It was just this month that many of the major lenders cut their mortgage offerings significantly, taking advantage of the low interest rates to offer customers unheard of mortgage deals. Of course, the banks did this to give themselves a leg up on the competition, and to get people going to them for a mortgage instead of someone else. But just a few weeks after announcing the new deals (and in some cases even earlier,) the banks pulled out, citing a lack of profits and basically no longer wanting to keep up with other banks, as reasons for it.
On the other side of things, it was also this month that rumours about CIBC closing their mortgage branch, FirstLine, began to heat up. CIBC thinks that you don’t need to offer your customer great deals in order to make money – you just need to keep all the business for yourself. FirstLine is of course, CIBC’s mortgage broker branch. By closing those doors and opening the ones to their branches a little wider, they don’t need to share commissions with brokers, thereby keeping more of it for themselves.
All these banks got it wrong.
There’s now a case in Canada that’s proven you don’t have to try to hold onto every dollar to make more money; and you don’t need to offer your customers ridiculous savings that will cut into your profits either. You just simply need to get the word out and be willing to work nicely with others. This is the case of the National Bank of Canada.
The National Bank of Canada was happy to announce yesterday that they recorded a first-quarter profit of $332 million, up from $322 million the year before. But the profit doesn’t come from raising the price on their mortgage products, or from trying to snatch all the business up themselves. In fact, all the National Bank of Canada did was to continue what it’s always been doing – reaching out to both mortgage brokers and customers, trying to offer everyone a fair deal.
“The good growth we’ve had doesn’t come from lowering underwriting standards,” chief executive, Louis Vachon stated after the announcement was made yesterday. “It comes from a significant shift that you’ve seen in Ontario for a while and is now developing in Quebec.” That shift is that, when looking for an Ottawa or Toronto mortgage, people want to get the best deal. And they know that going to a mortgage broker is the way to do it.
