Renewals: a battle brokers can’t win?

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The battle for renewals is a fight that brokers are gonna lose, says a leading mortgage broker.
“We are up against six of the richest companies in Canada, individual Davids pitted against six Goliaths,” says Ron Butler, president of Butler Mortgage, saying brokers need to realize that the cards are all stacked in the banks’ favour.
“It is their money, their contract and their decision to approach the client six months before renewal,” Butler told “Sometimes we as brokers just have to suck it up and realize that this is a free enterprise system, and that this is the way it should be – to the advantage of the client.”
The push from the major lenders is being felt through the brokering channel, as CAAMP’s 2012 fall survey numbers suggest. A total of 47 per cent of people who took out a new mortgage last year used a broker, but those numbers plummeted to 27 per cent upon renewal, as banks used their advantage to approach clients early with offers of low, discounted rates to renew.
“The banks are very aggressive these days,” said Jim Furlong, marketing manager and administrator with The Price Team. “They are actively seeking out new clients.”
The aggressive campaigns by the banks to win new clients appears to be working when you look at survey numbers, but as CAAMP’s CEO Jim Murphy points out, many people are agreeing to early renewal offers proffered at “best rates.”
“Most of those people should be shopping around,” said Murphy.
According to Derek Rowley of Real Mortgage Associates, banks have become so aggressive on renewals that they are welcoming with open arms clients who had been initially rejected.
“Banks are extremely aggressive now,” he said. “People that were declined through a broker are now being wooed for renewals.” 
In fact, as it is his duty as a broker to recommend the best deal for his client, he has told some to go ahead with a renewal offered by the bank.
“When the client approaches me, and they tell me that they received their renewal notice from the bank, I tell them to go ahead and take it,” said Rowley. “I know that there is no way I could qualify that client with another lender with their bad credit rating.”
It is a battle that seemingly is pitched in the bank’s favour.
“It is always unlikely we can hold a rate as long as the bank can, and right now the big banks are inclined to match all of our rates,” says Butler. “It is a decidedly difficult situation, but this is a free enterprise system.”
  • Jake on 2013-03-14 8:46:37 AM

    I completely agree. I rarely, if ever, win the renewal unless I can convert it to a refinance. Fact is fact - people are aggressive (both client and bank) and it's a lose-lose when you put your work into a deal only to get killed by the rate. I lost a $700K refinance the other day, for example. CIBC offered 2.89. I got 2.69. 2 weeks later and a few days before close CIBC came back at 2.39% 3 year closed. Guess what- no amount of "but but but.." will work and anyone who thinks a client is foolish enough to go with a higher rate because of hard work is drinking the kool-aid.

  • big picture thinker on 2013-03-14 8:51:10 AM

    If the lender that you initially recommended holds the mortgage and they have treated the client well, and are offering the best rate, then really, act in the best interest of the client and recommend they stay. Sure you don't get paid, but if you treated them well, stayed in contact and helped improve their financial situation, then ask for your happy client to refer their friends and family to you. Congrats Mr Rowley, for looking at the big picture.

  • Paul Mangion on 2013-03-14 9:42:06 AM

    Banks are getting smarter and many brokers are not! If the majority of brokers don't change from tranactional to relationship marketing then this industry is just racing to the bottom.

  • Derek Rowley on 2013-03-14 12:38:46 PM

    New flash Paul. Doing what is best for the client is relationship marketing. Jake is dead on (more likely California Kool Aid Jake - lol) and thank you Big Picture Thinker

    Continued good selling


  • Jason Nugent on 2013-03-14 12:45:03 PM

    Just another reason to use a trailer fee lender whenever possible.

  • Sharon Fauchon on 2013-03-15 11:00:32 AM

    There is nothing I like better then giving a client a low low five year rate and telling them to go to the bank and ask them to match it. Which they usually do, and the reason is I could not get the client a new mortgage elsewhere for various reasons. The client wins! I win! And the referrals that come in from this type of service are great!! You have to look at the big picture not just the one deal sitting in front of you. The brokers that can see that picture are the ones who will continue to succeed in this industry.

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