Mortgage brokers removed from website for ‘too low’ rates

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Two mortgage brokers have expressed their surprise at being removed from RateHub because their mortgage rates are too low. Jeff Mark and Steve Pipkey of Spin Mortgage, an online brokerage based in Vancouver, posted a rate of just 2.44 per cent for a 5-year fixed deal. The Globe and Mail reports that RateHub believed that the conditions to qualify were beyond the reach of most consumers and concluded that the rate amounted to false advertising. The rate was the result of a deal from Industrial Alliance Insurance and reduced by Spin foregoing some of its commission. Mr Pipkey says that the rate is achievable but RateHub’s Alyssa Richard argues that only 10 per cent of borrowers would qualify for extra conditions including the mortgage being closed within 30 days. Read the full story.
  • Dan Faubert on 2015-03-27 8:48:17 AM

    Finally some sanity in the market!

  • Barb on 2015-03-27 9:00:47 AM

    I agree that advertising these bought down rates sets a dangerous precedent for the industry, however fact is that clients would have the same qualifications for the 2.44% rate as they would IA's 2.69% rate.

  • Arbitrage on 2015-03-27 9:26:13 AM

    Rate hub should be embarrassed by this. Clearly a tactic to keep Canwise (their own brokerage) at the top of the heap. The problem isn't with Spin mortgage offering these rates, instead it is with Rate Hub not offering brokers the ability to list various conditions. Someone posting their rates here can only post rate, term, pre-payment % and rate hold period. Rate Hub designed it this way for maximum clicks...they have known all along that many people clicking their links would not qualify. They have promoted bait and switch for's literally ingrained into the site design.

    Rate Hub is simply banning someone who does bait and switch better than they do and claiming it's in the clients best interest. If they cared at all about the client they would require their rate listings to be more detailed. Penalty calcs, registration type, portability, HR or CV, beacon requirements, transaction type, etc. At least give the client a chance to click on something that halfway applies to their situation...

  • Ron Butler on 2015-03-27 11:23:23 AM

    RateHub should be proud of this!! Ratehub hates bait and switch tactics. They want the reputational status and referral generation that comes from happy users. We mainly advertise 1.98% 5 - year Variable on RateHub and we have the exact same rate on our website. We fulfil 91% of the inquiries for that rate (sorry to the 9% with rentals we could not help) and that should be the objective of everyone who advertises mortgage rates to the consumer.

    RateHub really should allow for more description of the product that is associated with the rate and I am certain that change is on their list for site upgrades in the future. But I want to point out one key element of the Spin Mortgage website. When you get to their site it automatically leads you through several pages of rational questions until it asks you "Are you okay with a restrictive rate?" Most people would click on the "A What" button then a screen pops up: "Common restrictions include: high discharge penalties, inability to blend rates if you sell & buy, inability to leave the lender, etc"

    Holy Mackerel!!: INABILITY TO LEAVE THE LENDER!!! so if it is a 30 year amortization I am there for 30 years?? Okay, so we as mortgage professionals may understand what that actually means but most consumers would simply be alarmed. On the Spin website this this dire warning is followed by a choice of "sounds okay" or "no thanks" what the heck would the average consumer say after they read that train wreck of a warning (the contents of which are totally bogus: no lender has ALL those restrictions) well, I think 99% of consumers would say "no thanks" at which point they are pushed on to (wait for it........... drum roll) the HIGHER rate. Classic bait and switch but very hi-tech.

    Imagine picking a hotel room with the best rate on Expedia and eventually you hit a pop-up that said "bed bugs and roaches possible at this rate or choose insect free rate for $100.00 a night more" Expedia would never allow that and neither should RateHub allow this bogus Spin website.

    There are 3 keys when advertising rates to consumers: honesty, honesty and honesty and building a website that guides consumers in the direction of a higher rate than the rate they clicked on is wrong even if it is cunningly designed. Offer a great rate, explain that rate and close the mortgage at that rate every time. That is the winning approach.

  • George Christopoulos on 2015-03-27 11:59:34 AM

    Arbitrage great post.

    Seems Rate Hub does does not like to play with people offering lower rates than them.

    I look forward to the day when this race to the bottom ends.

    And of course it is bait and switch

    A little buy down is one thing but working for next to nothing is not good or the industry

  • Ron Butler on 2015-03-27 12:16:15 PM

    George, that may be a fair comment, but please keep in mind that the consumer does not care about our industry's well being they only care about great rates and great service. I never worry about how the car dealers are doing, I just care about a great price on the car and great service.

  • steve-spin on 2015-03-27 12:56:55 PM

    First off, as much as I find these forums to be entertaining, this will be our only post here so that we don’t get sucked down the rabbit hole…

    We’ve posted a blog article on our site to provide a quick rebuttal to the article and to clear up a few inaccuracies.

    As far as bait and switch goes, anyone who knows the product and comp knows this isn’t a factor. This product at that rate pays very very well.

    Secondly, any one who deals with on line rate shoppers knows that they are generally very well informed and quite strong borrowers. They wouldn’t be easily baited and switched. They are too smart for that.

    Thirdly, the whole point of starting spin was to not only provide excellent rates, but also provide the transparency on our web site so the consumer could see the story behind the rate, without having to call or email.

    All of our rates and offerings are very clearly laid out and described (warts and all) and our other mandate is to provide consistency across all sites. We display the same rates on every site we advertise on, which is more than I can say for some of our competitors out there.

    We’ve never met Ron, however, he always comes across on these forums as a straight shooter, so I’m a little surprised by his take.

    Rate hub should definitely allow the advertiser to display more info about the rates. I don’t want to pay good money for a lead that can’t qualify, but I suspect it isn’t good for their business plan.

    Thanks ron for pointing out the wording on our site, we have fixed that to read, inability to leave the lender ‘during the term’ which incidentally it does say on our rate table, and which is an accurate description of that product.

    The point of that rate game is to bring added transparency. It allows the consumer to play around with the rates and see what factors causes changes to rates, without having to call in and find out.

    We did this for the consumer, as we were tired of seeing countless brokers advertise a low rate basic without any mention of the higher payout penalties.

    Over and out on this, back to work…

  • Richard Kitts on 2015-03-27 3:26:19 PM

    Does it really come as a surprise that RateHub has their own Brokerage and are removing the competition. This should be a warning to all Brokers using Rate Sites to drive business. All the client information being driven to their site and driving up their internet presence, seems like a business model that will, without question, accelerate into a competing entity.
    Being reliant or at least feeding a business that will soon become a major competitor in the Rate Site game, seems like money NOT well spent. What a great internet model, build a site, have your future competition pay for major improvements, become a top source for Rate Shoppers, hire some of the competition, get the Broker license, open your own Brand, pretend you’re really not competition, and have competing Mortgage Agents still use your site.. talk about smoke and mirrors.. ouch.. Just my thoughts..

  • Hypocrisy R Us? on 2015-03-27 6:55:18 PM

    To Ron

    On you appear to advertise the exact same 5 year product that you're criticizing Spin Mortgage for and you do it at an even lower rate.

    I quote from your website:


    5-YEAR 2.39%

    This is an effective rate which incorporates cash back. A higher contract rate applies, upon which the actual payment is based. You will receive a lump sum of cash back upon closing, equal to the interest savings of the advertised rate. No Rentals. No Pre-approvals. 30 Day Rate Hold.


    Are you also "baiting and switching" people with this lowball rate while condemning Spin Mortgage for doing the same?

    I wonder how many people you upsell into a higher rate from this product?

    How many qualify for your rate?

    At least Spin Mortgage was offering a real contract rate at 2.44%. The rate you tease people with is based on "cash back."

    People in glass houses...

  • Ron Butler on 2015-03-29 12:16:49 PM

    @ Secret Coward Hypocrisy, read my post, I NEVER criticized cash backs to create low net interest rates for consumers, I never will because it is a very good idea. Apply the cash back as a lump sum pre-payment and the total interest cost on the mortgage drops like a rock.

    My complaint was entirely about offering consumers a low mortgage interest rate and then the minute the consumer gets in touch with you through your website; the set -up of the site tries to manipulate the consumer away from your rate offering towards a higher rate. By the way, that sort of manipulation is dead wrong whether you do it on the website or on the phone.

    Look at the big expose on the Alberta car dealers on W5 last night. Same thing: advertise a car price and then when the consumer asks for it either the model is sold out or only comes with built-in extras that must be paid for or some other phoney dodge.

    My point is always the same, offer the low rate, try to describe the conditions if the rate site allows you to and then welcome the consumer to get that rate when they contact you. Don't spend your time trying to convince the client he does not want the offered rate.

    By the way, last week Spin was offering that same 5 year fixed rate on the Rate Spy site at 2.39%. Most discounters offer at similar rates the question becomes how often do they close the mortgages at those rates. I will put our stats up against anybody else's numbers. We deliver on rate offers, we don't design a website to push consumers to a higher rate.

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