How to beat banks at renewal time

How to beat banks at renewal time

How to beat banks at renewal time

The challenges of the traditionally slow winter season are now being compounded by banks contacting past clients 120 days ahead of renewal – and just out of reach of the brokers’ 90 day rate hold.

 “I’m relatively new so I still don’t get those return clients with renewals (and) this time of year in Ottawa it’s slow because people don’t want to move in in December and January,” Nick Bachusky told “The banks are getting to the clients first – 120 days out, the managers get an automatic message saying whose renewals are up and then the specialists contact the clients with the best rates. It’s tough for brokers to compete because we can only offer at 90 days out.”

The banks tend to have the rate advantage and it can be difficult to sway a previous bank client to move the mortgage to the brokerage side.

“The banks go on floors: they don’t make revenue on it, they make more on volume (and) if it’s a war on rates, the banks will usually win it,” Bachusky said. “They can go to upper management and get rate matches and clients are more willing to stick with the bank because no new paperwork has to be done and no new rules need to be discussed.”

However, one way to get a leg-up on the competition is to focus on other areas of wealth management and providing customers a more holistic financial services approach.

“For renewals, what we’re finding, is that with our client base we offer more than just mortgage services,” Patrick Briscoe of Mortgage Alliance told “We have a little bit more client dedication in the fact that they come to us first to get an opinion on what they should do.”

Briscoe believes it can be difficult to compete on rate but it’s those other services that help keep the client, in many cases.

“We have seen competition from the banks for sure as they compete for rates, but at the same time by offering other services we have been able to maintain the client,” Briscoe said. “We do investment services, life insurance and income tax preparation.”

Perhaps this approach is the best way to stay competitive during this important time of the year.

“It’s nice to have a niche in what we’re doing but we think it’s necessary for brokers to have the same sort of model if they want to remain competitive,” Briscoe said.

  • Ron Butler 2013-11-04 9:04:23 AM
    Okay, let me think about that for a moment: it's renewal time and the bank offers the client a rate, the broker offers a slightly lower rate but the clients needs to be re-underwritten with a new lender, go through the whole process, pay per diems and pay a discharge fee to the old bank. The incumbent bank says "wait, we will match that offer, nothing to do, no docs to submit to us and you save the discharge fee".

    So at that point we as brokers have a decision; further rate discounting (possibly not practical, and the incumbent will continue to match) and cash incentive to offset the discharge fee, or both.

    The bottom line is no matter what level of other non-mortgage business you could be doing with that client, the client stays with the incumbent unless they are incented to leave. Why would the client do something against their own monetary interest just because they have other financial products with you.

    Perhaps the most important question is: if it is against the client's monetary interest to do the transaction, why would we ask them to do it at all?
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  • Welbanks 2013-11-04 9:26:11 AM
    @Ron You bring up some good points, but I think the idea is that we need better incentives in order to switch clients. That may be a cash incentive for the hassle they go through, that may be other products you offer. It could be a myriad of things but at the end of the day, we can never stop trying, as long as we are not doing something that acts against the client's better interests.

    Right now it is harder because clients are coming out of a high rate environment and early renewing into lower rates. Once this cycle of mortgages renews into what will probably be higher rates, we won't see the renewal rates as high as they are as people will have no incentive to give up their lower rate early. It all ebbs and flows.

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  • Nick Bachusky 2013-11-04 9:36:12 AM
    @Welbanks I totally agree with your second paragraph. Great point.
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