The tougher mortgage rules may shut a significant number of borrowers out of the market, but mono-lines should turn that into an opportunity to speed up approval times, argue brokers.
While economists are predicting a significant reduction in the number of mortgage applications stemming from the higher qualifying standards, any reduction in workload can be used by broker channel lenders to up their underwriting processes and advance themselves and brokers a competitive advantage, brokers told MortgageBrokerNews.ca.
That, at least, is the call to action. In reality, improved underwriting efficiencies may be harder to win.
“The really good lenders will use the reduced workload as an opportunity to improve their service and speed up the processing of loans,” said Marcus Tzaferis, a broker with MorCan Financial Inc. in Toronto. “There is an expected time for loans to be processed, and brokers tend to go to lenders that process applications faster.”
Last month, MortgageBrokerNew.ca reported on increasing importance of quick turnaround times for brokers. Those wait-times are opening up a new battleground in the mortgage wars. While rates remain crucial to clients, brokers are now just as likely to lose a deal in leaving a client hanging, waiting for an approval.
“What I’m finding is that new lenders like MonCana are really coming forward with answers within hours, and that’s helping them compete with other lenders, even if the broker has a dedicated underwriter,” Tony Anagnostou, an agent with Dominion Lending Centres Forest City Funding said.
The new rules should theoretically allow all broker channel lenders to cut their approval times as they see a cut in the number of deals, said Derek Rowley, of Real Mortgage Associates, in Nova Scotia.
“The logic is that a lower LTV and a shorter amortization period will result in less people qualifying for a loan,” he told MortgageBrokerNews.ca. “This will help banks weed out the number of applications they process and ideally would mean the applications they process could be approved faster.”
However, another Toronto-based broker remains sceptical.
“I think the approval wait times will generally remain the same,” said Dianne Chafe, a mortgage professionals with Oriana Financial. “The approval process will remain the same, and I expect that banks will return decision in about the same time they did before the new regulations came in.”