First National’s 2013 compensation program finally spells out its decision to permanently reverse that 5-basis-point chop to finder’s fees introduced last year and alienating some brokers.
“When I got the 2013 reminder rate sheet from First National, I noticed that it included 80 bps on a 5-year fixed mortgage,” says Alex Pang, with Verico Clear Trust Mortgages. “When I contacted them (First National), they confirmed it was a permanent change.”
The 5 bps cut in August, dropping the finder’s fee to 75 bps for a 5-year fixed, was coldly received by many brokers, some of who showed their displeasure by taking their business elsewhere.
“No one is going to be happy when they have a cut in commission,” says Ben Kawa, director of sales and strategic relationships with First National. “But at the time back in August, the cost of doing business for lenders was going up and we decided to cut costs, so we made the decision to cut fees by 5 bps.
Times have now changed.
“We circled the wagons for a few months, and have looked at what we were paying, what the competition was paying (in fees), and decided to tweak the system,” said Kawa. “That is reflected in the new 2013 rates.”
As for brokers taking umbrage at the cut in fees from back in August, Pang sees the rate reversal from First National as evidence of a boycott.
“In my view, they (First National) have seen that brokers boycotted them, and now they needed to win our business back,” observes Pang. “Our time as brokers is important, and if we are to take a pay cut, I will take my business elsewhere. I know I did with First National.”
The reversal of the 5 bps cut is completely separate from the limited-time special 10-bps increase it brought to the market last month for all high ratio deals. That expires on February 15.
First National’s decision to offer an extra 10 bps on high ratio mortgages largely seen as a response to MCAP and Street Capital raising broker fees to win over ING Direct clients combined with CMHC demand for those types of loans.