Brokers have reported an increase in inquiries from clients since the Bank of Canada rate change, which has provided an opportunity for industry players to extoll the benefits of working with a mortgage broker – and explain the fine print on mortgage documents that many bankers may overlook.

“It’s great time because you get that opportunity to have the conversation about pre-payment penalties – how they work,” Dustan Woodhouse, a BC-based broker with Dominion Lending Centres told MortgageBrokerNews.ca. “And they often say their bank never explained it to them and how cool is it to have that conversation? You’re telling them something their banker never told them when they signed up for a mortgage.”

Clients are increasingly more educated about the state of mortgage rates and the various offerings from the big banks and brokers. What they may require education on is in the area of pre-payment penalties, which opens up the opportunity for brokers.

“The advantage for brokers isn’t rates – we all have access to the same rates and, yeah, we can get prime minus 70 from a monoline but so what?” Woodhouse said. “The bank rep can access prime minus 70 from any of the major chartered banks, so it’s never about rates, even though it’s always about rates in that initial first sixty seconds of conversation with the client. You’ve got to redirect the conversation to policies, guidelines, pre-payment privileges, pre-payment penalties.”

But rate-focused clients may not be swayed. However, brokers are well equipped to compete with the banks, according to Woodhouse. Especially after the initial client consultation about how penalties work.

“For clients looking at a five-year fixed, unquestionably is a monoline lender nine times out of 10. Not for every single client, but for the overwhelming majority of clients, if they want a five-year fixed they will have a significantly better advantage in pre-payment penalties by going with monolines,” Woodhouse said. “Six out of 10 Canadians are breaking their mortgages early. 10 out of 10 Canadians say ‘that won’t be me.’”