Are the broker network’s days numbered?

by |
One industry player is claiming the broker channel is unsustainable, citing eroding profit margins for lenders paying out on broker-originated deals.
 
“Brokers in Canada get paid their commission no matter what the profitability ratio of the product they are selling is. They do not take a hit like the lender does when margins narrow, and any lender who even contemplates having brokers share that pain is ostracized by the broker community,” writes “M. Robertson” a regular commenter on MortgageBrokerNews.ca. “The reality? The broker channel as it exists today is unsustainable. In almost every other country in the world there has been change because of this and it means that brokers in Canada better watch out because it will come to Canada too. It is only a matter of time.”
 
Robertson has been vocal about the profit discrepancy between the bank- and broker-originated mortgages for members of the Big Six and those credit unions operating in the channel. And with rates being at record lows, spreads have taken a beating.
 
“Mortgages originated by brokers are a loss leader for most banks, it is why so many have exited the broker channel and why when brokers demand lower rates they have no concept of how much that impacts the bottom line of the monoline lenders in this country,” Robertson wrote. “Yes, they are profitable in the end, but at current levels of profit, how sustainable do you think this all is?”
 
And most recently, Robertson justified Meridian Credit Union’s decision to offer a special promotional rate at the branch-level only.
 
According to Robertson, the credit union will earn $8,627.47 on a $300,000 mortgage if it goes to full term. If the mortgage were originated by a broker, Meridian would have to pay a $2,400 commission.
 
“That means that they would not earn one cent in positive revenue on the mortgage until the 7th month,” Robertson wrote. “When you factor in hedging costs, etc. it means that they lose money on the product, at least twice what they would with strictly branch origination.”

And, by the way, would the real M. Robertson identify him or herself!
 
  • Carol on 2015-04-15 11:38:39 AM

    is that profit after factoring in the cost of bricks and mortar and staffing expenses? I think not

  • John smith on 2015-04-15 11:40:03 AM

    What a farce this article is. Lets have a chat in 15 years and see where we are at. Gaining market share every year and more stable monoline lenders than ever. Go drink someone elses koolaid!!!!!!

  • John W on 2015-04-15 11:40:55 AM

    The monolines only originate through brokers so they have a little motivation to ensure the broker channel is sustainable. The commission structure could change but the broker channel won't disappear. Where do they find these crackpots.

  • Jason Nugent on 2015-04-15 11:41:57 AM

    I agree with Robertson to a point, we need to look out for our lenders and our clients, we are brokers working for both parties. If the lender isn't making money they won't stay in the channel and less competition means clients will end up paying more. So we do need to make sure our lenders are profitable. However, the point about spreads shrinking is falls, spreads are at a high right now. Rates should be lower based on current profit models.

  • Mukesh Patel on 2015-04-15 11:54:49 AM

    Let's not fool ourselves. If the broker channel was creating a loss for any lender, they would have shut it down right away. Fine, some have exited the broker channel, but the ones that are still here have been around for a long time and I don't think they would be here if they were losing money through the broker channel.

    Who is M. Robertson and why is he derserving of this article. There has to be some quality control here, as everyone has an opinon on everything, albeit unrealistic. Has M. Robertson looked at the actual numbers before coming to this conclusion ?

  • Ferdinand Gatt on 2015-04-15 12:04:20 PM

    I agree with others, the money saved in bricks and mortar, employee salaries and benefits and marketing, more than compensate a Lender for Broker fees. I am surprised that some Banks are not smart enough to take full advantage of the savings and spend millions in advertising and road reps pay and benefits, trying to reinvent the wheel.

  • Agent on 2015-04-15 12:14:50 PM

    Mortgage brokers will continue to grow and banks will probably continue to shrink in market share.
    A recent client went to the bank - was told they only qualified for 250,000 and had to pay off the van - panic set in as they bought from builder last fall.
    I qualified for 350,000, not paying off the van- Guess where the client is going.
    Just checked FSCO- only one M Robertson and they are not authorized to sell- license was cancelled on March 6 - ?

  • andrew on 2015-04-15 12:17:34 PM

    I doubt the banks will ever exit, no matter what way you slice it, the broker channel will always be least expensive way to grow when you factor in the full costs of supporting that mortgage. Where else can you get a sales force that only gets paid when they produce. The true profit of a branch/mortgage is quickly eroded when you factor in total costs etc. The real threat to the broker channel will be its ability or inability to evolve and demonstrate value to the client other than only providing mortgages.

  • Jeff Attwooll on 2015-04-15 12:20:29 PM

    Next time MBN writes an article quoting a person the editor should reference where this person works and position to assess their creditability. Who is this M.Roberston and where do they work? Just saying industry player does not count. I believe that is 101 basic journalism. I am open to opinions but please let us know where these opinions are coming from.

  • Paul Whatmore on 2015-04-15 12:24:12 PM

    Is the broker channel sustainable? No! No, is told that when I started in this business oops 38 years ago. Meridian should look at this a little bit differently, how much money would you have earned on that money if the broker didn't bring you the deal in the first place? Talk about a cost, dead funds not working for you. The Mortgage Broker is growing your business and if you treat the client right you will keep them. Treat them poorly with a greedy rate in the future they will be mine again. Govern yourselves accordingly. Sorry I'm letting my grey hair show.

  • Layth Matthews on 2015-04-15 12:33:50 PM

    If we wait until everyone is deserving of an article, there would be very few articles to discuss. I also think it is best to focus on the points people raise rather than the person. I mean what kind of rabble are we? (don't answer that.)

    Clearly this article has raised some interesting points and discussion. I disagree with the forecast however. As long as there are two banks in Canada there will always be a need for mortgage brokers. Why? because bank profits depend on widening the margin between the institutional and retail lending rates. Brokers, keep the market fair and efficient. This is why Canadians probably enjoy one of the most efficient mortgage markets in the world. We are really good at this, and I hope legislators and regulators appreciate it before they regulate us out of business.

    According to the numbers presented a bank has to pay about 1/3 of it's revenue to originate a mortgage through a broker. Given the fact that a paid bank staff person would otherwise do this work, the broker fee is variable i.e. only incurred on successful deals, and the bank's role is largely passive after that, (with cross-selling opportunities) 2 out of 3 doesn't look so bad. In fact, I'll take those odds all day long!

  • Dennis Rajewski on 2015-04-15 12:36:43 PM

    Let's see now - a 300,000 mortgage for a term for 18 mos. will earn me 2,400? Wow! What will a 5 year term cost me? Or better still, what will the true cost of the mortgage be to the client in 18 mos at renewal?

  • Marie Illerbrun on 2015-04-15 12:42:14 PM

    i am quite disturbed that MBN would print an article like this. Its not proper journalism, There is some mystery person who is not being profiled properly but seems to deserve a article all about him. I am also open to discussion, and opinions are good to have, but this is a bit mickey mouse and misleading. I agree with Jeff Attwooll.

  • Robert Gascon on 2015-04-15 12:46:19 PM

    My name is Robert Gascon. Who is M Robertson???? Someone ,I think, who does not have a full understanding of the mortgage business. Second, who is allowing this article to be published with this heading in the first place????? Please stop the babble ( not the first time ) and print something worth reading and discussing To Paul Watmore you have one more year on me. LOL

  • jason on 2015-04-15 12:53:05 PM

    I think that some people are missing the point. Margins may be OK right now, but its not hard to check the numbers... with an average pay out on deal at 100bps the lender does not recover that upfront commission until the 6th month on average. Why? Because rates are so low. Margins or not, the bank has to outlay the upfront commission to the broker. They ONLY way for a lender to recover those funds is through the interest paid on the product.

    Throw into the mix that a broker originated mortgage has a term that is far shorter than a branch originated mortgage, well... that means that it is less profitable.

    It is not rocket science... It is simple and frankly grade 6 math. If any broker can't do the math, well... that is a whole other discussion/

    I think the point to pay most attention too is this: Broker commissions continue to increase when you factor in incentive programs, at some point that has to stop.

    In several other jurisdictions around the world the mortgage brokerage community took a hit on their commissions.

    And before anyone starts flying the monoline flag again, the big 5 banks in this country fund the vast majority of mortgage business. They are the ones buying the paper from the monolines folks. Don't kid yourselves - the banks own the mortgage industry in this country - either directly or indirectly - they own it.

    Brokers posturing at market share is just that, posturing. The market share you have been taking is predominantly from credit unions, insurance, and trust companies.

  • Joe Janovich on 2015-04-15 1:01:54 PM

    Who is 'M. Robertson"..??

  • Tony on 2015-04-15 1:02:41 PM

    I just read an article stating the the profit margins or at least the current spreads between the bond mkt and the mortgage mkt is quite good right now. Even with these low rates. So I guess it's the margin after all the other expenses are factored in with whichever lender is being used/chosen.

  • Gunther Kaschuba on 2015-04-15 3:32:25 PM

    Seems that are quite a few of us 30yr+ brokers still out there who have heard this time and time again, but yet we are still here, market share of brokers has grown and commission structures have been set by the lenders, not the broker community! Like everyone else I would like to know who this M. Roberston person is. It should be a requirement that a person making these kinds of statements be properly identified and who they represent, otherwise, do not print this babble. Must be a slow day in the marketplace 'cause everyone seems to be reading this!

  • Jim Campbell on 2015-04-15 3:44:15 PM

    the Bond Rate is .08 on the 5 year, this plus 1.45 which is the usual mark up means the five year mtg should be around 2.25. taking the effective rate into consideration which has the five year around that 2.6 mark, means the lenders are raking it in. they are making so much money that they just weigh it, to much labour to count it all

  • Mukesh Patel on 2015-04-15 6:02:59 PM

    Jason,

    yes, the model that you have presented is a Grade 6 model, calculated with a simple assumption that the bank makes the actual interest rate as profit. A 300k mortgage pays the broker 3000. At a rate of 2.50%, the makes approx. about 3750 in interest covering the broker fee.

    This has nothing to do with profitability, as it does not cover any expenses that the lender incurs. The actual model to determine profit would be pretty complex and include many factors including expenses that we would have no way of figuring out.

    At the end of the day though, don't tell me that the banks aren't making money on mortgages, because that's not what the banks are about. We all know this. If they were losing money on any product, I am 100% sure they would not be offering it, they are all about money and profit.

  • James on 2015-04-15 11:18:16 PM

    It beehives me to understand why M. Robertson's comments would attract this much attention given that it is almost always based on generalities.

    Since we are using generalities...
    - the $8600 profit on a $300K mortgage IF taken on full term is based on what?

    Did he forget that these entities...
    - are often almost always inefficient?

    Tell me...
    - for example...how many VP's paid in the $100K range do you really need to run a credit union?
    - or hiring consultants to start projects in the millions only to be turfed when there is a leadership change?
    - or hedging the wrong way because treasury isn't capable of their own critical thinking?
    - or how about money invested in failed projects
    - or how about...how many staff does it needs to operate a broker centre?

    i could go on and on and on...

    Did he happen to also forget about the criminal penalty that these entities charge?

    Bluntly...his generalizations are beyond his pay grade.

  • James on 2015-04-15 11:18:29 PM

    It beehives me to understand why M. Robertson's comments would attract this much attention given that it is almost always based on generalities.

    Since we are using generalities...
    - the $8600 profit on a $300K mortgage IF taken on full term is based on what?

    Did he forget that these entities...
    - are often almost always inefficient?

    Tell me...
    - for example...how many VP's paid in the $100K range do you really need to run a credit union?
    - or hiring consultants to start projects in the millions only to be turfed when there is a leadership change?
    - or hedging the wrong way because treasury isn't capable of their own critical thinking?
    - or how about money invested in failed projects
    - or how about...how many staff does it needs to operate a broker centre?

    i could go on and on and on...

    Did he happen to also forget about the criminal penalty that these entities charge?

    Bluntly...his generalizations are beyond his pay grade.

  • James on 2015-04-15 11:20:29 PM

    beehoves...sorry...tech issues!

    i almost wet my diapers reading his comments

  • Kevin on 2015-04-16 12:08:06 PM

    Well no matter what anyone might say about this M. Robertson person, event if their math is off, I find it interesting how quickly people attack the person. There is an interesting topic in here that most people are simply ignoring, or choosing to avoid when they comment. Broker compensation continues to rise and there has been more and more talk about it over the past couple of years.

    Brokers are not really so naive to think that their commission is untouchable... are they?

  • John W on 2015-04-16 12:38:47 PM

    I think the real issue here is the quality of articles that are presented. I find the articles that receive the most discussion are the ones that are gravely inaccurate or only discuss one side of an issue. The people that write these articles seem to have little experience. They just write about anything without putting much thought into it.

  • John W on 2015-04-16 12:39:05 PM

    I think the real issue here is the quality of articles that are presented. I find the articles that receive the most discussion are the ones that are gravely inaccurate or only discuss one side of an issue. The people that write these articles seem to have little experience. They just write about anything without putting much thought into it.

  • Mukesh Patel on 2015-04-16 1:45:42 PM

    We are not attacking M. Robertson by asking who he really is and what are his credentials. We are questioning the publisher though for putting up an article like this and holding back details on M. Robertson.

    And it's not our commission that's untouchable, it's our service to the public. :)

  • Ron Butler on 2015-04-16 3:00:54 PM

    @ Kevin, the truth is broker compensation is actually reducing based on the competitive nature of rate buy downs. Most lenders tell me that on a percentage basis the compensation paid to brokers has gone down for the last 3 years in a row.

  • James on 2015-04-17 5:54:07 AM

    @kevin
    there is nothing worse than unsubstantiated generalization.

    Robertson is guilty of that and so are you when you state that commissions are going up and good brokers are stupid enough to think any compensation structure will last forever.

  • race to the bottom on 2015-04-17 3:09:26 PM

    the banks have ongoing costs regardless of whats going on in the market, leases, utilities, salaries etc. So is it more economical to pay a broker 100BPS+ or to have the hired gun make a call to the existing client? Not rocket science or even grade 6 math. There very little money in mortgages period. There is more meat on the bones at the moment but that is very narrow thinking. Financial services is where the banks are raking it in. Mortgages is just one piece like opening a new account. The channel is not going to grow anymore than the banks will allow, they control the market. If they wanted the channel to be 50% it would be. This channel is not going grow, it will shrink, most brokers even larger brokers are not making the money anymore, the channel is a one trick pony thats it. Who is going to invest RSP's, get insurance, etc with a mortgage broker? Very very few, not enough to offset the loss in income most have experienced. For you guys doing it for 30yrs and saying nothing will change are living in the past, its a new Global World, Woodwards is gone. There will be more disruption with the banks getting more aggressive. If you stay in the biz eventually you will work for the bank because this channel will not survive. If you have noticed over the years all middle men across all sectors are being taken out. The only brokers that will exist will be those that are bank reps.

  • Jason Nugent on 2015-04-17 3:19:45 PM

    @race to the bottom
    You make some good points, but I think your version where we no longer exist is just out right wrong. There will always be mortgages the banks can't do and there will always be a mortgage broker. There might be less of us, but we will always exist. Plus the banks will always have more money then they can lend through their regular channel, so they will need a way to get that out to the market.

  • Jason Nugent on 2015-04-17 3:19:56 PM

    @race to the bottom
    You make some good points, but I think your version where we no longer exist is just out right wrong. There will always be mortgages the banks can't do and there will always be a mortgage broker. There might be less of us, but we will always exist. Plus the banks will always have more money then they can lend through their regular channel, so they will need a way to get that out to the market.

  • Ron Butler on 2015-04-17 3:33:47 PM

    @ race........... as usual, more or less gibberish from you. Banks are very rich and the bank leaders are VERY smart people but here's the thing they are smart enough to be paranoid. Today the banks worry about tech gnawing away at them. Apple Money represents a real concern, once you interrupt the banks dominance in the payment space, what's next?

    The real point is traditional retailers laughing at Jeff Bezos back when he was taking the books to the post office in his own van to mail them out. All retailers thought Amazon was a joke. Tech changed that world and tech will change banking. Why not crowd fund loans, why not a bid site for mortgages? Get Google Money and close you bank account. The banks are very smart and oh so rich but nothing is guaranteed to be eternal.

  • John W on 2015-04-19 11:01:26 AM

    @ race. Why are you in this business if you feel that way? And if the banks felt the way you say, why are we here now. They want us to be idiot!

  • James on 2015-04-19 11:51:21 AM

    @race
    another genius off'ing at generalizations.

    geez...the "there is no money" in mortgages mantra is a bankers' favourite line...just like a car salesman telling you about their thin profit margins.

    you also seem to discount that fact that there are good brokers who are good ex bankers that have experience selling RSPs and MFs. it is only a matter of time those will be added to the inventory.

  • race to the bottom on 2015-04-20 6:17:31 PM

    @John W, @James why then is the channel not growing? How come most brokers are making half or less than what they used too? If mortgages are so lucrative, why are the big mortgages houses adding, insurance, leasing, and now RSP's, banking services etc? The reason is incomes are down and they need to figure how to bring additional revenues in for brokers and for themselves to survive.

    SO your telling me if one had 500K to invest you would call up Johnny mortgage broker and have him invest it? I highly doubt it. Most FP's are doing worse than what a good Index Fund returns and it doesn't cost 2.5% in fees each year. With the stroke of a pen, fees could be cut in half. Believe me most of the banks profits in the last few yrs are a result of cost cutting.

    Why have the monolines discontinued incentive programs for the most part if there is so much money in mortgages?

    Tell you what boys, start lending money at 2.5%, open up offices, get some employees, pay utilities, leases, taxes, benefits and let me know what your net returns are like. Kevin O'leary exited pretty fast, he found out very quickly that the the biz has very low margins with no upside.

  • John W on 2015-04-20 6:57:17 PM

    @race, the business is growing. When I got my license 15 yrs ago there were perhaps 5000 brokers across Canada, now there is 5000 or so in Ontario alone. That is not a shrinking market. It does answer a couple of your other comments. When you refer to the term most brokers, are you really referring to the brokers who maybe don't have the skills to succeed in any market. I would suggest most skilled brokers are making more than they used to. It's not hard to increase revenues when home prices are going through the roof and the size of the average is much higher than it was even 5 yrs ago.
    As for your comment about the biz having very low margins and no upside, regardless what the margins are, I'm sure with over a trillion dollars currently outstanding in mortgages there is an opportunity for a few dollars in profit. I can tell from your comments you are already at the bottom.
    A more positive attitude might help, just sayin'

  • James on 2015-04-20 7:15:47 PM

    @race

    The sun is shining in BC right now.
    BC is on Earth.
    The sun must also be shining in Dublin right now because Dublin is on Earth.

    Figure that out; you will understand why your generalizations are flawed.

    Why are big houses adding product lines?
    Smart guy like you should know that aside from incremental income (which is most likely peanuts per transaction), the logical answer to that would be to spread the tentacles to embrace the client.

    Quit generalizing again and again...
    Someone with $500K liquid assets who is astute enough and knowledgeable about the markets would not go to a bank rep PERIOD.

    RE: O'Leary
    that generalization is like saying I should get a haircut like Justin Bieber...I'd be guaranteed to bang a few babes.

  • race to the bottom on 2015-04-20 8:21:06 PM

    @James going to be tough to see the sun right now in Dublin...its after midnight..

    The banks have wealth management divisions and people are depositing and are using these divisions. Talk to some branches and hear it for yourself. People certainly won't be using a mortgage broker for wealth management. So the industry move into this arena is kinda funny. There isn't the credibility or experience required. Same with insurance, you want an expert, not a mortgage broker trying to make an extra $15/mo on a trailer fee.

    @John, Ive made good money in this industry, good money in my books is six figure plus. There are very few making 100K+/yr these days. The industry has changed a ton in the last 5 yrs. I don't dispute the number of brokers you quoted from 15yrs ago to current but what growth has there been in the last 3yrs in terms of numbers and market share?

    John are you telling me that in order to win a refi, renewal or purchase you are not having to buy down the rate or pay for legal and appraisals? Why would a client go with broker when the banks are offering competitive rates with no hassle or costs on renewals? I'm hearing that many are having to resort to this in order to get the deal. There is also the point that many won't qualify for that very same loan anymore with changes brought in by the Fed and Banks so they are forced to renew with their current lender...the bank wins. People expect excellent service and really the broker offering strategy isn't a strong enough reason to leave their current lender, because in the end most just make the required payments and thats it. Many want to pay off the mortgage more quickly but very few take the action and make the sacrifice required.

    People cannot incur anymore debt. Banks are spanking the broker channel on renewals and refi's.

    So tell me where is the upside? Where is the growth going to come from?

  • John W on 2015-04-21 1:06:23 AM

    @race. You make some good points here. The growth has to come from you though. If you think $100k+ is good money in this business you are sadly mistaken. Most seasoned brokers make anywhere from $300k - $600k. The reason $100k isn't enough is that we have been in one of the strongest real estate markets for the past 20 years. When that changes your $100k will be $50k. I think the biggest issue with Mortgage Brokers today is that most of them only know the good times and when they face a little adversity they don't know how to roll up their sleeves and go out and get deals. In my market $100k is only about 40 deals. You shouldn't be able to survive on that.
    To answer some of your other questions, yes I do pay for legals, appraisals and buydown rates when needed but that might only represent a third of my deals. How do I compete with the banks. I am an advisor for my clients, I tell them the truth and sometimes that means telling them to just renew with their current lender. They trust me and are loyal to me and send me referrals. Granted I probably lose more deals now with competition and tighter lending rules but I find my income still goes up every year. I'm probably the exception but this is an amazing business and I love it. I wouldn't have the opportunity to make this kind of money too many other places.

  • race to the bottom on 2015-04-21 1:37:05 AM

    @John W 100K+ is good money, its not great money, its not excellent, thats why I said good. 500k+ is great money. 750 -1M+ would be excellent. There are only a couple guys making true blue great to excellent money Im certain, pooling etc not included in their calculations. So many fudge the numbers. Anyways sounds like you are making a lot and growing congrats. Hope you are investing some of it and creating a backup plan. Middle men are under attack and always will be, its the world we live in now.

  • Arbitrage on 2015-04-21 11:24:02 AM

    I think the question of how much you need to make in this business to consider yourself successful doesn't have one true answer. I will make between $90-110K this year but have extremely low operating costs. I have negotiated free office space in a building with another somewhat related business (in exchange for referrals), I require no staffing, don't bother paying for advertising (instead focusing on relationships), and don't work for a brokerage that requires monthly dues. Over the course of the year my monthly burn probably averages no more than $2-300. I'm in my 4th year and expect reasonable year over year growth and have bought into the trailer model from year one as an attempt to level income.

    I personally know 2 brokers generating a $250K-$300K income that may not end up with as much in their jeans ultimately as I do...staff, buildings, and large ad campaigns cost lots of money. And if the tide shifts and business slows, I feel a good deal more protected from that pain than someone with a bunch of overhead that may or may not be easily trimmed. Did I mention they also work more than me?

    I think that people in commission based businesses sometimes lose sight of the fact that they are running a business. They become entirely focused on generating that next deal...it would seem at all costs. There seems to be a "thing" in this industry where volume has become the only measuring stick for success. I will happily stick to slowly plodding along and tweaking my business efficiencies over blowing my brains out for volume and I think I'll choose to call that successful.

  • Ron Butler on 2015-04-21 11:59:59 AM

    Arbitrage, your post is thoughtful and reasonable. It summarizes the constant dichotomy between a "balanced life" and "go for it" both sides have value and we need to respect these different positions. Don't be too hard on the brokers who work more than you in pursuit of growth for growths sake. It may not be highly profitable but it is part of some people's make up. As Browning said: "but a man's reach should exceed his grasp or what's a heaven for?"

  • James on 2015-04-21 3:52:20 PM

    @race.
    bruh. the struggle. u missed my point in the analogy.

  • race to the bottom on 2015-04-21 4:39:50 PM

    @James...What I am learning here is that the brokers are making more money than in the so called hay days of 2002-2011, this is great news. We really are still experiencing some the best years still and will continue to going forward. All the new products and service brokers now have at their disposal will create more income and greater loyalty to the mortgage broker channel. I get the impression from your posts that your business is growing. Thats awesome. These are exciting times for the broker and broker channel. Never before have we had the diversity of products to sell to clients and deepen our relationship with them.

  • Ron Butler on 2015-04-21 5:26:26 PM

    Their are some weird ideas about mortgage broker income here. The median income is less than $45K because their are so many part timers. There are definitely some superstars but there are likely less than 150 mortgage brokers in Canada with NET incomes over $500K. Maybe less than 100.

  • James on 2015-04-22 10:18:58 AM

    @race
    IMHO, your generalizations are clouding what is in front of you.

    SOME thoughts:
    The biggest difference i see today vis a visa in the 2002-2011 are:
    - rule changes...policies are tighter and sometimes senseless.
    - bigger houses are more willing to take on rookies who have no clue about lending and yet still have access to status pricing.
    - technology has allowed consumers to be more aware

    However, some things continue to be the same...
    - the industry is still fragmented without any semblance of a great leader to advocate for all brokers.
    - banks continue to be the frenemies...more sneakier than ever.
    - incompetent brokers will continue to give the industry a bad name.
    - banks continue to make huge money off mortgages. anyone who think they don't must not have worked in treasury or finance.

    Brokers are their own worse enemy.

  • race to the bottom on 2015-04-22 7:22:30 PM

    @James please tell me what is in front of me?

  • James on 2015-04-23 9:56:40 AM

    @race...
    this thread provides you other perspectives out there. it is up to YOU to see it. my blunt comments alone minces no words against the generalizations.

    surely, you don't need me to paint it in crayola.

  • race to the bottom on 2015-04-23 3:12:06 PM

    @James as I have said before...

    There is and will be continued pressure on commissions paid to brokers by lenders. Moving forward a broker will spend more time, money and have to do more volume to make the same money they used to make. Lenders aren't going to increase commissions, they aren't going to give brokers access to any of their other products or services. The banks are adding more branches into neighbourhoods and are using more and more tech into the mix. Its amazing what one can do with the phone apps these days.

    The free flowing money that once was in the market is gone. Lenders are more cautious. They can't sell the kind of mixed bundles of mortgages into the market like they once used too. New rules & regs that didn't exist before have also eroded biz that we once you to do.

    The lenders retention teams are the most aggressive we have seen, this means less biz for brokers, we can't compete like we once did.

    The BFS biz is gone, a huge hole for those dealing with self employed/business owners.

    Builders or the investor that owns more than 5 props is also very difficult today.

    There are more changes that I could mention that have cut into the broker biz.

    These aren't generalizations they are realities and these collectively have taken away opportunities that once existed for the broker. Adding insurance, RSP's etc. to make up for the loss in revenues from selling mortgages isn't going to cut it. Lets see.. $2500 for a mortgage or $15/mo for a new insurance policy. hhhmmm

    I believe the tech giants are going to enter in and disrupt the market. Google, Apple or even some new startup will come in to this space. The banks will be fine because at the end of the day they have the money to lend, they control the processes and are the ones regulated and approved to operate in the market. Unfortunately for the the broker, they have no skin the game from beginning to end, there is no ownership of anything.

    There will be some that will do well and make money but it will be a big machine. The middle ground that everyone has played in for years is going away and will be gone.



Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Name (required)
Comment (required)
By submitting, I agree to the Terms & Conditions