my thoughts

Brokers

If you read my article Friends for Foes you probably figured that I am not a fan of the “small time” brokers. With the credit crunch hurting bank’s profits, bank have significantly cut back their brokerage rates. Not sure if that’s good or bad for the customer, only time will tell. My feeling is that brokers will have more incentive to push you to the highest pay lender!

Another development on the brokerage front is the practice by lenders to shift the brokerage costs to the borrower. This has always been an unwritten rule by the banks however lately this message is being repeated by the people up top! So more reason not to use a broker. Look at it this way, the broker is the middle man, he gets a cut of the bank revenue, the banks can’t afford to hand over a large chunk of their revenue to the middle man any longer, so they will try to recoup it from you, the customer!

Here is a real example, I had to charge double for an application fee for a business lend because a broker was involved. If the customer came straight to me, I would have been able to charge them half the application, that’s a lot of money!