Street sweetens the compensation pot

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Street Capital is among those offering brokers an additional 10 basis points on some  fixed mortgages, the move helping build an increasingly competitive and lucrative market.

Effective, Jan. 22, the monoline is offering an "extra 10 bps commission on 5-year fixed-rate high-ratio, paying up to 115 bps," reads a communication recently sent to its broker partners.

That "up to" depends on the plan, with the Loyalty Program Upfront model sitting at the top end of the compensation scale. All deals must be CMHC-insured and represent new business, says Street. They are alos subject to other requirements.

Street's move runs parellel to steps first taken by MCAP and followed by First National to sweeten the pot for brokers, now fighting to maintain, if not grow, originations in a slower market.

The extra compensation also comes as some mortgage professionals scout about for an alternative to ING, which will formally leaves the channel next month.

The heightened competition this time around is an about-face of sorts, say some brokers, from what happened when FirstLine packed its bags last year and some other lenders moved to cut finder's fees.

 

 

  • Cory on 2013-01-26 5:08:14 AM

    While I am more than happy to cash the extra bps on my cheques I hope I am not the only one that finds it bordering on comical how all of these lenders are now offering up extra commission. For months, if not years now we have heard how expensive it is to operate inside the broker division and that our commissions are much higher than institutions who offer their product direct to consumers. We have seen rate increases almost immediately upon the bond market taking lender margins into the "uncomfortable zone" and have seen commission decreases and lenders leaving the channel. This consistent message to our channel was at the same time that most of these lenders were reporting record profits. I for one never bought it, but many of my colleagues have been on record about how we as a channel have to do more to support our lenders who are facing "hardships". Now all of a sudden when the bond to discounted rate spread is at its lowest in a long long time (and reported daily that it is way outside their comfort zone) we are seeing increased commission which further cuts into profit margins. If I didn't know better, and maybe I don't, I would say that most of these lenders have no idea what they are doing.

  • Chase Cooper- DLC Mortgage Excellence on 2013-01-26 5:50:08 AM

    I also find it funny that we can now see that the lenders are trying to via for our business by increasing how much we are paid. I for one would much rather a lender try to expand on the products and services that it offers to try and separate themselves from the pack by trying to add value; not compensation. Isn't being a Broker about being able to offer our clients the best products and services that suit their needs? I have never sent a client to a lender based on what I am paid and will never do that, when we seen a commission cut from some of the lenders I never said I was going to stop sending them deals, if it is what works for the client then that is what matters. So to have a lender step up their game and bring in a new product would show me that they are really trying to add value to the Broker channel. Just my 2 cents :)

  • MIke on 2013-01-26 7:18:32 AM

    I agree with Chase 100%. That is the most logical thinking. Well said Chase!

  • Ron Butler on 2013-01-29 5:25:21 AM

    I think some of these comments have missed the point.

    The mono-line lenders are chasing one product: hi-ratio mortgages.

    This has to do with what insurers want and the requirements mortgage insurers are forcing on many lenders to do with product mix.

    Most mono-line lenders need to supply a certain amount of hi-ratio mortgages to their insurers so they need to seek that business.

    As for products, mono-lines can only provide the products their sources of funds want to use so again, they are not able to deliver all we want to see.

    There is a lot going on in the background of non balance sheet lenders that we as mortgage brokers should try better to understand.

    They all want to compete on products, they all want to grow all lines of business, it is simply not always possible.

  • Robert Stanfield, Invis agent on 2013-01-29 7:25:48 AM

    I agree with Ron, every broker needs to better understand how mono line lenders obtain their funds and what products they can and can not offer. there are some products they just can't offer or compete on against the banks. That being said, I fully support the monolines as I feel they have more invested in the broker channel being successful. Regarding bp increases, they will always go up and down when lenders are forced by other lenders to compete for broker business. In the big picture, 10 bps neither makes me look at, or move my clients to another lender. It is all about product, broker service and the service a client obatains from the lender after the mortgage funds. It isn't worth having an unhappy client to get an additional 10 bps commission.

  • Chase Cooper- DLC Mortgage Excellence on 2013-01-29 8:00:04 AM

    Great point Ron- I was more stating what I "wish" would happen but I do understand it is not always as straight forward and easy as we may think or hope. I always support the Mono line channel and will continue regardless if they can bring in different products or not.... But wouldn't it be great if they could :)

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