Pro optimistic about industry longevity

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The conversation was sparked by one anonymous MBN reader, who claimed the broker channel is unsustainable, citing eroding profit margins for lenders paying out on broker-originated deals.

“Brokers in Canada get paid their commission no matter what the profitability ratio of the product they are selling is. They do not take a hit like the lender does when margins narrow, and any lender who even contemplates having brokers share that pain is ostracized by the broker community,” writes “M. Robertson” a regular commenter on “The reality? The broker channel as it exists today is unsustainable. In almost every other country in the world there has been change because of this and it means that brokers in Canada better watch out because it will come to Canada too. It is only a matter of time.”

But as long as there is competition among lenders, brokers will have a role to play, according to Matthews; as long as there is competition, clients will seek the best rate and brokers will help them do that.

“Lenders incentive structure is to widen the margins between the rate at which they’re paying the money and the rate at which they’re lending the money,” he said. “The role of the broker is to keep that margin reasonable and that’s what we do; we basically keep the market efficient.”

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