RateHub.ca boots broker

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The broker who had his rate removed from RateHub.ca alleges he has also been barred from using the site in the future.

“They didn’t just pull our rate, they kicked us off Ratehub.ca – they won’t let us go on [anymore]. They gave us two reasons. One, [Alyssa Richard, RateHub.ca founder] doesn’t support us advertising that rate because she feels the product is not achievable for people to be approved on, which I don’t agree with,” Steve Pipkey of Verico Spin Mortgage told MortgageBrokerNews.ca. “And then she said she didn’t like that we would come on and off the site as frequently as we did … when we signed up there was no rule or stipulation about [doing that]. We only want to be on during business hours.”

According to Pipkey, Ratehub  had not raised the issue of Spin Mortgage’s infrequent use until it had posted the 2.44 per cent five-year fixed rate – the lowest on the site at the time.

“There was no warning,” Pipkey said. “Had she come to us and said, ‘hey guys, I don’t like the fact that you’re coming on each day for two hours; if it’s a servicing problem why don’t you think of coming on for one day a week for a whole day,’ that would have given us the business case to [consider it]. But she just outright booted us.”

The Globe and Mail reported Thursday that Spin Mortgage’s 2.44 per cent five-year fixed rate had been removed by the popular rate site. The article listed a number of restrictions tied to the rate which Pipkey says were inaccurate.

“The problem with the Globe article is there were some inaccuracies. That product is good for high ratio or conventional; it’s good for refinances, transfers [only in Ontario], or purchases,” Pipkey said. “The biggest downfall to the product is simply the 30 day close because that is hard to do [for some people].”

He isn’t sure where the Globe and Mail got the inaccurate info, which stated that the mortgage: “had to be closed within 30 days, the rate was only good for new purchases, not refinancings or renewals, was open only to insured mortgages (those with less than 20 per cent down), and couldn’t be used to fund rental properties.”

For her part, Alyssa Richard said the rate was taken down because only ten per cent of clients would qualify for it and that it was merely being used to bait-and-switch clients into other products.

“How can you quantify that?” Pipkey said. “It certainly isn’t a slam dunk deal but I closed one last week and I’m closing one today.

“There is always talk about bait-and-switch; the fact is this rate pays better than anything else … so there is absolutely no bait-and-switch.”

Calls to Ratehub were not returned.
  • Donna on 2015-03-27 2:45:38 PM

    I agree with Ratehub, but maybe they should follow there rules too! We do not need any reasons for clients to think we are playing games, enough games are being played by Bank Employees where rates are concerned!

  • Phil on 2015-03-27 2:47:39 PM

    The question you want to ask is what are the penalties attached to the mortgage and would most clients want to enter into that ?

  • Bob on 2015-03-27 2:47:49 PM

    At the end of the day, it's their site and their call. Broker should be thankful for the free publicity. IMO, The website does however make it difficult to communicate the restrictions of the product. Perhaps an individual product page could be useful.

    Also a point of consideration for those who lead too heavily on ratesites or any one channel as the lifeblood of their business.

  • broker on 2015-03-27 2:50:20 PM

    Sounds like a bigger issue here. Is it not the case that another broker advertising on the site is part owner of the site and this 2.44% was eating the other brokers lunch? In other words, rather than competing with the 2.44 they would rather get rid of Steve altogether. Smells fishy to me. This should be a lesson to the other brokers advertising on this site. You are at a disadvantage as you are competing with the guy who controls the deal flows. Hey, look at the shelf space the PC brand has over Coke and Pepsi (and PC does not have to pay the exorbitant shelf space fees.

  • Van Isl Broker on 2015-03-27 2:50:54 PM

    buying down the rate like that is bad business for all.

  • Drew on 2015-03-27 3:00:49 PM

    Ratehub is in our business. Not just marketing but facilitating. Make no mistake about that. Anyone advertising there is shortsighted and arming their eventual national competitor.

  • broker on 2015-03-27 3:01:29 PM

    Interesting to see who is now at the top of the list on rate hub now that Steve is gone. Hey - is this also not the part owner of the site????? Hmmmmmm.......... Interesting as how things happen.

  • wondering on 2015-03-27 3:02:55 PM

    Interesting to see who is now at the top of the list on rate hub now that Steve is gone. Hey - is this also not the part owner of the site????? Hmmmmmm.......... Interesting as how things happen.

  • mario on 2015-03-27 3:05:23 PM

    I guess this has been well deserved. If you need to buy down a rate that drastically to bring business in as a lost leader ad , are you really working for the best interest of that client. Those types of mortgages come with conditions. " do not judge a book by its cover"

  • Paul on 2015-03-27 3:09:46 PM

    A lesson in ethics from RateHub..err CanWise, umm..RateHub?? I am confused....

    Btw, pretty sure the 5yr on their site being advertised right now is a FN product that offers No porting and is High Ratio only...a restricted product.

    The blatant shadiness they are slapping their clients and advertising "partners" (other brokers) in the face with I'm sure only scratches the surface of what goes on behind the scenes.

  • Paul on 2015-03-27 3:10:04 PM

    A lesson in ethics from RateHub..err CanWise, umm..RateHub?? I am confused....

    Btw, pretty sure the 5yr on their site being advertised right now is a FN product that offers No porting and is High Ratio only...a restricted product.

    The blatant shadiness they are slapping their clients and advertising "partners" (other brokers) in the face with I'm sure only scratches the surface of what goes on behind the scenes.

  • Marina on 2015-03-27 3:11:26 PM

    I applaud Alyssa Richard, RateHub.ca founder. Good job to finally booting those agents. It will make other agents to understand that we should post those rate that are really reasonable and available

  • Dave on 2015-03-27 3:15:53 PM

    Very simple what happened here...Alyssa and Ratehub didn't like the competition taking away business from their new brokerage deal with Canwise.... end of story

  • Arbitrage on 2015-03-27 3:25:09 PM

    @Marina 2.44% is available and reasonable. Similar terms, conditions and penalties as the Big 5 Banks but with a 30 day close (which is fully disclosed on the rate posting). If a client is fine with 5/5 prepayments (which most borrowers don't even breach anyway and is fully disclosed in the rate posting) then where is the problem? On top of this a broker still gets paid 83-93bps. If you think this move is anything but eliminating the competition then I fear you are telling yourself a story.

  • ... on 2015-03-27 3:25:11 PM

    Let’s do the math on these sites. I used to use them 3 years ago when they made more economic sense. Unfortunately, today that is not the case.
    If you are successful, you will close 1 in 5 of these leads. That is, you will work on 5 leads and fund one of them. At a cost of $60/lead, your cost is $300 per funded deal. When you add the click cost which is typically equivalent to the lead cost, you are paying an average click cost of $300 per lead so your total cost of acquisition is around $600 per funded lead.
    To win these deals, you typically have to buy down the rate between 10bps – 15bps. A 15bps buydown will cost you 63bps in comp. If you are making 110bps, you are down to 37bps net. On a $300,000 deal you are making a mere $1,100. When you subtract the lead cost of $600 you are down to $500 net per funded deal. I repeat – you are making $500 per funded deal.
    When you factor in your time to work on 5 deals (all of which are also talking to 3 other brokers at the same time), are you really ahead? How much is your time worth? You spend time on 5 deals and close 1 for a net $500? I’ll repeat again: WORK ON 5 DEALS, TALK TO 15 PEOPLE IN THE PROCESS, CLOSE 1 DEAL, MAKE $500.
    Worse, your funding ratios go to the toilet which ends up costing you the efficiency bonus (I can tell you we earn an extra 40 bps in efficiency bonus from one major lender). This would never happen by sourcing leads from these sites.
    Steve, thank your lucky stars you were kicked out of this.

  • Vince Gaetano on 2015-03-27 3:27:29 PM

    One can speculate all they want about the reason why RateHub booted the broker in question but the reason makes sense from a business perspective during the spring market where visitors to the site peaks. If the rate offered is only available to 10% of the market (as claimed by Ms Richards) then she needs to protect the brand and make sure 90% of the visitors to the site don't have a negative experience and feel they were mislead.

    As far as CanWise's participation is concerned, the RateHub market report that is available to brokers using the service is fully transparent about the market share the website owned brokerage, CanWise, has on a monthly basis.

    Does CanWise have an advantage? That decision will need to be made by the participating brokers of the site. As far as I'm concerned, I'm indifferent. RateHub does provide the monthly reporting and provide full disclosure to all participants and this should provide insight on how they operate. This is good business practice.

    Just my two cents.

  • MJ on 2015-03-27 3:31:09 PM

    Not sure how 2.49 currently advertised is really different than the 2.44. Booting Spin probably made sense, however moving forward RateHub should have a clear set of rules for brokers to abide by. Assuming they want to play fairly at least. As well, RateHub needs to give more product detail options (ie rentals, high ratio, etc). At the end of the day RateHub has the power to decide what's best for them, and I'm not sure how this story even made the globe and mail. Canadians are way too obsessed with mortgage rates and real estate. It's time to move on realize that the rate itself is not as important as the relationship, service and quality of the product. Too bad most people are too ignorant to realize this.

  • Kelly on 2015-03-27 3:44:10 PM

    At $60 a lead we don't see value anymore in Ratehub. We list on Ratespy.com instead and have been quite pleased with the results. The volume of leads is less but you can't beat free.

  • Dave on 2015-03-27 3:45:58 PM

    @MJ ... well said and I agree with you

    The main problem with the Ratehub site is there are not enough details about the rate offers for the consumer. Many important product details are left out . And yes the consumers are way too rate driven, trying to save a few hundred dollars , maybe a couple thousand over the course of the term for 5 or 10 basis points discount. Meanwhile they take a product with restrictions and they totally forget that a good relationship with a professional broker who has solid life long advice for them, is worth more than that 5 to 10 bps savings. What makes me laugh the most is they are overpaying for homes by $50,000 in bidding wars and then ordering Wolf ranges and Miele appliances , overpaying for those too! Most Canadians really have no clue what they are doing with their money and real estate. Follow the herd mentality is strong in Canada , that's for sure.

  • Luke on 2015-03-27 3:49:19 PM

    I agree with RateHub's decision. It is bad for business to have a broker advertising a rate that is 9.9 times out of 10, not achievable and misleading to clients. Let's be honest, clients do not usually take the time to look at terms & conditions. They see the lowest rate and click away. Let's also be real and know that the only reason Spin was advertising the rate, was to undercut the other brokers who use the site to win the leads. The rates advertised are usually the same or very close between Butler, Mortgage Pal, Canwise & Dominion, so to say Canwise has the upper hand is nonsense. This is not part of my business model but I know brokers that use the rate sites to generate leads tend to do very well.

  • Richard K on 2015-03-27 3:58:33 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..

  • Dave on 2015-03-27 4:12:13 PM

    What a slap in the face. Who says 2.44% is not available? It is available to all clients. It is available for purchases, refinances and switches. It is available for conventional and high ratio. The only condition is it needs to fund in 30 days. This is not an issues at all. Ironically, this 30 condition will not deter any or the clients on these rates sites as all of them keep shopping up until the day of closing. The character and nature of these nickel and dimers that go to these sites continue to shop till the last minute. as such, 100% of these clients are eligible for this 30 day special. Lets call a spade a spade. This rate site would rather get rid of competition so they can feed their sister company the leads while the rest of you agents pay them for nothing. Wake up mortgage professionals.

  • Other Dave on 2015-03-27 4:24:54 PM

    @Dave.... exactly my point too, Ratehub booted the competition, had nothing to do with bait and switch , 30 day mortgage rates, yadda yadda yadda...all nonsense excuses to feed the media and the Globe and Mail fell for it as usual. Im surprised the G&M even wasted time writing about this, must be a slow news week.

  • Paul on 2015-03-27 4:45:39 PM

    Don't think there is a "sister company" about it.

    Its the same company just using a different name to give the illusion that they have a fair business model to attract brokers to continue to advertise with them.

    Sorry about Spin, but unfortunately believing that RateHub would be fair when they are also a brokerage competing for business then it should really be no surprise this happened.

  • broker2 on 2015-03-27 7:52:32 PM

    What kind of politics is this? I can find 2.33% for 5 years fixed easily on the web. Why is this being isolated?

  • Agent on 2015-03-27 9:01:20 PM

    2.33% - has a Cashback component, wise to ask how penalties are calculated to get out... if you can? I would not recommend to a client. Stats show 38 months into a 5 yr majority are looking to do something different- designed to make the phone ring, Who wants to write 100 mortgages for $500, lol

  • Stefan on 2015-03-28 1:20:29 AM

    I'm seeing it a bit more in the comment threads, but it's mind blowing to me that the conflict of interest at hand hasn't been discussed more in the media. RateHub and CanWise are one and the same, people! It seems pretty clear that this company felt threatened by the competition, could not match their rates, so instead of accepting it, kicked Spin mortgages off of their site. As mentioned above - they didn't contact the company to discuss, or simply ban this one post - they are completely banned from the site! Horrible business ethics from CanWise/RateHub & Alyssa Richard.

  • Jesse D on 2015-04-02 8:27:46 AM

    Maybe it is because she is now part owner of her own brokerage with James Laird, formerly of True North. Perhaps the 2.44% was too much for them to handle. Like Drew D. said, you are arming your competition by using their site so be prepared for where that could go.

  • Sean Binkley on 2015-04-02 10:08:15 AM

    I'm trying to get my head around why anyone would pay for leads? I can share with you a "lead generation system" for today's low low price of only $29.99 and I'll throw in a set of Ginshu steak knives too if you call now!

    1) Get up from your desk and go outside
    2) Go meet some people and introduce yourself
    3) Tell them what you do and ask for business
    4) Repeat

    Kind of like the shampoo bottle from your daily shower wet, apply, later, rinse repeat.

    Internet leads are tire-kickers and far from loyal. The time spent on leads vs. developing lead-generating relationships are a waste of time. Today people want to take the "lazy-man's (and women's) approach to sales - pay someone to give you leads so you don't have to talk to people to sell your services to them.

    Happy Easter!

  • Matt on 2015-04-03 4:11:16 PM

    Sean - how many mortgages do you do a month with that strategy 1? Do you go door to door to see if people need a mortgage? You pay for leads because you can talk to 20 different people a day and if you are good at what you do can convert those leads into closed mortgages. Those people also come back and refer friends which costs nothing.

  • Sean Binkley on 2015-04-07 12:18:38 PM

    @Matt. Matt, not sure if you are an agent or represent the lead sites, but having done this for the last 16 years I can tell you that my strategy works. Talking to people and asking for business works. All the best with your business whatever it is!

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