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Banks vs. Mortgage Brokers: Who Wins?

Banks vs. mortgage brokers – when considering mortgage options, whether their first one or a refinance, consumers like to have choices – and choosing between a bank and a mortgage broker is an important choice. So, what’s the best choice? Ultimately the bank may end up with the mortgage regardless, but there are key differences between working through a broker vs with the bank directly.

While it sometimes seems like the story of David and Goliath – with brokers battling it out against big banks for their share of the mortgage market – the relationship between banks and mortgage brokers is more complicated than that. True, banks have the resources to be aggressively competitive in the mortgage market (if they so choose), and some homebuyers turn to banks when it comes time to get a mortgage because they think it’s the most obvious choice, but that’s mainly because mortgage services are usually offered at the customer’s primary banking institution.

In the mythic battle of banks vs. mortgage brokers, mortgage brokers have been steadily increasing their share of the Canadian mortgage market. According to the 2017 Mortgage Consumer Survey released by the Canadian Mortgage and Housing Corporation (CMHC), the mortgage broker share of the market is growing, with the biggest trend upwards with renewals (from 26 percent  in 2016 to 35 percent  in 2017) and with the highest share among first-time buyers at 55 percent .

What are some of the advantages of working with a broker or a bank? When working directly with a bank:

  • clients can capitalize on an existing relationship with their financial institution
  • clients may already know the banker who will handle their mortgage
  • banks can add mortgage to existing banking profile and make automatic payments from linked accounts
  • banks often don’t charge fees, but since they rely primarily on their brand names and only offer one product, they are almost never going to offer you the lowest rate in the market

According to CMHC’s 2017 Mortgage Consumer Survey, the top two reasons to work with a broker are the desire to get the best rate or deal, and valuable advice and recommendations. Among the various advantages over banks, mortgage brokers:

  • compare mortgage rates from a large number of banks and lenders to find the lowest rate possible
  • provide more options because they work with numerous banks and lenders
  • can finance more complicated deals because of their knowledge
  • leverage existing relations with various lending partners
  • are typically easier to get in contact with than banks
  • are only paid when a loan is approved and signed (in most cases)
  • work harder to get applications approved, knowing their commission is on the line
  • utilize the same technology as the banks, meaning they can ensure an application is more likely to be approved before it’s reviewed by the lender

Sure, you, as a mortgage broker, know these advantages, but helping your customers understand them is crucial!

With Purview, brokers like you can demonstrate the expertise clients can rely on when they are looking for advice on the best mortgage options. Using Purview positions you as the best mortgage professional to guide homebuyers through the application process. Banks or a mortgage broker? With access to Purview, the choice is clear.

When it comes to banks vs. mortgage brokers, you need every advantage. You want to work smarter, not harder, with the tools and resources that do the most for the least.

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