Should Mortgage Brokers Force Exclusivity Deals?

RBC and TD Canada Trust were the first to raise their variable mortgage interest rates this week and by the time end of week came, all the others had followed suit. Consumers though, are not quick to be fooled and rarely go with the first rate they’re given. So in turn, they do their due diligence and run around town getting quotes from other lenders, most of them mortgage brokers, to try and get a cheaper rate. This makes sense, banks want to make money and consumers want to keep money in their pocket. But there’s a problem. Once the consumer gets the cheaper rate from the broker, they then go back to their bank, asking them to match the rate. And as this week has proven, most times the banks will. So where does the unfairness lie?
On the part of the mortgage broker who called around and talked to many people, trying to get their client the lowest rate to start with. In short, consumers ask mortgage brokers to find them the lowest rate, and the only information they really need is what the rate is, and who’s offering it. The bank gets their share of the money from the mortgage, and the consumer gets the lowest price. The only person that’s left short is the mortgage broker who’s done all the work and has nothing to show for it.
It’s this exact predicament that may have started a new trend in Canadian mortgages and the way Canadian mortgage brokers work. Many brokers in Toronto are now forcing their clients to sign exclusivity deals – deals that say that if a broker finds their client the best deal and that client wants that deal, they’re going to have to go through the mortgage broker to get it. While this certainly makes things much fairer for the mortgage broker, is it fair to the consumer?
Some say yes, and some say no. Those that are against exclusivity say that it’s always the consumer’s choice as to who they want to hold their mortgage, and they should be allowed to give it to whoever they want. Others, who are all for exclusivity deals within mortgage brokerages, say that it’s completely fair because the consumer never did their share of the work in the first place. And while yes of course, it’s the consumer’s choice as to who they want to deal with, they should be the ones to do the work figuring that out.
So far, mortgage brokers in Toronto are the only ones that have started including exclusivity deals with their clients and they haven’t reached larger cities like Ottawa just yet. But should the trend continue with bank’s interest rates going up and consumers still wanting to get the best deal, without doing a whole ton of work to get it, it could be something that becomes commonplace in mortgage brokerages. It’s also important for consumers to remember that they’ll still be getting the best mortgage rate. They’re just going to have use the person that got it for them.