Wednesday, May 26, 2010

Another one bites the dust...

HSBC has just pulled out of the broker channel, meaning they will no longer allow mortgage brokers to place mortgages with them.

Banks are out to create the most profitable relationship possible with their customers, period. Their best client is the one who walks into their branch and accepts the interest rate as offered. The bank will then try to further increase profits by cross selling other products and services.

If a bank deals with mortgage brokers they know that they will have to provide stellar interest rates and compete with the other lending institutions. It’s pretty simple, if their rates are not good, us broker just won’t send them any business. This means lower profits for the banks as they can’t sell you the higher rate they’d like to!

I hear it all the time from my customers...their banks have offered them a rate much higher than what I can offer.

To me, this latest move by HSBC makes sense...it’s all about profit. This has nothing to do with what's best for the consumer. Surprised anyone?

Read the Globe and Mail article HERE.
Read an interesting blog from CanadaMortgageNews.ca on the same topic HERE.