CIBC is the latest Big 5 lender to duck out of the business of mortgage brokers. The bank has nixed its iconic FirstLine Mortgages brand, once the largest mortgage brokerage in Canada.
It’s a move that reflects tough times ahead for the broker channel sector as banks move in favour of focusing on their own in-house mortgage brands.
The decision to shut down comes after CIBC failed to find a buyer for the brand, which was put up for sale in March of this year. The bank felt the time was right to sell, having strengthened their in-house services and adding a number of mortgage advisors to their forces.
While initially planning to complete the sale by October, there’s speculation CIBC’s choice to “wind down” the brand is due to a recent failed agreement with a potential buyer. As the bank intended to hold on to the brand’s financial assets and existing client base, it proved to be a hard sell for prospective buyers.
No new mortgages will be issued through the company as of July 31, with CIBC’s branch network picking up the slack for existing clients and mortgages.
Mortgage brokers have traditionally provided a high volume of sales for banks by providing an unbiased rate comparison service for would-be home buyers. With the banks picking up the commission tab for each deal made, however, many are turning their focus from this low-margin income and looking inward to in-house mortgage services. However, their services are of great value to prospective homebuyers, as they can greatly increase their rate options and ease the hunt for the perfect mortgage.