Great article today in The Globe and Mail… Ok, so why am I promoting an article that talks about NOT dealing with Brokers? The article says, RBC, BMO and now HSBC are not dealing with Mortgage Brokers (RBC never dealt directly but they do put money out through RBC Securities…BMO stopped a few years ago and HSBC just stopped).
The article quoted Marcia Moffat, VP Home Equity Financing, RBC. I have my opinion but what do you think about what she said?…. “The mortgage market is extremely competitive, so the reality is that there is little to no difference between bank rates and broker rates.”
Well, that statement sparked a flurry of comments… read the comments section of the article.. including some words from CanadaMortgageNews.ca. As recent as a few weeks ago, I had client asked if I could give them a letter stating what my rate was so they could take it to their RBC branch and the branch could match my rate… and this happens all the time…
The Banks are a business and want to make a profit…. you heard me say this before? I must repeat it again…far too many don’t believe it… The Banks want you to take the 5 year fixed rate mortgage… it’s the most profitable product for them…
Remember, a few months ago, I wrote about the government introducing new mortgage rules that make it harder to qualify for variable rate and shorter term mortgages (1 to 4 years)…. you must now qualify using the Bank Posted 5 year fixed rate… that’s 6.10% today!! Or you can qualify at the contract rate (fully discounted rate) of the 5 year fixed rate mortgage product….. today, that’s around 4.49%… . Which product do you think borrowers will need to take if they are on a tight budget? yes, the 5 year fixed rate mortgage.
So, why do these lenders not want to deal with Mortgage Brokers? For me the answer is very clear…they want to put you into their most profitable product…. Mortgage Brokers have a duty to recommend and advise the MOST APPROPRIATE PRODUCT.
I’ll be speaking more about Bank mortgage products soon… in particular, the split mortgage products… please don’t get into these products without knowing all the details and reading the fine print….speak with a qualified Mortgage Broker.