New lender commits to 50 bps renewals

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 A 50 basis point renewal fee: It’s what the broker channel’s newest lender is offering originators on top of competitive upfront compensation, its president told, following the first week of operations.

“It’s going well and we’ve issued several commitments,” said James Clayton, president of MonCana Bank of Canada. “We now have about 25 brokers registered since we started on Nov.1. They’re from across the three markets we’re starting in: Alberta, Ontario and Halifax.”

For the most part those mortgage professionals actively sought out the lender after Clayton – former head of ResMor Trust – won the last of regulatory approvals for the new bank in October. Most of that select group of originators -- brokerages and individual brokers, alike – had successful previous working relationships with members of MonCana’s business development team.

While headquartered in Calgary, the bank also has two BDMs in Ontario and one in Halifax, in addition to its two in Alberta.

“Initially, we haven’t set any minimum volume require for brokers, although we are expecting that the brokers we’re dealing with will contribute a substantial amount of business,” said Clayton, again partnered with Gerry Wagner, who serves as MonCana CFO.

The lender is focused on A deals, averaging $225,000 and for the most part CMHC insured. MonCana is also prepared to do high ratio lending up to 95 per cent loan to value, said its president, dangling competitive interest rates to attract that business.

That 50 basis point renewal fee is also expected to appeal to brokers, increasingly looking to squeeze every dollar from each and every origination as the real estate market cools. MonCana does, in fact, see itself as sharing the client with the broker, suggested Clayton, pointing to the inclusion of broker names on its renewal correspondence with borrowers.

“We are committed to working with the broker all the way through the life of the mortgage,” he told

 MonCana’s entry to the market has helped lift spirits among brokers grappling with the fiercest competition from the commercial banks in years. Those rate wars were largely blamed for the departure of both Macquarie and Concentra this summer, effectively squeezed out by tight spreads and that heightened competition with the Big Five.

Mono-lines have been particularly challenged given their primary focus on mortgages and the fact many are without the cross-selling opportunities of the big banks, which are increasingly using home loans as a loss-leader in order to sell clients their many other products.

MonCana's bank status effectively provides it the same ace in the hole. Clayton plans to take advantage of it by offering a host of other products to clients – from RSPs to tax-free savings accounts – through financial advisors and other “deposit brokers.”

“We are a deposit-taking institution,” he said, on the phone from Calgary, “and that will provide us with cross-selling opportunities, which is part of our business plan.”

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