It’s a question that’s been around ever since we’ve had mortgages: should you go through a bank to get your home loan, or should you go through a Toronto mortgage broker? It’s a question almost every home buyer asks themselves during the process of buying a home; and now, banks are doing nothing to swing the vote in their favour. The major banks had some customers in an uproar after making grand announcements about extremely discounted mortgages, only to pull them what seemed like days (even though it was actually a couple of weeks) later. Still, they pulled out early, and customers weren’t appreciative. Now, many of those same banks are turning off even more homebuyers by pulling out of the brokerage market.
It all started when CIBC announced that FirstLine, the major arm of the bank that offered mortgages, would no longer be doing so – and now there are even rumours that FirstLine is up for sale. It’s said that once that sale goes through, CIBC will also pull out of brokerages. This will mean that if you want a CIBC mortgage, you’re going to have to go into a CIBC branch to get it. A CIBC spokesperson declined to comment and the news is just rumour at the moment, but it wouldn’t be the first time a Canadian bank has pulled out of using brokerages; RBC and BMO are already two major lenders that don’t deal through mortgage brokers. But why would banks be doing this to themselves, and why wouldn’t they let someone sell their product for them?
Once again it all comes back to money and profits. Even thoughtheir mortgage products might not be advertised as much, when it does the bank gets to keep 100% of the profits, instead of using some of it to pay off brokerage commissions. But the banks do have a plan for making up some of those lost profits that they would have received by selling their products through mortgage brokers. Now, some of them are offering “mobile mortgage specialists” that go to the customer to offer mortgages, rather than having the customer come in to apply for the mortgage. But is that really still better for the customer?
It turns out, not really. Some Toronto and Ottawa mortgage brokers have already started to offer their own discounts, some even dipping into their own commissions to cut back rates and costs for homeowners. But truthfully, these measures generally won’t be necessary for homebuyers to still get the best deal from a broker; brokers will still be the most convenient, and will still offer many more products than the handful of products any one bank will offer.
The only question then really, is why are banks making it so difficult for customers to get a mortgage from them?
