The current state of buydowns

The current state of buydowns

The current state of buydowns With rates at record lows, at least a few mortgage brokers are enjoying a break from the cut-throat practice of buying down rates.
“You don’t have to buy down rates (as much) these days because they are so low,” Michael Francis of Centum  National Mortgage Loans told “Buydowns just aren’t an issue right now, especially if the client is loyal.”
In March, when polled for the annual Broker Sentiment poll, industry players were fairly optimistic about buydowns. Some 83 per cent said at the time that they expect to buy down 0-25 per cent of their deals this year.
And it’s a trend that may be even more prevalent in smaller markets.
“I’m not buying down rates right now; it seems to be something that happens more in the larger markets, like Toronto, where there is more competition and online shopping,” Mitch Thibodeau of Verico The Mortgage Professionals told “Here, we find offering good service and education wins us clients based on our knowledge and, as a result, I generally don’t have to buy down rates.”
Thibodeau, who is based in Kingston, Ontario, is wary of the fact that buydowns will become prevalent much more in the near future, and not only when rates rise.
“It may change in the future, though. Online shopping is here to stay, so I feel as time goes on and it becomes easier to shop around for rates, competition will increase and buydowns will become more prevalent.
“People go online and find these no frills offers, but I find that explaining the details on a 2.49 per cent and the fine print is usually enough to win those clients.”
  • Dustan Woodhouse 2015-07-09 10:59:59 AM
    Callum Ross nailed it at a recent CAAMP event with his line, "you are either in the Price business of the Advice business".

    There will always be DIY solutions that seem less expensive. There will always be comprehensive planners who are worth their weight in Gold.

    Clients and Broker alike:
    Choose your model wisely.
    Post a reply
  • Ron Butler 2015-07-09 11:40:40 AM
    There is another great quote:

    "Decide if you are the value delivery business or the BS shovelling business"

    If you are in the former business the future is bright if you are in the latter you need to buy a bigger shovel.
    Post a reply
  • Rich Ulvild 2015-07-09 3:52:37 PM
    Here is another simple one:

    Rate matters more in the absence of value.

    If we want to commoditize our valuable services to the lowest common denominator (rates) then we can only blame ourselves when our services are no longer required.

    Service, and therefore value, will never go out of style.
    Post a reply