It’s increasingly apparent all mono-lines will have little choice but to cover legal and appraisal costs for refis, argue leading Toronto agents, billing it as essential to satisfying clients – now inundated with no-fee offers from the banks.
“One lender offered brokers an incentive to bring bank refi clients over to the broker channel,” Darin Bauer, with Mortgage Intelligence
in Toronto, told MortgageBrokerNews.ca. “But I think the incentive has to be for the client, not the broker, because they’re already getting that offer from bank branches, which are covering their legal and appraisal costs. To draw business from the branches broker channel lenders have to match that.”
His analysis reflects that of a growing number of brokers, struggling to grow their refi portfolios in order to compensate for a weaker real estate market. Consumer interest, spurred by rock-bottom rates, has also played a part.
Still, renewed aggression at the bank branch level means that most are prepared to assume a client’s associated legal costs, including disbursements, said another Ontario agent,Sudip Adhikari, with CENTUM Gold Mortgages. As a result, brokers are opting to cover those costs themselves.
Both Bauer and Adhikari want to see that burden lifted from off the backs of brokers.
“It would be better overall if the mono-lines offered to cover those costs,” he said, identifying an average range of between $500 and $800. The bill is likely to be smaller for broker channel lenders, most, in fact, using title companies like FCT
More and more clients are also expecting to see lenders cover appraisal fees, something many broker channel players have resisted, although several have made special offers specially focused on legal expenses.
Regularizing those offers would help to remove the obstacle brokers still face in selling mono-lines and other broker channel lenders to clients wary of corporate names outside the Big Five,” said Bauer.
“Aside from no-fee offers, mono-lines have to look at offering products that really set it apart from the banks,” he told MortgageBrokerNews.ca. “Brokers need that to better sell them to clients.”