The growing number of high-volume brokers expanding into this market may ultimately have to abandon their buy-down strategy, said a veteran now speaking from personal experience.
“We’ve now been in Quebec for several months and what we found was that a number of lenders there just don’t allow brokers to buy down rate at all,” Dan Eisner, CEO for True North Mortgage, told MortgageBrokerNews.ca. “In addition to that, in comparison to Ontario and Vancouver, buying down rate is not what moves clients through the door.
“Any broker from outside Quebec entering this market has to have a marketing strategy that is focused on more than buying down rate.”
It’s a lesson Eisner’s expanding brokerage – dependent on online leads and low rates to drive business to its upscale retail stores – learned for itself after setting up shop in Montreal this spring.
Several other national players have since made their own moves to La Belle Province, trying to capitalize on a relatively hot market experiencing above-average price growth.
Many are now being challenged by the province’s smaller lending pool and the market’s well-established system of setting rates. It means lenders effectively restrict a broker's ability to eat into his or her commission in order to offer a client a better rate.
Brokerages using online lead generation sites routinely use that strategy to compete for and win triple-A clients largely fixated on rate.
That won’t work in Quebec, said Eisner, suggesting clients – even rate shoppers – tend to focus more on product options and the ability to tailor a mortgage to their specific needs.
There are other challenges for brokers entering Quebec.
True North spent upward of $50,000 to create a bilingual website and swap out English with French as the dominant language on its trademark blue and orange signage, said Eisner, who doesn’t himself speak French. Those expenses are likely to remain ongoing, with the company having to translate all future marketing and promotional literature – both print and online – in order to comply with standards set down by the Office Québécois de la Langue Française.
The provincial authority enforces commercial advertising laws, which also require business websites to adhere to section 52 of the Charter of the French Language, although it does allow for subordinate English text.
Ensuring its website meets those standards is key for True North, said Eisner, suggesting the firm relies on the Internet, and not necessarily its agents, to drive sales leads.