Brokers are feeling one last push by the banks to sell cashback mortgages before OSFI kicks it off their product lists.
“They know the product is going away and they want to fill up their pipe with as many of those deals as they can before they have to pull it,” Chad Robinson, president of Verico Best Interest Morgages, told MortgageBrokerNews.ca. “It’s still a hard sell for brokers, because of the rate.”
Earlier this month, The Office of the Superintendent of Financial Institutions confirmed that it will indeed move to scrub that hard-to-hawk offering from lineup of federally regulated lending institutions.
“With respect to the borrower’s down payment for both insured and uninsured mortgages, writes the regulator in its June 2012 guidelines update, “incentive and rebate payments (i.e., “cash back”) should not be considered part of the down payment.”
While early broker objections around those new rules focused on re-qualifying standards, few mortgage professionals have publically criticized the move to eliminate cashbacks.
That’s likely because of the same challenge Robinson points to: Rate.
“The demographic for the product is very small,” he said. “They have to have good credit (680 Beacon score) and a good job, but no down payment. That kind of client is more likely to be able to source the down payment through other means and they’re sensitive to the gap between the rate attached to cashbacks compared to prime rates.”