I saw an interesting story on a side effect of the credit crunch yesterday. Despite the fact that the article is on the UK market, and the fact that the mortgage market in the UK is much worse shape then Canada, could it be a sign of things to come?
The article stated how some of the UK’s biggest lenders have withdrawn their best deals from the broker channel and are only offering them to customers going direct. The reason behind this is to try and create a bottleneck to slowdown demand for mortgages and control their uptake until the economy stabilizes. As a result, the UK mortgage broker market has seen a 15% decrease in its membership to approximately 26,000 brokers, and the number homebuyers using brokers has halved in the past year (Council of Mortgage Lenders).
The UK mortgage broker market is massive compared to Canada, as almost 3/4 of the £15 billion annual mortgage market are sold through brokers. The FSA has said it won’t step in to alleviate the situation, and a London broker was quoted as saying, “this dual-pricing is to the detriment of brokers but it also to the detriment of consumers, pushing them away from advice and leaving them in danger of not getting the right deal for their circumstances. Brokers have helped the mortgage market move on. No one wants to step back ten years.”
Indeed. Let’s hope the Canadian mortgage market never gets into these sorts of problems.
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