“Street's initiative should be of no surprise to the industry, since brokers are engaging in the online deep discounting buydown game by willfully eroding their margins, which ultimately affects the quality of service, and the professional sound advice brokers are typically known to provide,” John Bargis, principal of Mortgage Edge, told MortgageBrokerNews.ca. “If this works for Street, expect others to follow. Brokers once used to see banks as their biggest competitor.
“They are slowly graduating to cannibalizing one another, which can only lead to a significantly diminished customer service experience and value for borrowers.”
is the latest broker channel lender to offer direct-to-consumer mortgage campaigns. In onesuch initiative, the lender is offering rates as low as 2.25% and up to $1500 cash for users of the ForeSaleByOnwer.ca website. And a similar offering was first reported by Canadian Mortgage Trends.
Other such campaigns by big bank partners and credit unions have drawn broker criticism in the past. Street is certainly not the first channel lender to pursue various distribution channels and the lender says it is “channel neutral.”
“This is very important because there are very different value propositions out there … some of them are more rate-focused, others are more service and advice-focused … what we want to do is (be) channel neutral,” Ed Gettings, chief executive officer at Street Capital, told MortgageBrokerNews.ca. “We give the same pricing and the same pricing tools, flexibility, to all of our channels that we deal with.”
Brokers have access to similar rates “should they buy down,” Chris Reid, senior vice president of business development at Street Capital, told MortgageBrokerNews.ca.
For its part, Street Capital
has already received broker feedback about the programs.
“Some have concerns. Others say it’s an open competition and we have to adapt. You have to adapt to the competition in your marketplace,” Gettings said. “We’re giving (brokers) the tools to support the value proposition you want to go to market with.”
Whether or not the marketing initiative will deter brokers from sending business to Street Capital
remains to be seen. However, broker Dustan Woodhouse
thinks it might.
“I am pretty sure that most brokers could go through their career never really needing to send Street a single file, and I am equally sure that with this announcement many brokers will choose to do just that,” he said.
Brokers may not be happy about the strategy, and one veteran argues it could lead to more pressure to buydown rates.