Since When Was Offering Consumers The Best Rate A Bad Thing?

As the record low mortgage rates are coming to an end, the age old feud between visiting your bank for a mortgage or utilizing the services of a broker are being fuelled by the media and rates.  Above all, what we really need to look at is what is best for the client.  The National Post printed an article today, Mortgage Brokers Undercut Banks, in which they start the article with "Mortgage brokers are once again undercutting the banks and some are willing to buy down your rate — eating part of their commission in the process — to gain customers."  I'm sorry, I must have missed the part where offering the consumer the best possible rate - even if it means sacrificing your own pay - was a bad thing?  


The perception of Mortgage Brokers has changed.  Ten years ago, having to use a mortgage broker meant that you had less than perfect credit, and weak income.  Today, using a broker means that you are  somewhat financially savvy, and are looking at the best ways to save some money.  It means that you are shopping your mortgage, wanting to find the best rate and product.  When shopping your mortgage, you can either go with a big bank, or through the broker channel.  


The broker channel consists of over 40 different lenders Canada wide.  These are financial institutions that do not have savings/chequing accounts.  They do not have a walk in branch, which is why they can often offer lower rates - they are not paying employees to sit in a branch.  Instead, they pay mortgage professionals a commission to facilitate mortgages. Mortgage professionals are not paid by the consumer, they are paid by the lender.  To me, this means that they are willing to work even harder to offer you the best possible service they can.

A few weeks ago, when BMO slashed their rate to record lows, the other major banks followed.  They oligopolized the mortgage industry by offering these rates, and advertising til no end.  The broker channel suffered, unable to compete with the big banks.  Though it was a slower response, the mortgage broker channel caught up with competitive rates and products, allowing them to battle the large banks.  Now that the major banks have hiked up their rates, the broker channel can still offer the 2.99%, 2.89%, etc...  Mortgage brokers also have more discretion in 'buying down' a rate - which means that they can waive portions of their own commission to offer better rates.  Apparently, this is a bad thing?


Essentially, it's up to the consumer.  Some people feel more comfortable having all of their accounts with one bank, and will always stay loyal to their branch.  Others would rather shop their mortgage and find better rates and products.  A little healthy competition is fine, just don't lose sight of what's best for the consumer.