Internet-savvy consumers question need for brokers

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A growing number of homebuyers say they simply don’t need the advice of a broker, according to a new survey, suggesting those cock-sure consumers are prepared to go it alone with help from the Internet.

“Brokers are often being left out of the process, either by proactive lenders or because customers do not see them as adding the right level of value,” reads CAAMP’s Consumer Mindset report, part of its 2013 Spring Survey. The polling of more than a 1,000 respondents asked homeowners who'd used a broker in the past why they would not in the future.

Some 41 per cent of those respondents indicated that they “Did not need the advice” of a broker – that’s up from the 24 per cent who answered the same way last fall. Perhaps of even more concern were the number who doubted whether a mortgage broker could in fact get them a better deal. That percentage came in at 28 per cent for the spring survey, up from 11 per cent in late 2012.

Both trends, says one broker, reflect on the growing comfort level consumers have in relying on Internet research – including rate sites – to ferret out the best deal for themselves.

The results also suggests that brokers will increasingly have to up their value add for clients or simply increase their originations volume to compensate for any growth in the number of buydowns.

Either way, the Web may be rapidly changing the way consumers perceive the complexity of the mortgage transaction and the need for expert advice.
 

  • John on 2013-05-30 10:02:06 AM

    People think they don't need an accountant or a lawyer for transactions as well and learn the hard way. It's pretty much the same. Whether they THINK they need a broker or not is the issue. Why not use a broker and have an expert looking after your file when it's FREE! My survey conducted over the last 25 years in the business is that most people just aren't too bright when it comes to common sense decisions.

  • Kent Farnsworth, Meridian Simply Mortgages on 2013-05-30 10:49:03 AM

    I don't think that we're in any imminent threat from website rate searching. There is the odd person that will choose to go it alone if they are confident in their knowledge, but then again, I find that this type of person is most likely the one that will shop the heck out of you anyway. Personally I'm fine going without that guy. I refuse to play the back and forth rate game, and it is very rare that one I have given them a rate they will attempt to shop me.

  • Brian Matthey on 2013-05-30 10:58:07 AM

    John I agree.it is unfortunate that rates sites are commoditizing mortgages when they are the single biggest loan that a client is ever likely to make.Many people relate to a mortgage as rate only in the ultimate saving.
    BMO's discount efforts last year highlighted the pitfalls of a discounted rate offerring with future mortgage contract conditions that could impact the borrower's ability to control their future.
    Any mortgage professional who is independent from the influence of one lending source and whose main concern is their client is in the position to ensure their client's interest is being served now and in the future.They are also in a position to guide their client's future with specific repayment strategies that will only improve that client's overall financial position.
    I too have been in the business 25 years and I rarely encounter a client who has the necessary background in mortgage planning or knowledge of the mortgage market to make a well planned and informed decision on their mortgage choice.I have met many who have made the wrong decision or choice in their first time buying decision and realized only later the implications of that choice.
    We have to do a better job educating the public.

    This is a little different than the changes taking place in the real estate industry, but also bears some similarity.The Buyer or seller thinks they can navigate the system themselves and save a lot of money in the process.The mortgage shopper thinks they can navigate the rate market to do the same.In the case of the mortgage broker,there is no up front cost to a qualified buyer.The actual cost,though, to the mortgage shopper may be the time they take to investigate their perceived best deal while not knowing the future implications of their decision on the biggest loan they are ever likely to make.

  • Ron Butler on 2013-05-30 3:10:27 PM

    I am sorry to be repetitive but it simply does not matter what we as mortgage brokers believe or want to see happen.

    The public forms their own opinion based on cultural and technology trends, availability of information and media commentary.

    We may believe the public needs better education about our industry, more information about what mortgage brokers do, better professionalism on our side and better communications from our various associations. But we are wrong. The 15,000 mortgage brokers in Canada have very little impact on public opinion, heck, even the chartered banks spending a billion dollars a year on advertising and marketing don't control public opinion. We can influence opinion but none of us can change it.

    If the public believes they have the ability to make their own choices about rates, products and mortgage terms and the percentage of people who share that belief grows every year perhaps we need to think of ways to join that trend and not spend our time and energy trying to convince the public that only we as professionals can explain these choices to them.

    In this changing world I doubt that it is a winning approach to tell the public they need our advice and also pay higher rates for that advice or they will make a mistake. What I want to do is facilitate giving the public what they want in a way they want it.

  • Kent Farnsworth, Meridian Simply Mortgages on 2013-05-30 3:56:54 PM

    I guess I do agree with Ron Butler. Ron you are 100% correct. You cannot change the opinion of the public once a trend in thinking starts. It would be like trying to change the tide in the ocean. I think that's a pretty good analogy for sure. That being said, things are so different here in the Maritime provinces. I don't like to say that we're backwards here as that would not be fair, but we're certainly behind when it comes to trends as far as things such as this. I suppose for once this would be considered a positive thing for brokers here as people are just beginning to see the benefits of using a mortgage broker. We have worked so hard here to kill the perception that mortgage brokers are only for subprime clients over the last decade. Now that we are finally starting to get over that hurdle, it will most likely be years before most people here step out of the hand holding comfort zone that brokers provide them to actually acquire their mortgage direct through a website. People here in this neck of the woods still enjoy the person to person service and genuine care and concern that we have to offer them. I suppose in the larger population areas people with less interest in that, and more dedication to "the best deal" may lean toward saving 5 or 6 bucks a month. Here though, it is not difficult at all to explain to a client the benefit of "hand holding". Therefore, I believe that here in New Brunswick and other Maritime provinces it's probably safe to say that we will enjoy that our people still appreciate the knowledge of mortgage professionals. Our clients here will take comfort knowing that we will make sure that we lead them in the right direction. We are small business owners, all of us. It is important that we let our clients know just how important they are to us, and that we need them as much as they need us.

  • Increasingly informed on 2013-06-09 11:02:49 AM

    I have found that rate sites are inceasingly valuable. I am very informed of the in's and out's of mortgages, yet I work in the Public sector. I have not taken any Science or Math courses beyond grade 10, yet I could ask questions that most brokers would have to call up their lenders to find the answers. I agree with the mindset of Verico - Butler ( Ron ) and Advent - Jim T. Facilitate your client. understand that they are incresingly informed. Many clients like myself, don't need your value added services. I get the difference between 3 months int and the int. diff. penalty. I also know that ( for my income ) the best rate with 20 / 20 on the pre-payments is the best way to go. If I had higher income, I might go with a higher rate and a 25 / 25 % split ( like at ING ). Some brokers that post on Canadianmortgagetrends and on this site - think that you are explaning things to me. You aren't. Many brokers ( I suspect ) might point out the : top down approach of gov't, schools, hopitals etc... and you are quite right. Give me the best rates, quote me a higher rate if it has lower penalties for breaking a mortgage ( because life happens - we know !) , quote me variable, quote me a fixed, don't bother us with low pre-payment options unless - we are not AAA clients, have low income(s), etc.. and don't assume that we can't do research for ourselves. You are well paid and many of you work hard, but don't use indignant comments about so-called value - unless you are truly providing value (rare ). Beyond the best : rate and best pre-payment options. I don't care about bricks and motar services, I don't wan't other services like : LOC or HELOC, credit cards, over priced higher on the planet MER fee for so-called mututal funds and full service. I don't care that you sponser teams or where you golf. Answer my questions, close on time, be as least as knowledge as myself on relevant things ( ie know what the penalties are, what your lender covers to switch on a transfer ) You are incresingly a facilatator - not some keeper of knowege that we must be in awe of , of some pseudo service provider that provides so-called value added service, yet we never ususally here from you unless it to : inform us of a poll, sell us more products/services ( those that aren't monolines) and impress us with your other connections ( a.k.a friends). I can shop for myself and do my own research. Do you all - show awe for the knowledge that your child's teacher or doctor provides you. Of course not, you google, you reaserch, you ask questions etc.... Some actually hold public servants to account with expectations of acuntability and transparency and some are uninformed and make folish decisions - much like some of your clients. Finally - buying down is not an insult ! I don't owe you a living anymore than you owe us a living. I want the best rate with very good pre-payments options. Cut the charades - immediately give me a very competitive low rate - then I ( and most - I suspect ) won't shop you around for 2 to 5 bsp - if and when the rates drop - ex. when T.N.M.. Butler, Advent, Mortgages togo, etal. drop their rates, or when they pull off their rates from say - ratesupermarket for a couple of days ( we still find you to compare )- etc...

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