Brokers push back against industry trend

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Rate discounting may be a necessity these days but many brokers are pushing back by drawing attention to the added value of advising clients about more than just rate.

“With the rate wars that go on people get too short-sighted and focus too much on rate,” Blair Anderson of Anderson Associates told MortgageBrokerNews.ca. “That whole approach doesn’t appeal to me; traditional advising role is pushed aside when the focus is placed on rate.”

The importance of rate is evident in the rate buy down trend seen throughout the industry.

According to CAAMP’s most recent report, rate discounts now average 1.95 percentage points for five-year mortgage terms.

However, Anderson is personally trying to change consumer thinking with his community-based website, mortgageresource.ca, which focuses on educating the public about the value mortgage brokers can provide to home buyers.

“The focus on rate is a trend I’m trying to fight against,” Anderson said. “On this website there is no pushing rate; no one shows what rates they can get because it focuses more on educating the consumer about the breadth of the business and the industry.”

It’s Anderson’s personal answer to rate sites which, according to the veteran, independent broker, have “commoditized” the brokering business. He also downplays the influence they have on the industry, estimating that only one per cent of mortgages are funded through the popular websites.

He isn’t alone in his advice-first approach to mortgage brokering.

Angela Wong-Liao of Invis The Mortgage Lady applies a similar approach to her business.

“I don’t believe in buying down rates unless it is absolutely necessary,” Wong-Liao said. “Independent brokers are unique because we can offer so many alternatives that the banks can’t; these offerings allow me to not only focus on rate.”



 
 
  • Ron Butler on 2014-06-12 12:19:57 PM

    I have said 200 or 300 times that there will always be full service mortgage brokers.

    The thing that Blair and Angela don't understand is that while they are more than entitled to have their opinion that the focus on rate is not important they actually don't get to make that call, the consumers gets to decide what they think about lower rates versus sterling advise and a great fridge magnet. The customer will make their own decision in the future about how they want their mortgages marketed to them; it's not up to mortgage brokers to make that decision.

    Blair is 100% correct that advertised rate discounters directly produce less than 1.00% of overall mortgage volume. Lenders have advised me that overall the discounting of commissions to produce lower rates is up about 300% year on year and accelerating so I think the advertising of low rates does have an effect on a bigger audience than just the mortgages originated by the advertisers.

    Finally, please consider everything new starts small. There is a software called UBER that puts people together with drivers who will take them somewhere. This software did not exist 5 years ago and today taxi drivers all over the world are rioting over it. Change takes time but it will happen eventually just ask the folks who used to press vinyl records.

  • Victor Simone on 2014-06-12 2:05:12 PM

    If a mortgage agent or broker buys down a rate to 5 years @ 2,78 % for a mortgage of $ 200,000, what is the House or licensing brokerage earning on such a deal ? Surely this all star producer is in the 90% - 100 % base commission range ?

  • BC Broker on 2014-06-13 3:54:52 PM

    The house gets referral fees from the lender, the insurance co and the professional organization.
    On top of the franchise fee.

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