The country’s leading provider of reverse mortgages is blaming low-rate conventional loans for its 18-per-cent slip in originations during Q2.
“During the quarter, HOMEQ experienced continued competition from competing products, in particular the low-rate conventional mortgages and secured lines of credit,” reads the bank’s financial report, issued earlier this week.
The phenomenon is borne out in the lender’s results.
New mortgage originations for the three months ending June 2012 stood at $57.1 million, or $12.6 million lower than Q2 2011. That equates to an 18.1 per cent drop, despite HOMEQ's own increasingly competitive rates.
The period corresponds with a rise in the number of broker-arranged conventional deals, precipitated by a rate war extending beyond insured mortgages.
The trend continues, although borrowers – even those looking for conventional loans – are now facing more rigorous qualifying standards.
HOMEQ isn’t specifically identifying which if any of its primary originations sources has seen the largest drop-off in referrals, although the lender has pointed to the broker channel as an increasingly important originations pipeline.
“Brokers are a very fast growing channel for us, and we see it as growing in the next two to three year,”
President and CEO Steven Ranson told MortgagBrokerNews.ca in an earlier interview. “A lot of seniors may not have used mortgage brokers, but we see that changing as the percentage of people using brokers increases and that applies to seniors.”