Current rate environment opportunity to advise clients

In light of recent interest rate increases, and more to potentially follow before year’s end, mortgage brokers are contemplating whether or not they’ll have to send clients to non-channel lenders.

Rates are presently on the rise -- and expected to continue to do so -- but at the moment brokers aren’t too worried about sending clients to non-channel lenders, except if they’re new clients.

Chris Allard, a mortgage agent with Dominion Lending Centres Smart Debt, says he firmed up his clients financial situations months ago because of the previous rate increases. However, potential new clients are the most likely to be affected. In some cases, the rate hike could present an opportunity to reconfigure existing plans and broaden brokers’ clienteles.

“I think there will probably be a few potential clients reaching out to me on a better rate, term and product that I might not be able to meet, given they received their renewals three months ago when rates were half a per cent lower,” he said. “But in many cases, those borrowers may be looking at the wrong product entirely, which may give us the opportunity to review their financial situation and determine the best term and product for that person.”

Allard says that borrowers could already have a better rate, term and product, in which case he’d simply send them back to the lender they came from. However, he doesn’t anticipate this will affect business too much.

“I think it will only be for new potential clients,” he continued. “With our existing clients, we were already in touch with them four months ago and already helped them with upcoming renewals.”

The prime rate increased by half a percent in the last few months, and the fixed rate has gone up by three-quarters of a percent in the last four months or so.

Allard says the variable rate holder will have less trouble recalibrating their mortgage because the prime rate in tandem with a discount provides enough wiggle room to help them. However, borrowers on fixed rates may be more difficult to help because they received their renewal rate when rates were lower.

Jason Anbara of Mortgage Alliance Mortgage Approvals Ottawa Team, says he isn’t too worried about sending clients to non-channel lenders when the next rate hike hits.

“I’m not too worried,” he said. “The only clients who may be impacted and stick with existing lenders are clients who are calling about the fixed mortgage rate.”

MBN

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