It seems HSBC Canada may start selling through mortgage brokers once again. The bank had a “Head of Mortgage Broker Channel” job posting on its website until this morning. We then confirmed with a separate reliable source that the news appears to be true. HSBC was not able to comment by press time.
The move would be a major boost to mortgage brokers given that HSBC mortgage rates are by far some of the most competitive in the nation. In fact, HSBC at times posts mortgage rates that even brokers can’t touch. At the moment, for example, it’s got the lowest conventional 2-year fixed, lowest conventional variable and lowest high-ratio variable of any lender in Canada. Features-wise, its variable-rate product is outstanding (given it is completely open after 36 months and lets customers convert to its fully transparent, ultra-low online fixed rates).
If the bank does re-launch in the broker market as we expect, especially if brokers are able to “buy down” those rates further, it’ll be a terrific win for consumers.
HSBC sold through mortgage brokers before. It exited Canada’s broker channel in 2010, choosing to focus on branch, online and call centre distribution instead. For it to re-enter after a decade suggests: (A) it has found a way to improve the economics of its broker originations, and (B) it wants to ramp up its Canadian mortgage business big time.
Mortgage brokers control about one-third of the country’s mortgage market.
Google to Speed Up Mortgage Processing
It keeps getting faster and easier to get a mortgage — and that’ll be even more true when Google’s Lending DocAI arrives. A company spokesperson told us today, “…the Google Cloud team has plans to bring the solution to Canada in the near future.”
DocAI automatically “processes borrowers’ income and asset documents to speed up loan applications—a notoriously slow and complex process,” Google says. It does so with “industry-leading data accuracy,” automating “many of the routine document reviews,” leading to faster completion of mortgage applications.
Consumers may not enjoy its benefits right away, however. When it comes to new credit-related technology, “The biggest short-term obstacle is lender buy in,” says mortgage technology expert and Newton CEO Geoff Willis. But give it a few years and automated document processing should be commonplace at all forward-thinking lenders.
57% of first-time homebuyers plan to get a fixed rate
20% plan to get a variable rate
23% don’t know what they’re going to get.
The survey also shows that 56% of first-time purchasers depend on financial help from family to buy a home (the number is almost 6 in 10 in British Columbia and Ontario).
These first-timers expect over $44,500 in assistance, on average.
Almost 1 in 4 millennial buyers (23%) expect $100,000+. It’s nice to have well-off parents.
“…We typically advise prospective buyers not to spend more than 30% of their monthly income on housing,” said Hassan Pirnia, BMO’s Head, Personal Lending and Home Financing Products. But, unless someone is living in the likes of Timmins, Ontario, or 100 Mile House, B.C., that usually isn’t realistic.
Pandemic Moves
TD: “…Despite the increased demands Canadians are making on their living spaces, very few (3%) have gone ahead and purchased a new house, vacation home or property since the pandemic hit.”
Stealth Bond Yield Control
With further government stimulus in the wings, most mainstream economists expect higher bond yields in 2021, albeit not considerably higher. (Bond yields heavily influence fixed mortgage rates.)
That said, central banks could continue repressing government bond yields for months. If they do, it’ll limit the speed of any rate ascent, if not cap rates altogether.
Constant BoC buying is discouraging many investors from selling government bonds. Given bond prices and bond yields move in opposite directions, that’s keeping rates low.
This Bloomberg story talks about this phenomenon from a U.S. perspective. But Canadian rates are similarly influenced given the Bank of Canada has the same M.O. as the Fed.
Homebuyers Largely Insulated from Unemployment
“No less than 80% of the jobs lost since February were in low-paying occupations,” leaving homebuyers “in a better position to take advantage of low interest rates,” CIBC economist Ben Tal told FP.
In a separate Brookfield RPS presentation this week, Tal said “two-thirds of the economy is in a V-shaped recovery and one-third is stuck in an L-shaped recovery.” That one third will be a drag on inflation, likely keeping rates from flying too high in 2021.
Tal and other economists in that presentation projected 2022 as the soonest we’d see “normal levels” of economic activity. But remember, the bond market can price in future recoveries two years before they happen. In other words, if you wait for GDP to reach its pre-pandemic level before locking in a fixed mortgage rate, it’ll likely be too late. (And no, we’re not recommending that most borrowers in ultra-low variable rates lock in. If you’re well-qualified, risk-tolerant and have prime – 1.00% or better, keep riding that pony!)
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Why do you mention brokers have to buy down commissions in every article? Do borrowers earn their living at 20% or 40% reduction in earnings?
Your advice is great but honestly, you try to undercut the industry by bottom feeding to the masses. I guess $5 is better than zero in your world. Most consumers don’t deserve the break TBH. But you have the conch.
‘Special thanks to our lender, mortgage broker and reverse mortgage sponsors who help us deliver the best mortgage rates in Canada’
Who sponsors you for 1.4% fixed rates out there?
Is this the clients best interest or yours?
Conflict of Interest disclosure?
Asking for a friend?
>> Re: “Why do you mention brokers have to buy down commissions in every article?”
If we agree on nothing else, Mr. Tom Dick Harry, perhaps we can agree that “every article” is an exaggeration. Either way, RateSpy’s raison d’etre is saving people money. Yet, nowhere is it written that brokers “have to buy down commissions.” Brokers who sell value (that borrowers are willing to pay for) may have no need to discount rates. In contrast, brokers whose value proposition is rate savings better buy down rates, or get another business model.
Take a minute and Google “mortgage broker.” You’ll find the large majority of them claim to offer the “best rates,” or something equivalent to those hollow words. Brokers themselves, through their marketing over the years, have conditioned borrowers to prioritize rates. In fact, they’ve competed against banks for three decades using that playbook. And then you ask why someone would champion *greater* rate savings? The rate genie ain’t going back in the bottle my friend. Brokers must adapt, or find another line of work.
>> Re: “Do borrowers earn their living at 20% or 40% reduction in earnings?”
Do borrowers retire more comfortably by paying 15 basis points more on a mortgage?
$10,000 of nominal rate savings over the life of a standard mortgage is meaningful. Add to that the ROI from investing this savings and the benefit is doubled.
But wait, “It’s not all about the rate!” you say.
No, it never has been. This site has tirelessly preached the importance of minimizing *total* borrowing cost since its very inception.
But don’t kid yourself, Tom Dick Harry. In the sandbox we play in (prime mortgages), rate savings and great service/advice are absolutely unequivocally indisputably *not* mutually exclusive.
>> Re: “Your advice is great but honestly, you try to undercut the industry by bottom feeding to the masses.”
Thank you for the kind compliment. Now, it seems you *are* the industry, so in case there’s confusion about what we do here, the “Rate” in the site title is intentional. Undercutting rates is the core of a free and competitive mortgage market. Is it okay for HSBC to undercut big banks but not okay for brokers to undercut brokers? There will be no apology for promoting competitiveness, Tom Dick Harry. Here, consumers are #1. Industry is always second. If you’d prefer an industry-focused trade publication, try Canadian Mortgage Trends or Mortgage Broker News.
>> Re: “Most consumers don’t deserve the break TBH.”
Most consumers would disagree with you.
>> Re: “‘Special thanks to our lender, mortgage broker and reverse mortgage sponsors who help us deliver the best mortgage rates in Canada’ … Who sponsors you for 1.4% fixed rates out there?”
You seem to be referring to the 1.40% high-ratio 5-year fixed rates advertised by Butler Mortgage and intelliMortgage. By all means, reach out to them with your concerns. Tell them their rates are too low and let us know how you make out.
>> Re: Is this the client’s best interest or yours?
In a way, both. When Canadians save, they win. When Canadians save, we win. That’s called a “win-win.”
>> Re: Conflict of Interest disclosure?
Please take a moment to read our terms of use and the disclosures attached to every single rate on the site. Then email [email protected] with any concerns.
If I may leave you with one parting thought, Tom Dick Harry. The surest path to success in the mortgage industry is to spend more time improving and marketing your value, as opposed to trying to discredit the value of competitors. Your brand of comments have been made for years on industry websites and what has been the result? Rate competition has only intensified, massively. If your tactic to derail that freight train is to attack rate sites for being rate sites, you’ll find that as effective as putting a penny on the track before a hurtling locomotive.
Does that mean HSBC will not sell direct, or will not post their best rates online anymore?
I was planning to reach out to then in Feb 2021. I am after the best rate, and if brokers offer that as well I guess it is OK.
One thing I can say about Rob. When he writes “Rumoured” it is usually fact.
Whether I use HSBC will depend on its service levels. If the service is anything like I remember from 2010, I won’t be sending much business. I’ve heard from other brokers who lost deals to HSBC that they were taking weeks to issue commitments.
If they can keep approval times low then this is good news. At the very least it will light a fire under Scotiabank and TD. Their service levels have been atrocious lately.
When I asked HSBC about locking in my variable rate, I was told I’d have to lock in at the 5-year special rate (so, 1.89% today), even though I have a High Ratio mortgage (which for a new borrower should be eligible for 1.54%).
Does that align with your experiences with HSBC? Or should I try asking again through a different channel, in hopes of a different answer 🙂 ?
That said, everything is negotiable. If your mortgage is still insured you can always try a different channel and ask for the high-ratio rate “on exception.”
Side note: If you have an HSBC variable that’s past year 3, there is no penalty to break so you could go anywhere.
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16 Comments
Excellent news! I wonder if HSBC will offer its $3,000 cash back promo through brokers.
Are they just coming to one network or all mortgage brokers?
Welcome back HSBC. I hope you don’t make us wait 7 days for document review like some banks right now.
I guess this is the “large bank” Gary Mauris was talking about. His Facebook says it will be available on Velocity only. M3 must not be happy.
https://www.facebook.com/gary.mauris/posts/10157186614065563
Why do you mention brokers have to buy down commissions in every article? Do borrowers earn their living at 20% or 40% reduction in earnings?
Your advice is great but honestly, you try to undercut the industry by bottom feeding to the masses. I guess $5 is better than zero in your world. Most consumers don’t deserve the break TBH. But you have the conch.
‘Special thanks to our lender, mortgage broker and reverse mortgage sponsors who help us deliver the best mortgage rates in Canada’
Who sponsors you for 1.4% fixed rates out there?
Is this the clients best interest or yours?
Conflict of Interest disclosure?
Asking for a friend?
>> Re: “Why do you mention brokers have to buy down commissions in every article?”
If we agree on nothing else, Mr. Tom Dick Harry, perhaps we can agree that “every article” is an exaggeration. Either way, RateSpy’s raison d’etre is saving people money. Yet, nowhere is it written that brokers “have to buy down commissions.” Brokers who sell value (that borrowers are willing to pay for) may have no need to discount rates. In contrast, brokers whose value proposition is rate savings better buy down rates, or get another business model.
Take a minute and Google “mortgage broker.” You’ll find the large majority of them claim to offer the “best rates,” or something equivalent to those hollow words. Brokers themselves, through their marketing over the years, have conditioned borrowers to prioritize rates. In fact, they’ve competed against banks for three decades using that playbook. And then you ask why someone would champion *greater* rate savings? The rate genie ain’t going back in the bottle my friend. Brokers must adapt, or find another line of work.
>> Re: “Do borrowers earn their living at 20% or 40% reduction in earnings?”
Do borrowers retire more comfortably by paying 15 basis points more on a mortgage?
$10,000 of nominal rate savings over the life of a standard mortgage is meaningful. Add to that the ROI from investing this savings and the benefit is doubled.
But wait, “It’s not all about the rate!” you say.
No, it never has been. This site has tirelessly preached the importance of minimizing *total* borrowing cost since its very inception.
But don’t kid yourself, Tom Dick Harry. In the sandbox we play in (prime mortgages), rate savings and great service/advice are absolutely unequivocally indisputably *not* mutually exclusive.
>> Re: “Your advice is great but honestly, you try to undercut the industry by bottom feeding to the masses.”
Thank you for the kind compliment. Now, it seems you *are* the industry, so in case there’s confusion about what we do here, the “Rate” in the site title is intentional. Undercutting rates is the core of a free and competitive mortgage market. Is it okay for HSBC to undercut big banks but not okay for brokers to undercut brokers? There will be no apology for promoting competitiveness, Tom Dick Harry. Here, consumers are #1. Industry is always second. If you’d prefer an industry-focused trade publication, try Canadian Mortgage Trends or Mortgage Broker News.
>> Re: “Most consumers don’t deserve the break TBH.”
Most consumers would disagree with you.
>> Re: “‘Special thanks to our lender, mortgage broker and reverse mortgage sponsors who help us deliver the best mortgage rates in Canada’ … Who sponsors you for 1.4% fixed rates out there?”
You seem to be referring to the 1.40% high-ratio 5-year fixed rates advertised by Butler Mortgage and intelliMortgage. By all means, reach out to them with your concerns. Tell them their rates are too low and let us know how you make out.
>> Re: Is this the client’s best interest or yours?
In a way, both. When Canadians save, they win. When Canadians save, we win. That’s called a “win-win.”
>> Re: Conflict of Interest disclosure?
Please take a moment to read our terms of use and the disclosures attached to every single rate on the site. Then email [email protected] with any concerns.
If I may leave you with one parting thought, Tom Dick Harry. The surest path to success in the mortgage industry is to spend more time improving and marketing your value, as opposed to trying to discredit the value of competitors. Your brand of comments have been made for years on industry websites and what has been the result? Rate competition has only intensified, massively. If your tactic to derail that freight train is to attack rate sites for being rate sites, you’ll find that as effective as putting a penny on the track before a hurtling locomotive.
We needed another balance sheet lender in the worst way. Thank you HSBC for coming back!!
Does that mean HSBC will not sell direct, or will not post their best rates online anymore?
I was planning to reach out to then in Feb 2021. I am after the best rate, and if brokers offer that as well I guess it is OK.
Hi David, HSBC will not stop selling direct. Nor do I expect the bank to stop advertising its great rates online.
One thing I can say about Rob. When he writes “Rumoured” it is usually fact.
Whether I use HSBC will depend on its service levels. If the service is anything like I remember from 2010, I won’t be sending much business. I’ve heard from other brokers who lost deals to HSBC that they were taking weeks to issue commitments.
If they can keep approval times low then this is good news. At the very least it will light a fire under Scotiabank and TD. Their service levels have been atrocious lately.
When I asked HSBC about locking in my variable rate, I was told I’d have to lock in at the 5-year special rate (so, 1.89% today), even though I have a High Ratio mortgage (which for a new borrower should be eligible for 1.54%).
Does that align with your experiences with HSBC? Or should I try asking again through a different channel, in hopes of a different answer 🙂 ?
Hi Jon, Variable-to-fixed conversions often get the standard published rates here: https://www.hsbc.ca/mortgages/rates/
Note that these are much better than the rates we hear other lenders offering, which are often greater than 2.00%.
By the way, if you’re locking into a 5yr fixed, HSBC’s advertised high-ratio 5yr fixed promo rate is actually 1.64%, not 1.54%.
If you are an existing HSBC customer you may not qualify for it, based on this: https://www.hsbc.ca/content/dam/hsbc/ca/docs/pdf/hsbc-2020-high-ratio-mortgage-rate-5-year-offer-tc-en.pdf
That said, everything is negotiable. If your mortgage is still insured you can always try a different channel and ask for the high-ratio rate “on exception.”
Side note: If you have an HSBC variable that’s past year 3, there is no penalty to break so you could go anywhere.
Any more word on whether HSBC is dealing with brokers?
Hey Scott, From what I hear, their plan hasn’t changed. We expect to hear more by the end of this month.
Any new word that HSBC is dealing with Brokers again?
Hi Sajaan, HSBC is currently dealing with a limited number of DLC brokers.