Online rate discounting the future?

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The future of the business is online and, according to one major broker, industry players who embrace that model will thrive in the coming years.

“People who are discounting right now and advertising and trying to move their business online right now are probably the future of the business,” Ron Butler of Butler Mortgage told MortgageBrokerNews.ca. “People who are delving deep into social media – they aren’t feeling the results today but they’ll start feeling the results more over the next two years.”

Millenials, who will account for a large proportion of the future home buying cohort, have grown up immersed in technology and social media, and they look online before making most major purchases, including mortgages. Which, according to Butler, will lead to an increase in the amount of discounted rates.

“The future generations are going to do research first,” Butler said. “So the more information about rates and products are online, the more likelihood they’re going to get a discounted rate.”

Currently, there are several brokers who have embraced the online model but they are still the minority. For now, at least. But what affect will that have on pricing?

“Future brokers can go 100 per cent social but the other reality is that … for the next generation of brokers the idea of doing a mortgage 115 basis points is going to cease to exist,” Butler said. “It’s going to be an exception; it’s going to be a rare mortgage that pays the full amount that is available.”

No stranger to discounting rates, Butler says that half of all his business comes from online leads, and the proportion of discounted deals across the industry is only set to increase.

“I would say in five years half of all mortgages will be discounted by mortgage brokers,” he said. “Half of all the mortgages written by the end of five years will not represent full commission.”

Related:
CAAMP: Broker market share shrinking
  • Broker on 2015-01-12 11:53:11 AM

    One article discusses how banks have taken back more market share in 2014. Banks do not discount, banks are destroyed by brokers when it comes to rates and yet they gained on us last year. Now this article discusses how you must discount rates/commissions in order be a player in this industry. Sell yourself short if you like but you don't have to in order to succeed.

  • JSydneyH on 2015-01-12 11:55:59 AM

    This sounds a lot like earlier claims about the impact social media would have on the real estate industry. While I won't dispute the fact social media has on the real estate industry and will have on the mortgage industry, my experience differs.

    When confronted with a never ending array of similarly priced products, the consumer DOESN'T make a choice because they have no confidence in their ability to distinguish one product from another. Limit the choices to a smaller number of selections and the choices become meaningful. This has happened with company sponsored investment options, packaged goods in stores, housing market, and now mortgages.

    The consumer will do their research online to find a good rate, but it will be a good mortgage advisor that recommends the 'best' mortgage for the consumer.

    I, for one, will continue to focus my energy on providing top quality advice - through social media - to my clients.

  • momoney on 2015-01-12 12:30:02 PM

    I don't think rate discounting is the way to go... Most people want a relationship with their, banker, broker, financial planner etc........ Most people went to their bank because Scotia calls up their clients like every two months.... How many brokers call their clients every two months? Hardly any, that is why approximately 2/3rds of their past business never will do business with them again..... Banks know this and that is why they call their customers... Want to beat the discount brokers and banks? Call your clients every two months and lock up their business.

    Mr Butler would agree on this point... He gets the rate discount shoppers and that I salute him for that. However you can wrap up your clients by going the extra mile, very few of them will leave you for the bank or for a discounter online.

  • Victor Simone on 2015-01-12 12:47:40 PM

    If the brokerages see many of their agents move to prices that gross 20bps - 35bps on 5 year fixed products, what will brokerages do to re-coup their lost margins ?

    More consolidation, higher agent fees, and a smaller independent mortgage industry may all be on the table.

    We can't stop the world from going around, and it should be fun to see how the industry evolves in the next 5 years.

  • Jeremy on 2015-01-12 12:49:17 PM

    When you have no value to add...drop your pants and buy rates down. The article sounds like someone is trying to convince themselves that working for 35 bps is the right thing to do...every broker will be doing it. WRONG! Only those with no value to add will be doing it.

    Do you see Nordstrom, Holt Renfrew, etc... slashing their prices to compete with Target or Walmart. Give your head a shake!

    This will ALWAYS remain true: you are paid in direct proportion to the value you offer.

    To those full-service brokers, keep up the great work. Consumers appreciate you!

  • KBowles on 2015-01-12 1:00:49 PM

    Once upon a time buydown rates were not allowed to be advertized. You had to have an interest rate in writing from the lender in order to advertize it. I would be in favour of this coming back in and eliminate the Bait and switch of advertizing buy down rates. As a broker of over 30 years I know I have more value in my service and 20 -35 BP.

  • Paul Therien - CENTUM on 2015-01-12 1:09:21 PM

    It is interesting how over the past several years online and social media have been touted as the future for business, in our industry and in many other industries. The trends recently with online shopping and in particular on social media, are starting to shift somewhat. Now, it is important to understand that when looking at a study perhaps the most poignant information is who funded or requested the study be completed. There are literally thousands out there, and when you look at the numbers, they seem to be evenly split.

    As CENTUM is a sister company to the travel giant, UNIGLOBE, I have some insight regarding how the online world can impact a company. When the internet launched all those many moons ago the prediction was that travel agencies were doomed because they simply could not compete with the low prices that were being offered online. For a period of time that seemed to be true and it looked like a very bleak future for companies like UNIGLOBE, Thomas Cook, etc. Fast forward to 2014 and although the online travel world continues to be a strong player, the more traditional travel company is seeing a strong resurgence in business. So much so that today the single largest travel company on the planet is UNIGLOBE, and they continue to grow. The question has to be… why?

    If I book a trip online I am likely not going to get any better a deal than if I walk into a travel agency, with the exception of the fee that the agency charges for their service. So I pay that extra fee… but what does it get me? Service; and that is invaluable.

    I was recently on a trip and while waiting to board the plane an announcement came stating that the flight was cancelled due to mechanical issues. All of the passengers were invited to go to customer service and the airline would see what they could do to arrange alternate flights. So 200+ people stampeded over to an already overwhelmed customer service desk and started demanding service. What did I do? I dialed my travel agent, was given several choices for options on the same airline and others, and was booked on a flight leaving in 30 to take me home – and I got my preferred seats – all within 10 minutes of me dialing the number. Have you ever tried to call an online travel company for that kind of service? It simply does not exist.

    My point… people are willing to pay for service. Yes, the next generation will continue to source information online, and yes it will probably impact the broker community in how we find business, but the statements that the millennials are purely focused on the online world of shopping is not as accurate as we have been led to believe. Online shopping for products has started to shift back to brick and mortar stores. In the world of banking… the online bank is not the pie in the sky dream that so many people thought it would be. If you look at the purely online banks around the world you will note that most of them have started to open branch networks. ING, Virgin Bank, etc. are all now in the process of building brick and mortar branches to drive business… why? Because it is what consumers want. The branches are vastly different than they were 20 years ago, but they are still branches.

    62% of mortgages, 86% of daily bank accounts, 58% of credit cards, 65% of all TFSA’s, RRSP’s, and Mutual Funds are arranged in a branch environment. The percentiles may be lower that it was 30 years ago, but what is interesting… since 2008 it is not shrinking, it is growing. Yes we use branches for very different things today, and online has dramatically changed the WAY we interact with a bank, but brick and mortar still plays a fundamentally important part of the business.

    Rate will always drive a certain percentage of business for brokers, but at the end of the day the consumer pays for service. It is why travel agencies, banks, shoe stores, etc. continue to flourish around the world as the preferred mode of consumer contact. You just can’t replace human interaction, we are a social species, we need to interact – and social media does not, cannot, replace face to face. Heck, even TELUS has been running commercials telling people to “turn off” and take some time experiencing real life.

  • Rick ( Mortgage Mentor) Robertson on 2015-01-12 2:46:58 PM

    It's not "rate" it's really PRICE that is the true core of the topic. Reality is that some brokers are using their income to pre-pay part of the borrower's interest. (therefore an appearance of a lower 'rate' to the borrower)

    How can we realistically afford to keep up with expenses for: fast changing technologies, equipment, office costs, multiple industry fees, and continuing education if we're discounting our own income. What other group of highly respected professionals 'discount' their salaries?

    Thought to consider: I was taught a long time ago that "nobody goes out of business because they charge too much" (the reverse of that applies too)

  • observer on 2015-01-12 3:06:42 PM

    "Banks do not discount"??? What??? If you believe that "Broker" then you are the most clueless broker I have ever come across. Road reps are selling 2.74% right now. How many broker lenders have that rate paying full pop?

    By the way, you people who think online brokers are to blame for buy-downs have your head in a hole. Consumers want better deals and internet shopping makes it possible. If brokers don't provide those better rates, they'll just go to their bank or credit union. Kill buy-downs and you kill brokers. That much I guarantee you.

  • M. Robertson on 2015-01-12 4:41:48 PM

    @ observer - not much observation going on in truth... most of the banks have already announced large layoffs of their MSF's due to them being unprofitable as compared to branches. OH and for the record... road reps use their commission to buy down the rate, the same as independent brokers do.

    If you think that rate is the only reason why consumer go with a bank or a broker... again you need to check the stats that argue strictly against that statement. Most mortgage holders renew with their existing lender, and of those the VAST majority sign the renewal documents that the lender sends them... with the increased rate. You see, people care much more about the size of the payment than they do the rate. How do we know this? Look again at the stats...

    Most people buy a home based on the monthly payment that they can afford, not the rate of interest on the mortgage. It is why people buy (or lease) the cars they do, etc.

    As for killing buy downs = killing brokers... really? Tell that to brokers who have been in the business for over 40 years, who DON'T do big buy downs.

  • Rick ( Mortgage Mentor) Robertson on 2015-01-12 4:46:42 PM

    It's a chicken & egg thing. Who is reacting to whom?

    Before brokers got into mainstream mortgages, a borrower was lucky to get .10% or .15% off POSTED.

  • Rick ( Mortgage Mentor) Robertson on 2015-01-12 4:46:45 PM

    It's a chicken & egg thing. Who is reacting to whom?

    Before brokers got into mainstream mortgages, a borrower was lucky to get .10% or .15% off POSTED.

  • Sam on 2015-01-12 5:52:15 PM

    Yes it is time to bring back the no advertising bought down rates. CAAMP time to show your value. Rules for an industry would be an interesting concept. Max buy down lenders can offer, no advertising bought down rates. If prices were all the same and we all maintain our commission structure is that so bad? Rate sites will still do well and continue to grow - hey they may even be happier they don't have to compete with the other online rate guys and kill there commission as well. CAAMP it is time you actually govern the industry. It is needed for the long term viability of us all

  • Ron Butler on 2015-01-12 6:53:31 PM

    Thanks to those who used there real names.

    Sam - Really, I mean seriously, the public needs to have discounted rates kept SECRET???? I guess we should use the same concept for gas prices.

    Rick - "nobody goes out of business because they charge too much" I can show you about 200 retail chains where that concept absolutely did not work. Also if we think mortgage brokers fall into the "highly respected profession" category such as medical doctors and chartered accountants maybe we should make the licensing a touch more difficult

    Jeremy - Holt Renfrew and Nordstrom have 400 times smaller market share than Walmart and Costco.......... so not such a great example.

    Paul - Honestly............ online travel going down, travel agencies on a big upward run.......... well ........ I have not heard that........... and ........ I just don't think so.............. nice plug for UNIGLOBE though.

    I will say for the five thousandth time I believe a full service mortgage broker will always exist. Some consumers will always prefer one on one, face to face dealing that's a fact. I wholeheartedly agree that a mortgage broker who call clients every two months and makes a real effort to be that trusted advisor is going to do far better than those who don't but that an increasing knowledge of mortgage rates will still become part of that client relationship.

    As for all those people who think online marketing in all categories, all businesses, in all ways, is not growing, gaining share, recognition and momentum; I have a simple response: you are wrong.

  • Rick ( Mortgage Mentor) Robertson on 2015-01-12 7:30:08 PM

    Hey Ron, thank for the rebuttal - good for readers to see both sides. BTW, I was quoting someone else.

    We understand that "Licensing" here in BC to be one of the toughest regimens on the planet. (people do come from around the world to take our U.B.C. course) In addition to the: Pre-Licensing, Post Licensing, and Marketing courses, there's a 4 course requirement every 2 year to get re-licensed. I believe we're also close to having a requirement that one be a Licensed "Assistant" to an experienced Broker for 2 years before you can actually arrange lender commitments on your own files.

  • Carmelo on 2015-01-12 9:48:50 PM

    i will just make it simple....Professionalism + Experience + Low Rate = make a new client !!

    Professionalism + Experience + and a Regular Rate = make you Look Good ,but not a new Client.....i agree with Ron Butler....we are NOT Doctors....cannot compare a Travel Agency or others things with the Mortgage Business.....Internet is the future.. .in regard of "Licensing" in BC...." to be one of the toughest regimes on the planet. (people do come from around the world to take our U.B.C. course)"....have you been around the World ???...how can you quote such statement ?....oh ya ....we are always the Best in Canada......come from around the world....??? from where ???....will be good to know.....

  • Walid Hammami on 2015-01-12 11:01:03 PM

    I agree with online, but what Mr Butler is true, how come apple charges 5 times higher and still get sold. How come apple is the biggest company in earth while selling products that are more expensive than the competition and not by a small margin. The answer is more complexe, there will be a market for discount brokers and they will be a market for non discount brokers.

  • James on 2015-01-13 1:40:52 AM

    Ron... you really need to do some research before you make a comment about something. I found Paul's comment interesting so I did some research (you might have done well to do that yourself). In actual fact travel agencies ARE on the upswing, and plug from Paul or not Uniglobe is in fact growing. In fact according to recent travel statistics they booked more travel than the top THREE online travel companies COMBINED. So yes, it does in fact make them the single largest travel brand on the plant, operating in over 60 countries around the world.

    I also don't think that Paul made the comment that online shopping was not increasing, what he said was that it could not replace the human need for interaction.

    As evidenced by his service comment and by the very public fact that virtual banks that are in fact opening retail operations. ING is a perfect example... you do know that the reason why they sold Canada was to take a significant cash injection so that they could start opening branches right? In fact according to their own business plan they intend to open over 100 branches in Europe over the next 5 years. Virigin Bank is also opening 150 branches by 2020. This is all public record. It is not some big mysterious secret, and there are studies done by Delliotte, PnG, and several other large accounting firms that confirm it.

    As for online sales in retail, yes they are on the upswing, but then it is much easier to purchase a pair of shoes online, more difficult to get sound financial advice - particularly given the Know Your Customer rules, which if you service purely online you cannot do - I don't care what anyone says. Will online continue to play an increasing role? Most definitely, will it shutter those that choose not to resort to buy downs and cripple their own bottom line, no it won't.

    Ans as for comparing Travel, or any other industry to our own... how do you think innovation comes about? It comes about because people DO look outside their own playground to see what is happening in the world.

    Given that there are companies in travel that have managed to "buck the trend" it would seem to me that maybe we need to take a seriously hard look at how they accomplished it instead of summarily stating that it is not true because "I have not heard that". Just because you think you know it all, doesn't mean that you do and you embarrass our industry when you act like that without doing the appropriate research to back up your statements.

    Ron, with all due respect, you are NOT the ultimate authority in our industry, and the fact that you would so unwillingly consider another person's opposing, and very non confrontational, opinion speaks volumes about your sheer lack of professionalism and dare I say it, class.

    As for the BC licensing being the toughest, it may not be in the world, but it is in Canada. Ontario guidelines were written using BC as a model, and since then BC has updated theirs significantly and has gone past all other provinces.

  • Keith on 2015-01-13 1:55:42 AM

    I don't suppose that Ron has considered that itravel2000.com, Flight Centre, and several others... that started as purely online, also have built a brick and mortar network?

    Holt Renfrew and Nordstrom... compared to Walmart? Really? they may not be as big, but they are both wildly profitable companies.

    There are some people that just won't go with the discount shops, or the online shops.

    According to my 21 and 23 year old's they would actually prefer to go in a store. They might research it online, but in the end they do not want to wait 4 weeks for shipping, and they like the experience of going into a store.

    I myself like to meet my customers, why? It is much harder for a person to lie to me face to face. I get to see real documents, and my due diligence will always pass muster. At the end of the day, I am profitable, my customers have a relationship with me, and they refer friends to me. I used to buy leads from online sites, I used to do massive online campaigns, and at the end of the day I found that spending my money in my community gave me a better ROI.

    I agree that online is growing, but it will never replace the human touch. Maybe for some though they prefer not to meet their clients, to know them and their families, and to build a business that is based on mutual respect, trust and sound advice. Instead, they just want to sell rate. They just want to be a Walmart... have you seen the people of Walmart website? Thanks, I don't want those customers.

  • Sam on 2015-01-13 10:27:54 AM

    Ron Butler not keep discount rates secret. But have an industry control discounting. Would you be further ahead if you couldn't by law lower your rates and therefore commission? Would you be further behind? No one is arguing the value of marketing online, selling online. The argument should be is price control. You can still sell mortgages online and lots of them...but thinking about the industry and not just your business for one second would price control ie discount control not be wise? If we all end up at the same price as you...and get paid much less...are you further ahead if we all advertise the same rate at some future point? advertise the rate you are able to yes I will give you that point, but lets control the pricing so those that survive thrive. Otherwise lets all go back to being bank reps - yes that's extreme, but you get my point. No problem with what you rate site guys do...its the rules given to you...its not the rate guys that need to make a change its the rules of our industry.

  • Sam on 2015-01-13 10:27:57 AM

    Ron Butler not keep discount rates secret. But have an industry control discounting. Would you be further ahead if you couldn't by law lower your rates and therefore commission? Would you be further behind? No one is arguing the value of marketing online, selling online. The argument should be is price control. You can still sell mortgages online and lots of them...but thinking about the industry and not just your business for one second would price control ie discount control not be wise? If we all end up at the same price as you...and get paid much less...are you further ahead if we all advertise the same rate at some future point? advertise the rate you are able to yes I will give you that point, but lets control the pricing so those that survive thrive. Otherwise lets all go back to being bank reps - yes that's extreme, but you get my point. No problem with what you rate site guys do...its the rules given to you...its not the rate guys that need to make a change its the rules of our industry.

  • Ron Butler on 2015-01-13 11:34:55 AM

    Rick - Even in BC 91% of applicants pass the exam first time and the fails can keep trying till they do pass. Only 23% of the average Engineering cohort in Canada is left in year 4. In Canada 73% of initial applicants fail the Medical School exam and interview process. To be a profession you need to exclude a bunch of people from ever getting in, we don't do that. We are a business not a profession.

    James - your response is goofy, 17 years ago online travel did not even exist now it represents the majority of all consumer travel bookings. Remember UNIGLOBE has a huge corporate travel element which is NOT consumer travel and online travel also includes all of the airline, resort and hotel's own online booking systems, its just not Expedia and the rest. So no, you are just dead wrong, online travel is MUCH bigger for consumers in North America and Europe than consumer travel booked through travel agents. Hugely so.

    As for online banks opening branches, they do it to gain share in Wealth Management segment, nothing to do with mortgages and deposits which they continue to push online. Wealth Management thrives on advisors so they open branches.

    Please don't revisit that dead KYC issue, you are so far behind the regulatory decisions it is painful.

    Keith - the profit at Holt's and Nordstrom is a tiny speck compared with Walmart's profit so please continue to hide your name in the shadows because you show off your ignorance. I shop at a Walmart I am not ashamed of it. So do the majority of people in North America. But it would appear you live on Pluto anyway because I don't wait 4 weeks for online purchases: Amazon is 80% same day delivery in Toronto.

    Sam - I think you don't understand the law on this matter because the CAAMP action you advocate is illegal, just google "competition tribunal".

  • Jeremy on 2015-01-13 12:10:29 PM

    Great comments here. I don't think more regulation around rates is the right answer, let's leave that to the free market. We are always going to have people on both sides of any argument, which I think is healthy. We can't continue to protect people from themselves...that's just crazy. If the discounters want to work for less, that's their prerogative.

    What we as an industry need, is leadership from the top...not more regulation. CAAMP needs to step up! Quit pussy footing around and start dealing with some real world issues instead of holding hands around a table and singing kumbaya. You vote me in and I'll shake things up...right! I'd like to see less talk and more action from our politicians, oops, I mean colleagues.

    As for Ron, with all do respect, we are feeding his ego with each comment. He is so busy working his 800 beacon, 6 figure income deals, yet somehow he has time to engage everyone with a differing opinion. One thing I do like is Ron's passion for what he believes in.

  • Paul Therien - CENTUM on 2015-01-13 12:33:11 PM

    I certainly did not expect to garner the ire that I did by providing some insight from another industry in which I have access to information. I will also comment, we should be keeping our comments professional on here and not resort to disparaging another over their opinion because it does not align with our own. It should not matter who reads this, industry or just consumer, we are professionals and should always conduct ourselves accordingly.

    Ron, you are correct that UNIGLOBE's primary business currently is corporate travel. But corporate travel accounts for more than 70% of all travel around the world, so for any travel company, online or not, that is the golden egg. It is also a market that online travel companies have struggled to gain traction in. As for consumer travel, I can only speak to what I know, and that is that their market share in the consumer segment has been growing. When you ask the consumer why, they always cite service. If there is any issue with a trip the online companies are largely ineffective at being able to provide the necessary service.

    My point was this. Online will always continue to play a growing role in how we as consumers do business. In financial services absolutely no different than any other industry. I cited my sister company because they found a way to still keep a more traditional model and have been effective at growing their business 17 years after they were essentially told to shutter their doors because it was online or nothing. They created a highly target service model and it has been working.

    The same applies to any industry. There will always be people who prefer the online world and they will continue to do so. There will also always be people who prefer having face to face interaction because of the greater sense of service.

  • David Mandel on 2015-01-13 12:38:27 PM

    Jeremy you hit the nail on the head. There will always be a "Prestige" credit card, a Holts, a Saks, a Rolls Royce or other high end car. There are plenty of consumers willing to pay for great service, proper direction, a good mortgage plan, a custom solution that you just cant get from a web site or from a low cost low margin supplier. So you have a choice. You can be the mortgage industry's Saks or Holts or you can be the mortgage industry's Ford Focus and hope that volume and low margins are survivable. Alternatively, you can specialize in higher margin mortgage services such as private and/or commercial mortgage services where "Service" and knowledge is necessary for success.

  • Rick ( Mortgage Mentor) Robertson on 2015-01-13 12:38:57 PM

    Hey Ron, Don't know where you got the 91%. That 'might' be 91% of those who made it as far as writing the exam. In one session I know of for sure, less than 70% who started the course actually made it through to writing the exam. And that was just the 26 module Pre-Licensing course.

  • M. Robertson on 2015-01-13 12:40:25 PM

    You know, of all the comments on here one thing is clear. Ron Butler... you may not be really, but from what is clearly shown here... you are a mean spirited person and nothing more than a bully.

    Any respect I have for you is being worn away every time you comment or contribute to an article on here or on other sites. It is not because of the opinion you express, it is because of the way you always, every single time, resort to making rude comments about someone who does not agree with you.

    You are a bully.

  • Ron Butler on 2015-01-13 12:52:47 PM

    Rick, you are correct, the 91% is the exam pass rate.

  • Ron Butler on 2015-01-13 1:26:00 PM

    Paul - it's all about how information is used to frame reality: facts are facts, corporate travel is not consumer travel and 90% of mortgage brokers deal with consumers not corporations. For consumer travel: online is the overwhelming choice.

    Online is clearest trend I know in all forms of consumer purchases with the possible exception of restaurants but even there the consumer review trend is massive.

    I try to let people in this industry understand what I think is coming to our business in the future. It is not popular, bad news is always unpopular, I try to get people to understand I am talking about "trend" and it does not apply to an individual practises universally only on the edges when a deal is lost or a rate discount is requested. But as a "trend" it is real and when the response is: "you are wrong! it's not the trend!" it drives me crazy because it flies in the face of reality. As an industry we are far better off dealing with reality than saying "no, online mortgages and rate discounting is dumb, the consumer only wants face to face, full price, individual service". It has happened in other industries so I believe we need to address these future trends in our industry.

  • Rick ( Mortgage Mentor) Robertson on 2015-01-13 2:08:12 PM

    You a right Ron. It is a "trend" - as was the 8-Track, and the Cassette, and pretty much every innovation man has come up with. There will for sure be a percentage of consumers who adopt that trend until the next one comes along. I do give you entrepreneurial cudos for embracing it as strongly as you have and believe you will also be an early adopter of the next mortgage trend when it comes along.

    There are enough borrowers out there in every business style and comfort level to provide a good income for every diligent mortgage broker in Canada. Evidence is that if everyone wanted low price and quick-easy professional service we'd see a Hyundai in every driveway and mile long lineups at MacDonalds. Please - not write backs on Hyundai or MacDonalds - the names were simply used to represent a concept.

    Each of us has a personality style and way of doing business that will be appealing to a number of individuals in our marketplace. The real trick is to LET THEM KNOW what you do, how you do it, and what you believe in. Be honest and stick to YOUR style and you will do well.

  • Ron Butler on 2015-01-13 2:21:21 PM

    Yeah, I get it Rick, but maybe the folks who worked at Kodak and Zenith and Yellow Pages and Blockbuster wished they had paid a little closer attention to the "trend".

  • Paul Therien - CENTUM on 2015-01-13 2:40:54 PM

    Ron, not to be objectionable, however if you took the time to actually read my posts you would clearly see that I was in agreement with the fact that online continues to grow.

    In the instance of travel, which was an industry that was hugely impacted by the internet long before it was even on the radar of mortgage brokers, several traditional companies found solutions. It is simply looking outside of our own industry to see what innovation has happened and trying to determine if there is a lesson to be learned.

    I am not, nor have I ever, suggested that the online world is not one that we need to participate in. I am suggesting that it is prudent to explore all options, and to not simply rely on a model that is exclusive to one area. When you do this you are more profoundly impacted by market variables.

    No one, no matter how bright they are, can accurately predict the future, nor the mood of the consumer.

    As Mr. Charlwood once said to me "You build your business to be profitable in the worst case scenario, so that you are able to better weather change."

  • Dennis Rajewski on 2015-01-13 4:36:29 PM

    Interesting discussion we have here - trends. Remember the pager? Remember when you didn't have to get a gym membership? Just carry around the 10 pound gorilla - the car phone. How about the fax machine? Remember delivering your documents to the lender by car? To Toronto only to have a message at the office that you forgot a document? Back to the car ....Innovations - fax machines replaced ( not totally) by email attachments, 10 pound car phones replaced by cell phones in our pockets ( in our bed in or bathrooms in ... you get the picture). Innovations that replace old ways and bring about change. The functions are still there but the tools changed.

    I see two things being discussed. Marketing by internet to reach potential clients and second point discounting the rate by way of rate buy down. Just as we embraced the computer and the internet, we should look at all means of marketing. If not, then we run the risk of being the best kept secret.To market our service in one format and drop something that has worked for us in the past would be short sighted. Add to - don't subtract. Give the same professional service to your client regardless what medium they came from. I use the internet, I have a web page but I don't offer discounted rates. Why? For me it's all about repeat business. If I provide a service by discounting my service, I won't be able to cover my costs. I feel that I would be no different then the lenders who have posted rates and discounted rates - one rate for the unsuspecting and one for the brave soul who knows he can get better. Would I place the deal with a lender who has a better deal but pays me lower fees or would I opt for a lesser deal for the client because I'm making a fatter fee, hence my take home would be higher? I realize that what's happening here is that the lower rate is being advertised so it is a little different but still.. we all had deals that sounded like slam dunk only to find out that the lender's policies have changed. How do i convince the client that this is not a bait and switch? What do I do with this client at renewal? Give him a discount or wait til he arm twist me?

    Going after business via the internet is GREAT... going after business by discounting is not a trend... it's been around before I became a broker in 1975.

    Just my thought on the subject.

  • darick.ca on 2015-01-13 10:31:51 PM

    Work hard, know your client, offer more services and most of all keep an eye on your expenses.
    Gone are the 120bps days of commission.
    20 years ago mortgage brokers primarily sold 1 to 3 year terms paying 50 bps maybe earning $500 to $800 per file. We should all be very thankful that the average mortgage amount has increased substantially over the years.

    The rate can be a client to client opportunity that only you will be able to determine during the application process. If you are offering more services and good advice than a 5 to 10 bps difference in the rate will mean nothing by the time you are finished the process which is more than likely better than what they would have received had they dealt with the bank that they have their savings account with.
    In my opinion a cold call always starts with the lowest rate quote.

  • Ron R on 2015-01-22 1:40:55 PM

    Model my business based on online discounted rates where Im paid 25bps and deal with people tht dont appreciate my knowledge and experience, I would rather accept 2 or 3 offers a week I receive from BMO, CIBC or RBC. If you're successful at it good for you but why promote it? Who are you trying to convince me or you?

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