Beating the banks is worth the fight: Brokers

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Tightened lending regulations have made it tougher to fund deals but brokers are best served to put their noses to grindstone and work harder to find the right mortgage for their clients, according to two players.

“We have to battle for our share of A-business; we need to become more efficient, more productive, more nimble and creative, learn to live with what is likely permanently lower revenue per deal,”  Ron Butler of Verico Butler Mortgage said in the comments section of MortgageBrokerNews.ca. “It's no fun but too many great people have worked too hard for too many years to abandon the A mortgage space to competitors now.”

Butler’s comments come on the heels of increased competition among the big banks for A-deals, with several of them aggressively targeting customers with sub-three per cent five-year fixed rates. It has some brokers wondering how to compete.

“We’re seeing more and more brokers exiting the A-market; I’m seeing more private (lenders) out there, more B-lenders and the banks are killing us in the A-space,” Joe Walsh of Dominion Lending Centres Bedrock Financial Group Inc. told MortgageBrokerNews.ca Wednesday. “Banks have begun focusing more on their retail lending and if they wanted to they could blow us out of the water.”

“They can undercut us and that’s a reality.”

But getting creative and taking on an advisory role will set brokers apart from their banking counterparts, according to one industry player.

“Brokers spend a lot of time lamenting how difficult it is to get a mortgage, and how much harder they have to work to get a deal done now compared to before,” commenter, M. Robertson said. “But isn’t that the whole point of a mortgage broker? To do the work so the client doesn’t have to?”
 
  • David Larock on 2014-06-05 11:32:21 AM

    "The banks are killing us in the A space". Really? Not my experience at all.

  • Adel Abaza on 2014-06-05 11:44:15 AM

    The way I see it is that we offer 2.99% 5 years fixed, no collateral mortgage, with lenders with regular posted rates, and reasonable break penalties. Banks could offer maybe a better rate sometimes, but will cost our clients with criminal break penalties and higher renewal rates for high-ratio clients within 80% LTV (in a collateral mortgage). So if your clients trust you, getting this message to them shouldn't be too difficult.

  • Deenu Patel on 2014-06-05 12:42:43 PM

    I feel that selling rate will always end poorly. We became professionals not to under cut our industry, but to educate and make sure our clients and public is aware of better products, and better advice. We need to bring our professionals together to get marketshare, and stop selling rate. Keep educating, keep building the trust, and you'll keep those clients coming back. These rate wars will always be out there, whether we're looking at 5.94% vs 5.82% or 12% vs 11.99% WOW.

  • Victor Simone on 2014-06-05 2:56:04 PM

    As independents we will always survive, with our A or B lending solutions. Banks are good suppliers to our channel, but I never want to work at just one lender or supplier, with their limited scope of solutions. The "Rate Buydown Guys" will need to diversify too, as more agents gun and copy their business models, and the same goes for the "B Brokers".

    I'm sure Mr. Walsh will continue along his fantastic career, and we just need to keep as many lending solutions available, as the next challenges arrive.

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