CMP Brokers on Lenders teaser

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Early results from CMP’s Brokers on Lenders survey prove that with the ever-tightening underwriting, brokers are having to rely more and more on Alt-A and B deals as fewer clients now qualify for prime.

“Yes, I have had to rely more on alternative (deals),” Kevin Bainard of Mortgage Alliance told MortgageBrokerNews.ca. “I have a higher number than the average (broker) and I think it will rise.”

Preliminary results of the survey show that, on average, brokers now rely on sub-prime lending to make up 18.6 per cent of their deals, compared to only a few years ago when the number was closer to 10 per cent.

Bainard believes the combination of tightened lending rules and the competition from banks is forcing more brokers to look to alternative solutions.

“Banks are much better at keeping their own business,” Bainard said. “It’s almost impossible to beat banks on A-rates these days and they are very focused on not letting the broker channel take business away.”

While Bainard relies on alternative deals more than the average, even brokers who have traditionally relied very heavily on A-deals have felt the effect.

“It has always been (that) 95 per cent of my business was A; this year it has been 92-93 per cent of my business,” Viktor Shaefer, owner of VS Mortgage Inc., part of Verico Onelink Mortgage, told MortgageBrokerNews.ca. “I was never eager to do B-deals, and I’m still not, but it’s just because of all the changes around mortgage rules that I’ve been forced to do more B-deals.”

And the trend is expected to continue, with some brokers believing the percentage of alternative deals will eclipse the 20 per cent mark by next year.

“I feel as though this trend will continue and the number of B-deals will grow as brokers are forced to look for other options for clients who can’t qualify,” Shaefer said.

  • Lior, Mortgage Edge on 2013-09-04 2:15:52 PM

    Here is my take: condos in Toronto are becoming increasingly difficult to place even for borrowers with very good credit. Business *is* being done, however, it is definitely more challenging.

    The issue doesn't necessarily affect consumers who got builder mortgages/rate holds 3 years ago. It affects people who are coming into the market *now*. Moreover, even the alt-A lenders are being more cautious with condos.

    So it really goes back to communicating with your customer from the onset and making sure they are aware that the lending environment is very different today whether they are dealing with a bank or broker.

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