Brokers – specifically, a bigger piece of their action – helped cushion the blow for Scotiabank in its third quarter even as its overall market share fell – a validation, say brokers, of their value proposition.
“If they (Scotia) were smart, they would look at expanding their efforts to grow business through the broker channel as a more cost-effective way of originating mortgages,” Della Dwyer, an Invis mortgage professional in Barrie, told MortgageBrokerNews.ca. “I don’t know that they’ll do it, though.”
The comments follow release of Scotia’s financials for the three months ended June 30. While the mega bank reported an impressive $2.5 billion growth in funding volume of residential mortgages, relative to the year-ago period, its overall market share fell from 20.40 per cent in Q2 2010 to this year’s 20.30 per cent.
It suffered an even bigger slide in the last six months, having reached a 20.54 high in the first quarter of this year. Percentage gains and losses of even one basis point represent hundreds of millions of dollars for lenders prepared to undercut each other’s discounted rates in order to meet year-end targets, says analysts. That may help to put erosion of Scotia’s residential mortgage portfolio in perspective. The slip would, in fact, have been steeper were it not for brokers.
Scotia was the broker channel’s No. 1 lender by volume for the quarter ended June 30, moving up from second position, according CanadianMortgageTrends.com, citing a quarterly report from D+H. While a slowing real estate market clipped away at its originations even through mortgage professionals, the decline was less than those sustained by most other lenders using brokers to bring in business.
Those results reinforce the idea that brokers continue to represent the industry’s best source of originations for both big and small lenders, said Dwyer. The analysis also counters the arguments of lenders such as Macquarie and Concentra – both quitting the channel earlier this year.
Scotia’s success aside, brokers are increasingly facing the pressures of disintermediation, said industry trainer Greg Williamson.
“Lenders will always be looking for a shorter route to the client,” said the broker, as part of his webinar “180 DEGREES ACADEMY - Winning the Rate War.” “That means cutting out the intermediary. There is only one way to stop, or slow down, the process of disintermediation, and that’s through innovation.”