Brokers, it may be time for some soul-searching.
Gone are the days when brokers could truthfully brag about having access to 40 or more lenders, argue some industry vets, suggesting lender losses have whittled down that number considerably – along with the diversity of the product, itself.
“I remember saying I had access to 40 lenders -- we would take that client and fit them into the proper box, every lender had a niche,” Cameron Mackie of Dominion Lending Centres Your Mortgage Partner commented on MortgageBrokerNews.ca. “Now when lender(s) merge they (seem to) remove the niche, providing the end result of the ‘same box.’”
That new reality suggests that brokers may have to reconsider their strategy for selling themselves to clients in an environment where the number of lenders with which they deal has shrunken and minimum volume requirements further challenge the ability to shop around.
And with fewer places to turn, come fewer options.
“With the new regulations there's very little that sets them apart,” Mackie said. “This has left us with only about 10 different lenders now; the rest are underwritten through the same third- party underwriting company and their funds are registered with the same trust company.”
And brokers have felt the impact.
“Day by day, the pool of lenders is shrinking; if you look at ING, they stopped dealing in the broker channel and losses like that have an impact on our business because it makes us less competitive,” Bilal Hussain of Mortgage Architects told MortgageBrokerNews.ca. “The more lenders we use, the more competitive we are.”
The industry, like any other, ebbs and flows and some brokers are optimistic that as it improves, the number of lenders will one day grow again.
“There are still a lot of lenders in the market, but I think the time will come when there will be more lenders,” Hussain said. “At this time, lenders may not be getting enough business to survive on their own and that’s why they merge. I’m confident the market will improve and attract more lenders.”