Mortgage professionals are fearful a recent move by First National to lower commissions will kick start a trend, as channel lenders face fewer competitors for broker business.
“First National sent brokers a message last Thursday that they will be lowering brokers fees across the board by 5 bps,” Brad Geisler, a broker with the Mortgage Centre in Alberta, told MortgageBrokerNews.ca. “They say the move is aimed at reducing costs, but I suspect it is partly the result of FirstLine exiting the market.
“With less competition, lenders can afford to lower their fees. I hope this does not become a trend.”
First National denies that as the reason behind its move.
“Yes, we have reduced our fees across the board effective last Friday,” Karen Biernaski, with First National, told MortgageBrokerNews late last week. “But the speculation that this is tied to competition is not valid.
“We looked at it from a cost perspective.”
Still, Geisler and others are concerned FirstLine’s shutdown last month now holds repercussions for their remuneration as lenders benefit from the mono-line’s withdrawal.
“First National was big winner when FirstLine left the scene,” said Geisler, “I’ve been told that they had been swamped since FirstLine left.”
Biernaski refutes Geisler’s theory, reiterating that the lender examined its operating expenses and found the need to improve cost-effectiveness in the following three areas:
• Portfolio leases
• Broker compensation
With regards to broker compensation, Biernaski said, First National found out that its Wizard Reward Program was not working out as intended.
“This was a loyalty program designed to reward top performing brokers, but with brokers pooling their numbers, First National was not getting the operating efficiencies it was targeting,” she said. “For instance some brokers were not using the (Wizard) online mortgage system which was meant to make transactions more efficient.”