Brokers hold breath as monolines follow big banks

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As the big banks increase their fixed rates, monolines like MCAP and First National are following suit – eliminating any breathing room for brokers already trimming commissions to accommodate clients.
“The first question out of their mouth is always ‘What is your best rate?’” says Shawn Mooney, a broker with Verico Bayfield Mortgage Professionals in Airdrie, Alberta. “It was tough to convince them (clients) that there is more about mortgages than just the rate.”
RBC, TD and BMO all raised their fixed rates in response to bond prices falling in value last month. Most banks moved from 2.99 to 3.09 per cent on a five-year fixed mortgage – with RBC applying the biggest increase to their five-year closed mortgage, moving it from 3.09 to 3.29.
First National raised their 5-year-fixed rate to 3.09 on Friday, after MCAP increased their rate to 3.09 on the same product (but still offering 2.94 on a quick close mortgage).
Still, brokers are hoping other monolines will hold fire, winning them a competitive edge without relying on buydowns.
“I do feel that the move by the banks to increase their rates will ultimately help brokers,” Mooney told “When the banks rates are similar to ours it is tough sometimes to grab a customer who is loyal to the bank and convince them to use one of our lenders they are unfamiliar with.  It will at least grab their attention and give us a better fighting chance of winning those customers from the bank.”
Some of the non-bank lenders are expected to cash in, but the real winners will be clients, says Mooney, who will benefit from the expertise of mortgage brokers.
“Bankers don’t really know mortgages,” he says. “Sure, they know a lot about banking, but not as much as a broker does. Their lack of expertise in dealing with mortgages is what’s been driving clients our way for the last few years.”
Lawrence Kobescak, a broker with, agrees. At the same time, he comments suggest monolines may need to continue pricing their wares lower than the banks despite the vagaries of the bond markets.
“These smaller lenders have no choice but to be aggressive on rate to begin to even attract potential customers,” says Kobescak. “This competition between the monolines needs to attract customers and the banks willingness to match their rates will continue to ensure that Canadians are truly offered a competitive rate from both the monolines and the banks.”
  • Robert Stanfield, INVIS on 2013-06-11 9:04:45 AM

    All the articles and comments regarding rate, rate, rate are really starting to give me a headache. I don't know if I am lucking out that I seldom have a client that is "loyal" to their bank, or is rate shopping the internet and every bank, but I do not come across all these issues. I physically meet with my clients discuss their goals, give them solutions and they are very happy that the options provided meet their personal goals. Sometimes my rate is lower, sometimes it is a bit higher. When it is a bit higher, I calculate the difference between my rate and the competitors. As long as the difference is less than a $1,000 over 5 years, I have never loss a client. I think it is the brokers that mainly focus on the online business that are experiencing the issues with strong rate wars and buying down rates. But, this is my opinion and my business model.

  • Kevin - Ontario on 2013-06-11 9:25:20 AM

    “Bankers don’t really know mortgages,” he says. “Sure, they know a lot about banking, but not as much as a broker does. Their lack of expertise in dealing with mortgages is what’s been driving clients our way for the last few years.” – Really? If bankers don’t know mortgages then how is it that they have the lion’s share of the mortgage market in Canada? I read comments on here all the time about how brokers like to say that they know more about mortgages than anyone else in Canada. Time for a reality check for some people. The vast majority of bank employees are university educated. The banks have extensive training and compliance programs that they are required to complete annually, like AML legislative testing, unlike mortgage brokers who consider continuing education going to a conference to hear some people on stage talk. That is if they even show up to the speakers after a night on the town. I worked for a bank for many years at the branch level and in credit adjudication. The vast majority of mortgage brokers I dealt with knew less about the ins and outs of mortgage lending than our branch staff did. It was the right decision when we stopped doing business with brokers. Lower instances of delinquency and fraud. Just because you can brow beat your underwriter into making an exception does not mean you know more about mortgages.

  • Ron Price DLC on 2013-06-11 11:45:40 AM

    As I have said before, no one should be able to comment in this venue without identifying themselves like Kevin - Ontario's comment.

  • @kiltedbroker on 2013-06-11 8:52:53 PM

    I have always picked up clients when the rumours of a rate increase start circling. I use it as an opportunity to re-connect with fence sitters. Best we lock them in on a pre-approval for 120 days before rates go up a quarter point... that way the whole lowest rate thing is a moot point.

  • Elizabeth on 2013-06-12 10:31:10 AM

    I read all the comments on here about rate wars, and brokers being upset about having to buy down rates to compete… and I just don’t get it. CENTUM Primo is still at 2.74% for a five year product with 20/20 prepayment options… I don’t have to buy anything down, and let’s face it – how many 5 year products with decent prepayment options are out there at 2.74% today? It’s why I joined CENTUM, they may not have the cache of some of the other brands, but combine the low rate with everything else they offer their network and my volumes are almost double what they were under my old brand. Not all my clients qualify for the low rate, but you better believe it gets them through the door. It used to be a challenge when I joined them because people always talk CENTUM down, but I have to tell you - I don't regret it at all. Sometime the quiet guy in the corner is the best one in the room.

  • Robert Stanfield, INVIS on 2013-06-12 1:02:08 PM

    Now that the CENTUM commercial has aired, we can discuss the compensation on the 2.74% at CENTUM. Is it 105bps Elizabeth? Because if it isn't, the lender has already bought the rate down for you before offering the white label product. I have actually never heard anything negative about CENTUM, so I don't know what you mean by your comment, but you make it sound like they have an advantage that no other broker or brokerage has, which is incorrect.

  • Elizabeth on 2013-06-12 1:43:17 PM

    Hi Robert, compensation is 115BPS and I was referring to comments people made to me when I joined.

  • Paul Therien - CENTUM on 2013-06-12 1:54:19 PM

    Hi, Thought I would offer some clarity to the last statements regarding our Primo product.
    It is true that the product is at 2.74%, and yes there is pre-payment options. Compensation is at 105bps not 115bps. All of that being said I anticipate that it will go up in the near future in response to the bond markets. No lender can go against the prevailing winds for long when it comes to cost of funds.

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