSBC’s first step out of the channel. Since then, HSBC’s best rates and products have typically been available only through its branches. HSBC’s broker centre seemed to be running on a minimal staff as well.
Prior to HSBC, the last major bank to exit the broker channel was BMO in 2007.
“BMO has lost significant market share since they stopped using brokers, but their profit margins have improved,” said Canaccord Genuity analyst, Mario Mendonca. (BMO’s share is now estimated at 9.2% versus 9.9% one year ago.)
“It’s hard to tell on a net basis whether [giving up broker business is] the right thing to do,” he says.
So where does HSBC’s move leave the broker industry? Well, we never like to see a bank exit the channel, but fortunately, HSBC never gave us much to miss. Apart from limited-time rate promos, HSBC’s broker rates was often way above the market. Moreover, its turnaround times during broker rate specials left much to be desired. (We’ll never forget waiting four weeks to get approvals back during HSBC’s summer 2008 rate promo.)
The main niches we liked about HSBC were its products for non-residents, co-ops, and leasehold properties. For those deals, HSBC’s top 100 brokers will now be looking for alternatives.
It’ll be worth watching to see how HSBC modifies its business model going forward. In the meantime, we want to wish the best to all the HSBC broker channel employees affected by this news.
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(Partial source: Globe & Mail, Reporter: Tara Perkins)
Is it just me or does it seem like TD is going down the same path as HSBC?
I haven’t seen a good rate from TD broker service in months and their best product (the HELOC) isn’t available through brokers.
I wouldn’t miss TD at all, but I am curious what others think.
Yes it does appear that TD may follow this path as well. They say that they are committed to the broker channel still but with them shutting down the western centre and shifting everything out east I don’t know.
We used to use TD all the time until they pulled off Morweb and didn’t really seem to care. Their equity program has disappeared and it does seem like deals get pushed through on the internal side easier then the broker channel. As much as we can get their products at other locations, better rates and likely better service, I really don’t like seeing these banks pulling out. One day we could see all the banks pulling out and it would be an all out war; broker vs. bank. Let’s hope that doesn’t happen.
Losing HSBC was a non-event. It won’t affect my business one iota and I don’t know anyone else who even used them.
Read the writing on the wall. They are all looking for alternative to brokers and so it should be an all out war as of now as there will be no battle if there is no one to fight