“People who are discounting right now and advertising and trying to move their business online right now are probably the future of the business,” Ron Butler
of Butler Mortgage told MortgageBrokerNews.ca. “People who are delving deep into social media – they aren’t feeling the results today but they’ll start feeling the results more over the next two years.”
Millenials, who will account for a large proportion of the future home buying cohort, have grown up immersed in technology and social media, and they look online before making most major purchases, including mortgages. Which, according to Butler, will lead to an increase in the amount of discounted rates.
“The future generations are going to do research first,” Butler said. “So the more information about rates and products are online, the more likelihood they’re going to get a discounted rate.”
Currently, there are several brokers who have embraced the online model but they are still the minority. For now, at least. But what affect will that have on pricing?
“Future brokers can go 100 per cent social but the other reality is that … for the next generation of brokers the idea of doing a mortgage 115 basis points is going to cease to exist,” Butler said. “It’s going to be an exception; it’s going to be a rare mortgage that pays the full amount that is available.”
No stranger to discounting rates, Butler says that half of all his business comes from online leads, and the proportion of discounted deals across the industry is only set to increase.
“I would say in five years half of all mortgages will be discounted by mortgage brokers,” he said. “Half of all the mortgages written by the end of five years will not represent full commission.”
: Broker market share shrinking
The future of the business is online and, according to one major broker, industry players who embrace that model will thrive in the coming years.