Banks better than brokers, suggests report

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This may not be the best way to start your day, but a new report suggests bank reps remain better at clinching deals than their broker counterparts. 
“Banks are more successful at converting consultations into sales than other channels,” reads CAAMP’s Consumer Mindset report, part of its 2013 Spring Survey. The polling of 1,140 current homeowners suggests mortgage specialists enjoy a 77 per cent conversion rate compared to 51 per cent for brokers and 42 per cent for credit union reps.
Those success rates reflect both new mortgages, renewals, refis and switches. They also speak to overall broker market share in terms of new mortgages. That came in at 24 per cent for the spring survey  – actually up from the 18 per cent registered in the fall .
Still the relative success of banks in converting all leads is something brokers will increasingly have to deal with. The same Maritz report suggests that banks have become more aggressive in reaching out to existing clients as well as potential ones.
In fact, that may have played a significant role in why those respondents who count themselves as “former broker customers” did not again consult a broker for their last renewal. A whopping 42 per cent said “the lender reached out to me directly,” explaining their choice not to go with a broker again. That’s up from even last fall when 36 per cent answered the same.
For brokers, the trend suggests they have some work to do.
“Here’s the problem,” says Essential Mortgages Agent Ron Alphonso. “Banks have a distinct advantage with A clients in terms of pricing power and, perhaps, a strong history with a client. Banks will always have a higher conversion rate than brokers with those clients. 
“What we need to do is focus on the B or alternative clients where we have an advantage over the banks.”
  • Broker on 2013-05-29 10:25:30 AM

    IT would help if they played fair.

    When the branches offer products and terms not available to the broker Chanel for the same lender it sends a clear message. We need to support the mono line lenders as much as we can and any lender that plays fair.

    Why do we support TD and Scotia so much when thumb their noses at us on a consistent basis?

  • Dr. Grammar on 2013-05-29 10:32:27 AM

    "I explaining their chose not to go with a broker again" You would think that a publication would have some one proof read their copy.

  • Ann T on 2013-05-29 10:40:31 AM

    Given that most people have their investments through the banks and require deposit funds in the form of a draft, any decent bank teller will ask the client if they're buying a home & refer to a mortgage specialist right away. This gives them a natural advantage when it comes to conversion. Many clients have already been pre-approved through brokers giving the banks the leg up to better our rates.

    As brokers, we can't let mortgages become commodities. We need to add real value to convert our leads into clients.

  • John Hamilton on 2013-05-29 11:15:12 AM

    Might also have something to do with the client's fear they better accept auto-renewal or they won't qualify anymore, based on recent life occurrences, and news articles about rule changes and how it is harder to qualify. They see that renewal notice in the mail and they feel relieved. If the averages had the renewals removed from overall numbers, I am sure this news article wouldn't exist.

  • DB on 2013-05-29 11:57:47 AM

    TD and other Big Five Brand banks have lost credibility. They are treating the mortgage and real estate business as if we and no value to the transaction. They have cut lender fees and commissions, yet cry "bring us your business". RE-fi's with the big banks will not pay fee's even to their own specialists. So building a business of renewals must be done where by the broker keeps themselves front and centre in the eyes of the borrower during the term and renewal period. If I had my druthers I would utilize a broker every renewal period.

  • Lior, Mortgage Edge on 2013-05-29 12:41:48 PM

    Broker: at the end of the day it's a business decision. Major banks have access to an enormous customer database and intimate financial information about millions of customers. So why pay a broker 80bp on a 5-year deal when their internal specialists will do the job for 50bp or even less?

    Moreover, mortgages have become loss leaders for the banks. Just how much profit is there at 2.79% once the overhead is factored in? Mortgage rates these days are used to lure the fish onto the hook and then cross-sell other products that carry better margins.

    It makes little economic sense for banks to support brokers in the long run because abnormally low rates don't make the banks money and mortgages are not as profitable as they used to be.

    It's actually an interesting shift in terms of how the banks want to lure clients into the branch. Ten years ago, the banks were scaling back on branches. They were sending customers home to do their banking online.

    Today, every major bank is revamping their branches. Did you recently walk into a new branch? Some of them look like a boutique hotel with cozy couches, free WiFi, free newspapers, coffee and treats, free coin-counting, personalized attention from staff, etc. If that branch can sell you a 5-year fixed at 2.79%, even if the kid behind the desk only works there part-time and barely passed their IFIC license last week, what are the odds that most triple "A" customers will go to a broker?

    Food for thought.

  • kac on 2013-05-29 1:13:44 PM

    Hard to argue this when via the broker channel a lender can give a file complete and approved and then a day before closing start asking for additional information and have no consequences to pull the funding,the lender loses no credibility however the broker does. I agree with the relationship between the broker and lenders have changed dramatically since the economic down turn. If a banker used the same professionalism or lack of to their clients that a great number of lenders use with brokers these days you would surely be reading a different poll. We used to think the broker was a client of the bank and the relationship was cemented,now a days the relationship has surely changed.

  • ABroker on 2013-05-29 2:31:14 PM

    I keep hearing "support the Monolines" That would be great if it was not for the fact that the Monolines get the majority of their money from those exact banks you are trying to cut out.

  • KL on 2013-05-30 5:32:10 AM

    What a bunch of crap ! Banks better than Brokers - really !!! Since when does an order taker do a better job? Since what does an unqualified so called "mortgage specialist" do when they cry to their boss that a broker has abetter rate - they just match! No brain surgery at all is going on here. Ever ask TD or Scotia for a pay out ?? They not only want IRD, they want the orig discount back as well .... Monolines are the ticket - get on board ! There is a wack to choose from folks - pick 2 or 3 and you'll be a happy camper !

  • Ron Butler on 2013-05-30 6:41:46 AM

    I have commented on these issues before, the bankers are worthy adversaries, it is foolish to belittle and criticise them.

    Monolines are crucial to our business but without the products offered by the banks who operate in our channel we would place fewer mortgages.

    My big beef is with the idea we mortgage brokers should all concentrate on "B" business. This a truly dumb idea. We MUST fight the fight for "A" business. "B" business is about 10% to 15% of the mortgage market. We cannot give up on finding ways to complete with the bank branches and Road Reps successfully. It is key to our survival.

  • Interesting Read on 2013-05-30 7:22:14 AM

    Well...Everyone is saying "Support the Monoline lenders"...something I agree with but because Monoline Lenders offer nothing more than a basic Mortgage becomes and easy target for Big Banks who offer the "street" presence with nice couches, free wifi, deposit and retirement products...

    While I agree we need to support Monoline Lenders...they need to do more to support the Broker Network...give the Brokers more to work with...more to offer clients...something to dull the competitive edge the Big Banks clearly have over the Broker Channel.

    The Big Bank are fighting hard to increase their Mortgage Market share...slowly but surely they are winning the race...

  • Lior, Mortgage Edge on 2013-06-02 6:30:53 PM


    It is true that alternative business makes up a small percentage of origination but I'm looking a bit ahead.

    With the average consumer up to their neck in debt, the new B-20 guidelines limiting the options of self-employed individuals through traditional lenders (thanks to a stagnant economy there more self-employed Canadians than ever), and the fact that CMHC is now limiting refinance options, the overall market is heading the alternative route.

    The reality is people are going to need mortgages no matter how the economy is doing. Even if the buy side is weak, home equity is always the preferred route to consolidate or refinance. With the banks becoming more strict with what they are willing to take on, private investors looking to get decent return on their capital will pick up a lot of business.

    In my opinion, this is where things are heading. Time will tell if I'm right.

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