Mortgage Choice (MOC) Time to buy ?, page-70

It's pretty simple.

I goto a bank and get a rate of 4%pa. Joe Bloggs goes through Broker67 and gets the same rate of 4%pa yet the bank only gets 3.85%pa because they have to pay a 15 bps trail to Broker67. If the bank offered a flat rate of 3.95%pa to everyone isntead, they would benefit as they would overall get more interest from the loan, I would benefit as i pay less interest (3.95%pa vs 4.00%pa), Joe Bloggs would benefit over the course of his loan from 3.95%pa even after paying a flat fee to the broker. This is why i am subsidizing a broker - im currently paying a higher rate overall because the bank has to funnel off money to someone else.


If there are benefits in using a broker (and i do not doubt there is for some people) then there should be no problem for the client in paying a flat fee to the broker.