Is it ethical for a mortgage broker to offer a loan at a rate higher than the best rate available to the borrower?

Offering a loan at a rate higher than the best rate available to the borrower can be ethical in certain circumstances, specifically when it aligns with the borrower's informed choices and benefits them financially. In this case, if the borrower consciously opts for a higher rate in exchange for a borrower credit that helps cover closing costs, it is considered ethical practice.

This scenario is grounded in transparency and informed consent. The borrower is making a calculated decision to accept the higher interest rate with a specific benefit in mind—namely, reducing their upfront expenses through closing cost credits. If all parties understand the terms and implications, and the borrower is fully aware of the trade-offs, the broker is acting ethically by facilitating a choice that best serves the borrower’s needs.

In the context of the other options, it's important to note that simply offering higher rates without borrower knowledge or benefit would lack ethical standing. Coercing or misleading borrowers into accepting less favorable terms, even if a lender subsidizes fees or offers cash back, does not justify unethical practices in lending.