Brokers: mortgage rules pave way for agent cull

Brokers: mortgage rules pave way for agent cull

Brokers: mortgage rules pave way for agent cull

For established brokers, it could be the sunny side of an otherwise dark round of mortgage rule changes, with industry veterans predicting the revamp will force as much as 15 per cent of agents out of the business.

“We’re talking about young agents who haven’t had the time to develop a client book of people with significant equity in their homes and so are dependent on those first-time buyers with 5 per cent down,” Ray McMillan, a broker with Home Mortgage Consultants Inc. in Mississauga, told “Also, in terms of refis, unless you have a stable of private lender in place, it will be harder to get those refi deals done."

The comments echo the admittedly wishful thinking of other established brokers, with equally well-established books and client databases.

McMillan’s clients skew older, have significant equity in their homes and household income above the national average. It means he’s less susceptible to any slowdown in the first-time buyer market as qualifying gets harder.

Under new mortgage rules, meant to take effect July 9, those clients – may find themselves shut out of the GTA and other high-priced markets, unable to qualify under the new 25-year amortization cap.

Many are now relying on 30 years to get into starter condos in both the downtown and suburban cores.
McMillan is convinced the new rules will dry up business for many young brokers  as they fight for few first-time clients. He’s predicting 10 – 15 per cent of Ontario’s agents will quit have to quit the business within a year, unable to support themselves under a dramatically changed landscape.

Those kind of losses would come on top of a significant cull earlier this year and attributed to new re-licensing standards in Ontario.

As of April 1 – one day after Ontario’s final deadline– some 21 per cent of the province’s 9,707 agents had failed to renew their licenses. That’s a loss of 2050 agents, alone, although nearly 200 mortgage brokers also missed the renewal date, representing a 12 per cent drop in the number of those licensees.

While the numbers represent a bump-up from initial FSCO relicensing stats, they exceed industry estimates for a total loss of 10 per cent to 15 per cent.


  • Christopher 2012-06-26 4:26:47 AM
    I'm thankful to be in a market where the difference between 25 and 30 years isn't much. It's always been a small percentage of my business, with more deals with less than 25 years than more.
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  • @kiltedbroker 2012-06-26 4:29:23 AM
    I think the real question here is... will rates stay low? If rates stay low, housing prices might correct (if you believe the general consensus that housing in Canada is 10-15% overpriced). If this is the case, young agents might not be as affected as their target clients (first time homebuyers) should be okay. However if rates go up before the market corrects itself, I think it will be a tough go for all brokers across Canada. What better time would the banks have to go for our throats?
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  • Welbanks 2012-06-26 4:30:44 AM
    I'm not sure why there would be so much doom and gloom predicted... the rules really aren't all that different from when we had 25 year amortizations before. In fact, the ratios at 39 & 44 are still more lenient than they were then. Refinance business may take a bit of a hit, but for all the refinances that I do, there aren't that many that go to 85%. New brokers may find it a bit tougher, but I don't see it reason enough to say we're going to lose another 15% of brokers.

    The things people will write for some headlines.
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