ING Direct announced today that it will no longer be accepting mortgage applications from mortgage brokers. This change is a direct result of Scotiabank’s 2012 acquisition of ING Direct and is spelled out in a letter to mortgage brokers “Following the recent acquisition of ING Direct by Scotiabank we have completed a thorough evaluation of our mortgage business and have come to the decision that ING Direct will concentrate its origination efforts on its Direct channel and transition its broker business to Scotiabank”.
This change may have positive financial impacts on the combined Scotiabank / ING entity, but the segregation of service spells less competition and less choice for borrowers. By excluding themselves from the mortgage broker channel ING Direct reduces the competitive downward pressure on mortgage rates and leaves borrowers without independent representation. Prior to its entry into the mortgage broker market, ING had lackluster sales growth. It’s a given that ING Direct’s mortgage originations will fall off dramatically going forward. Business decisions are based on making money. Sometimes lenders can make more profit with less business, but only if they charge higher prices for their products.
Although this change was widely anticipated by industry insiders, its none-the-less disappointing.