Broker, meet your Frenemy, Rate Site

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Not for individuals

As Greg Williamson correctly says: rate discounting is not a viable strategy for individual agents and brokers. Our organization has grown over the last 18 years to the point where we had the number of lender relationships at high-volume levels to allow us to tap best rate offers from a number of sources. We had 18 years of experience handling cold calls from other forms of advertising. We had 10 years to adapt to processing incoming leads from a website. That being said, we made massive changes to our systems to accommodate the rate site leads.

The how-to

We downsized our commissioned agent group and hired salaried individuals who were licensed through FSCO. Those persons handled initial application input and Expert processing. We bought software to monitor internal deal progress and customized PDF docs to maximize electronic client interaction. We are constantly looking at ways to enhance the performance of the process. We don’t see how an individual working alone can live with the expenses, take on all the tasks and shoulder the workload the rate sites create.

We can’t say what the final outcome of all this will be but we believe rate comparison sites and advertised rates are not going to stop anytime soon.  As time goes on I think the mortgage brokerage industry will continue to feel the effects of these trends.


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  • Ross Taylor on 2013-04-12 6:53:57 AM

    Excellent article thank you


  • Rob Campbell on 2013-04-12 7:22:12 AM

    Very well done, Ron.
    Well said.

  • Wane Davis on 2013-04-12 7:39:47 AM

    Just for clarification, Banks sell rate because, even with little or no margin, they attract customers to cross sell more profitable products like credit cards, chequing accounts and other deposit may get them with your rate site and low bought down rates but you haven't solved the problem of renewal when, after acquiring the homeowner you have no sticky product to get the are just continuing to feed the machine and letting banks eat your lunch. Brokers need to do more to KEEP the client and the only way is to do more than mortgages.

  • Kerri-Lynn McAllister on 2013-04-12 10:02:33 AM

    Ron, I applaud you for giving such an honest and straightforward view on rate sites. Your comparisons to travel sites are spot on, and obviously those in the industry who want to work with rate sites do have adapt their businesses.

    Like any competitive industry, there are areas to segment. It's just that rate sites is the fastest-growing segment at the moment, and other brokers wishing to specialize in other segments will have to have a strong and defined value proposition.

  • Paul Therien - CENTUM on 2013-04-12 10:41:43 AM

    Ron - Great article - well thought out and well explained. I think that in our industry we often forget one key thing however... Back 20 odds years ago when I started in the industry mortgage brokers had two key selling points, and they were what built our industry. #1 – If you can’t get approved by the bank, we can help and #2 – we can beat the banks rates. #1 started to wane as more and more A lenders entered into the broker origination channel and felt that it was an excellent low cost source of mortgage business for them. Because of that lower cost of funds – independent brokers could offer lower rates than the branch network. There were also much more limited options for the consumer 25 years ago.

    Our industry rode the low rate methodology for many years in order to gain traction in the A side of the business, and it worked - beautifully.

    Banks now directly compete with us on rate, and you are 100% correct that we need to compete on a different level because a mortgage is about so much more than rate. Product, terms, etc. all play a fundamental role in the suitability of a mortgage for the consumer. I just think that we need to remember that brokers have been selling rate for decades, as have the banks. WE have created a culture in Canada where rate is king and sold the consumer on this concept. Ron is correct that we need to move away from the concept, but don’t be surprised when it turns out to be much more difficult than anticipated.

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