Banks Profited $40 Billion Through The Pandemic

We hope you all had a great Canada Day weekend. This week’s episode takes a deep dive into the profitability of our Canadian big banks. Did you know that these banks, on average, have been profiting $4,000 per Canadian household over the last year? While the services of the banks are essential to households and our economy as a whole, it is important to know how to avoid being taken advantage of. Have a listen to this episode to get a better understanding.

Here are some important takeaways to consider.

Loyalty is not always your friend.

We have discussed this in a few episodes now, but for a good reason. If you are under the belief that your bank is your only option for credit, they will leverage that. A lot of borrowers have a mortgage with their bank with a collateral charge that exceeds the amount they borrowed and because of the stress test, they still can’t increase their mortgage. When the banks talk about your unsecured credit options, that’s when it’s time to call Cannect. The unsecured options will destroy your credit if you keep their balance maxed out for too long. Seek out other options, a mortgage broker will help you do that.

They’re called the Big Banks for a reason.

Their profitability comes from their size. They have the ability to hold off the competition because of their size and brand awareness. 20 years ago, only 20% of Canadians used a mortgage broker. Now that number is up to 40%, but still well-below the US at 80%. The banks’ residential mortgages become less profitable as more Canadians turn to mortgage brokers, but the banks went through this problem before with Trust companies. When companies, like Canada Trust, started providing discounted rates, it ate into the big banks’ market share. As a result, these companies were acquired by TD and other Big Banks.

The banks will always be able to adapt, so it’s always up to us as the consumers to recognize that we can be a David to their Goliath at times and learn about our opportunities to save through other options. Cannect agents are happy to discuss these options with you anytime.

Marcus Tzaferis and the Cannect Team

#Cannect #MortgageBroker #CanadianBanking