“People should stop complaining about (rate buydowns) and start doing something about it – like change the way they do business. If they’re trying to do business today (the same way) they did ten years ago they’re going to fail miserably,” Paul Mangion of the Mortgage Centre M.O.S. MortgageOne told MortgageBrokerNews.ca. “Pick different niches of the market, pick the sub-prime; if you deal with upper clients, educated clients most of them don’t care if it’s 10 bps lower or five bps lower.”
Mangion sees similarities between the current mortgage industry and the evolution of the trucking industry; one he was forced out of when profits shrunk. He isn't as pessimistic about his current vocation, though.
“I was in the trucking industry and I saw ten years later we’re still charging the same rates only gas isn’t 60 cents a litre it’s $1.20; it was a race to the bottom (and) I saw the writing on the wall (that) only the big guys (were) going to succeed,” Mangion said. “Here’s the beauty of our industry: We’re service oriented so we can control our costs (while) the trucking industry is very labour-intensive plus you’ve got to pay for the capital equipment, insurance.
“In this industry what do we pay for? An office and the internet.”
His comments follow news
that yet another lender is offering a sub-three per cent five-year fixed rate, which will certainly force a number of brokers to buy down rates to compete. Much ado has been made about the prevalence of rate buydowns and the long-term effect the trend will have on the industry. And while Mangion isn’t a fan of the model, he realizes there is still a market for his own business style.
“I don’t do any advertising anymore … because it’s a waste of money,” he said. “You pay the greatest amount of money for the worst type of client; the best type of clients are referred clients.
"Pick and choose the clients you want to deal with. There are hundreds of thousands out there; you don’t have to deal with everyone of them."
Despite increasing competition from rate sites and competitors buying down rate, one leading broker sees the changing industry landscape as an opportunity to refocus his business.