“This year it may even get worse,” Ron Butler
of Butler Mortgage told MortgageBrokerNews.ca.
’s annual fall mortgage industry report, released in late November, indicated that broker market share had fallen on a year-over-year basis, a large chunk of which had gone to the big banks.
“For all current mortgages on homes that were purchased during 2014 up to the time of the survey, 61 per cent were obtained from a bank,” the official report states. “Mortgage brokers had a 31 per cent share. Credit unions were the source for six per cent of these mortgages, followed by two per cent from life insurance or trust companies.”
These numbers represent a significant change from the mortgage origination breakdown of just a year ago. In 2013, up until the date of last year’s publication, banks accounted for 42 per cent of mortgage market share, while brokers accounted for 40 per cent.
And Butler expects the trend to continue, mainly due to tightened underwriting that has placed more restraints on mortgage brokers than their banking counterparts.
“The underwriting changes that were forced on us, the branches ignored most of them,” through exceptions they allow for conventional mortgages, Butler said. “If you study OSFI’s guidelines, they talk about exceptions based on client relationships, based on assets; we just don’t get them. It’s as simple as that.
“You ask any mortgage broker in Canada if branches have taken conventional business away from them and they will all tell you that they have.”
Still, it may not be all bleak for brokers in 2015.
Filogix states broker origination business was actually up ten per cent this year, according to Butler.
“I’m not sure whether their numbers are always accurate because we’re not 100 per cent sure how they define those numbers; they define those numbers based on application volume, not closed business. It’s hard to tell how precise they are.”
Broker market share shrunk in 2014, and industry players should expect more of the same this year, says one leader.