It may be the last thing brokers want to hear. Still, comments from RBC head Gord Nixon on the “aggressive” approach of the Big Five confirm what veterans of the rate wars already know.
“We have never been more aggressive,” he said Wednesday, as part of a panel discussion in Washington focused on the financial crisis and its myriad effects on the global economy. “Our biggest challenge right now is to put credit out. We have balance sheet to go at all levels.”
Brokers and their lenders are engaged in the same struggle as a growing number of Canadians defer home purchases in favour of paying down unprecedented levels of debt. The move has only compounded the more seasonal challenge of maintaining originations as the real estate market goes into hibernation.
Nixon’s comments suggest brokers won’t necessarily be able to count on the traditional cooling-off of competition with bank road reps. Although the Big Five usually use the winter to focus on hawking RRSP investments, this year they’re likely to remain focused on growing mortgage originations in an effort to meet already-reduced targets.
While Nixon didn’t touch on growth in road rep numbers, RBC and it broad-shouldered competitors continue the ramp-up.
His bank, alone, took on 1,000 new sales employees in the last 14 months – a large percentage of them mortgage specialists and five times as many as it took on the previous year. BMO, which left the channel in 2007, added 1,000 frontline workers of its own in the second quarter of fiscal 2011, even as it continues to add to those numbers. The bolstered sales teams have helped drive sales, with the bank bumping up the value of its residential mortgages by $2 billion, year-over-year.
Bank want ads calling for more of those mortgage specialists now crowd online headhunting sites, indicating the Big Five remain focused on an aggressive approach to selling mortgages.
Some brokers have been critical of that strategy, suggesting it may ultimately weaken the Canadian economy if underwriting standards aren’t maintained.
The Office of the Superintendent of Financial Institutions (OSFI) has echoed that warning.
“What we are doing is stepping in to increase the monitoring of that portfolio,” OFSI head Julie Dickson told reporters in September. “I think the concern is that the conditions are such that there would be tremendous pressure on banks to loosen those standards.”