Are renewal commission plans here to stay?

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When brokers asked one lender if they were planning on keeping their renewal commission plan, the answer was a simple one.

“We’ve been asked a lot lately by brokers about our Renewal Commission Plan.  Specifically: Do we still have it? Do we plan to keep it?” says Kevin Conroy, the president of Canadiana Financial. “The answer to both questions are: yes.”

A high percentage of our brokers take advantage of the Renewal Commission Plan in conjunction with Canadiana’s Upfront Commission Plan,” says Conroy, allowing brokers the choice of selecting which commission model best suits their clients’ profile, enabling brokers to partner with the lender in recurring revenue for the life of the mortgage.

“We believe this option substantially assists brokers in creating true future value of their enterprise and underscores our commitment to our partnership,” says Conroy. “In a day and age where renewal rates are very high we think our renewal options gives our brokers the flexibility they need to compete. They consistently tell us this option affords them energy to focus their resources on the demands of originating new customers in a challenging, highly competitive market.”

The industry is currently enjoying the fortunes of historically low rates, while at the same time, the realty values are at an all-time high.

“Like all things this will undoubtedly change,” says Conroy. “For the high ratio borrower in a 3-5 year term, it is unlikely that their value will appreciate to, or be paid down to conventional levels before or at renewal. Refinancing during the term and taking equity out could be challenging.”

This makes a client applying for a high ratio mortgage today an ideal client for the Renewal Commission Plan, says Conroy, while renewal rates throughout the industry hover near 80 per cent, and many lenders have renewal rates in 90 per cent range and beyond.

“None of us can predict the future,” he says, “but what is predictable is the revenue you will receive from Canadiana Financial Corp upon renewal, and for every renewal thereafter for the life of the mortgage.”
 

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