“This just came up a couple weeks ago – a client came to me to apply for a mortgage and they had already spoken to the bank,” Mike Celuch of Mortgage Intelligence told MortgageBrokerNews.ca. “The bank told the client to go see a broker, find out what rate they will offer and that they’d match it.”
Celuch lost that particular client’s business. Though he has, in the past, been able to earn the business of rate shoppers.
“If I know upfront that that’s what the client is doing I’ll just say to them, ‘here, this is the rate I’ll offer, but I’m not going to waste my time for nothing,’” he said. “’If you want to stay with me I’ll give you the best rate I can.’”
With the prevalence of rate comparison websites and aggressive promotional campaigns from the big banks, brokers have to deal with rate-focused clients who are intent on shopping around until finding the best rate.
Some brokers have combatted this by asking clients to sign commitment letters. For his part, Celuch uses them on a case-by-case basis.
“I do have a form that, if I think a client is using me, I get clients to sign but the problem is how enforceable is it?” he said. “It’s similar to a contract that real estate agents us; it’s a broker agreement that states they are applying for a mortgage for X amount of dollars, and the client expects the commitment. If they cancel I am entitled to a fee of X amount of dollars.”
Brokers having to deal with flighty rate shoppers is nothing new, but one broker’s recent experience suggests banks may actually be encouraging that bold behaviour.