Here are quotes from those individuals that mortgage players may find noteworthy…
“It’s going to require a significant amount of investment” to show the public “what we do (as mortgage brokers)…Mortgage brokers don’t just sell interest rate.”
82% of a broker’s business comes from referrals, according to Maritz.
“Mortgage brokers haven’t been effective at renewing customers…Most lenders have the flexibility of lowering the rate and keeping that customer.”
“The last thing I want to see is lenders exiting the channel” because “it sends the wrong message to consumers” and hurts funding availability.
Rate buydowns are nothing new. “There were times (10 years ago) when mortgage brokers had to buy down rates to compete with the bank…(Going forward) we don’t want to see that frequency increase, but it’s a reality.”
BMO’s 2.99% 5-year fixed promotion was “unsustainable…I think we’re going to see some continuing pricing discipline” with fixed-rate mortgages.”
Threats to the broker channel include: Lenders leaving the channel, aggressive price wars, and growing mortgage sales forces. But “one of the biggest ones” is a lack of consumer awareness of broker value.
For brokers “to put their heads in the sand” (on these issues) is “absolutely foolish.”
“We (brokers) have to be as aggressive (on retention) as the banks are.”
“We have to get away from the transactional conversation, ’What is your best rate?’”
“When someone is saying ‘What is your best rate?’ they’re usually asking that because they don’t know what else to ask.”
To overcome consumer objections “We (as brokers) have to dollarize the difference” that 10, 15 or 20 bps has on the average mortgage…”
“I don’t think (FirstLine’s recent decisions) send a good message. That doesn’t say to us that they’re committed to our channel, and that’s a concern for me.” [Gary referred especially to the decision by CIBC to grant stated income products only to their retail sales forces.]
Some good news: There are two new broker lenders coming down the pipe “that are both going to be active inside of the next 60 days.”
“I don’t think that (banks) want to be involved in that race to the loser’s circle” by continually competing long term…at 15, 20, 25…basis points below what (the broker) channel has available.”
“Do I think that the (banks) will…go to the lowest rate to attract Canadians? Not a chance.”
“Expertise has value…When you cut commission to drop the rate to be competitive, I think the consumer looks at you and I think you lose credibility.”
“I don’t think that our business is going to be commoditized…to a point where it’s going to drastically affect us long term.”
“Typically when (customers) are speaking to you, they’re speaking to another broker and another banker—so (brokers) have to be better than two other people.”
“The old (broker sales) pitch is just not going to work as the banks get more competitive.”
Brokers shouldn’t compete “rate-to-rate,” they should compete “strategy to no strategy.” The (employees) in the (bank’s) mobile sales forces don’t have strategies. They just product push and fill out applications and sell rate.”
“If we start sending the message to lenders that we’re prepared to work cheaper…they’ll bring more cheap-rate / cheap-commission products…and that’s not good because then more and more (brokers) will get sucked into that vortex.