Brokers feared this day would come, with Scotia introducing a 5 bps cut to compensation on all its five-year fixed and variable product effective Oct. 18 and following on the heels of First National’s move.
“First Nat had already set the precedent and they obviously felt they could afford to follow suit," said Geoff Willis, a top broker-partner with Scotia and managing partner with Dominion Lending Centres Origin Mortgages. "It’s something they knew that they could effect quickly, I think."
The news formally reached brokers on Wednesday, although Willis and other top performers were given the heads-up.
The cut drops compensation on the five-year fixed and variable mortgages to 75 bps from 80 bps for both owner-occupied and rental program deals.
It's a change that MortgageBrokerNews.ca forecast last week in pointing to broker speculation about major lenders and their willingness to follow behind First National.
The Scotia move comes as many brokers openly express doubts about Scotia's dedication to the channel and its decision to acquire ING.
Scotia is likely to experience some pushback from brokers because of the decision, said Willis, but that will likely be limited to the short-term.