First National then Scotia. Mortgage brokers are worried other lenders will introduce commission cuts on five-year deals. But as Jemima Codrington reports, they're not prepared to lie down and take it.
Video transcript below:
Jemima Codrington, Mortgage Broker News
Jemima Codrington: Scotia mortgage authorities decision to cut commissions by 5% on 5 year deals is according to them, a growth opportunity. But do brokers agree? Hi, I’m Jemima Codrington and welcome to the Big Story on Mortgage Broker News.
The decision has ruffled the industry feathers to say the least. But is it an idea that’s likely to catch on or is it setting a dangerous precedent?
Marcus Tzaferis, Morcan Direct
Marcus Tzaferis: Yeah, I feel that it does set a dangerous precedent. I think that it’s a slippery slope. Whenever you see such a huge part of the market First National and the Bank of Nova Scotia represent a third of the mortgages originated through brokers. It’s just such a huge part of the market that, you know it’s going to have repercussions. So I think we should be a little bit worried.
Simon Vendryes, Real Mortgage Associates
Simon Vendryes: No, I don’t it’s such a dangerous precedent. I think it’s short sighted. The value that brokers bring to the business actually saves Scotia Banks and the primary lenders a lot of money, because we cost them no dollars in the sense in resources. We bring clients to them at no additional cost. In the long run I think they will find that they will be coming back with higher commission rates when they lose our business.
Jemima Codrington: The announcement has the industry looking to place [bang] and has prompted brokers to find ways to battle cuts for the sake of their business.
Marcus Tzaferis: I think that we have to start doing a better job of informing our customers the pitfalls of dealing directly with a bank. I think that we’ve got to be bigger proponents of these [model] lines that are out there providing a better product to these consumers and I think that where’s we are going to find success and fight back some of these commission cuts that we are seeing.