First National pumped up its originations by 28 per cent in the third quarter – phenomenal growth suggesting the lender is increasingly “in it to win it” with more consistently competitive rates, say brokers.
“I’ve sent them more business this year than the previous, mostly because they have been more aggressive with their rates and consistent with it," said Dan Faubert, a 26-year veteran of the industry and a broker with Ottawa-Carleton Mortgage. "They’ve been much more like a regular rate leader,”
He may not be the only broker shooting off more deals to one of the broker channel’s biggest players.
In financials for the three months ending Sept. 30, and released earlier this week, the lender saw overall mortgage originations increase to $3.5 billion from $2.7 billion from the same period last year. That's a whopping 28 per cent jump.
A large part of that came with total single-family originations, which increased by 24 per cent, while multi-unit residential and commercial realized a volume increase of 47 per cent. That translates into a move from $474 million for the period ended September 30, 2010, to this year’s $699 million.
“The company recorded higher origination volumes from a resilient real estate market, growing net interest margin and mortgage servicing," said Stephen Smith, chairman and president. “Without the unfavourable fair value losses on our hedging program, the company would have had its strongest quarter of 2011. Even with the significant hedge losses, the company was able to generate enough cash flow to pay its dividend and still retain a portion for its equity."
Early last month, First National warned investors about that $18 million in losses stemming from new accounting standards and its strategy to limit the risk of holding mortgages before selling them as securities.
“This loss eats away at our capital, but we are not going to change our originations strategy,” CFO Rob Inglis told MortgageBrokerNews.ca. “As far as brokers are concerned, it won’t affect their relationship with First National.”
Anticipating that chop to revenue may have contributed the lender’s decision to take on the more aggressive rate strategy Faubert and others are pointing to. Still any future capital challenges may compromise it, say analysts, pointing to the possibility of the lender adopting more conservative underwriting.