But that is slowly changing, Westra points out, as the broker industry is slowly turning its attention to cultivating opportunities in the renewal business though greater participation and changing broker compensation including trailers.
“Five years ago there was maybe 5 per cent of the overall business going to renewals for mortgage brokers,” he says, “but now that is around 15 per cent. The broker channel is still a very fragmented industry – but some business can be recuperated upon maturity should borrowers new seek options.”
Counsel’s growth has been accelerated by CIBC’s departure from the mortgage channel by closing down FirstLine last year and the recent sale of The Mortgage Centre to Dominion Lending Centres.
In addition, additional market share has come in the form of broker defections from ING following the acquisition of that popular lender by Scotiabank.
Counsel’s investors had been complaining about a clear corporate direction, spurring management to announce their intentions to sell most of its holdings and focus on the mortgage operation, Street Capital Financial Corp.
Counsel has also applied for a licence to become a bank, having already received Canada Mortgage and Housing Corp. approval to securitize mortgages.
“That is one of the reasons for their success,” says Westra. “They have always rated well on service surveys with mortgage brokers, and are extremely competitive the channel.”
Counsel had $6-billion worth of mortgage financings last year, or about 3 per cent of the market.
Counsel typically doesn’t hold the mortgages it obtains from brokers, but offers them for a fee to other institutions, such as pension funds and life insurers.
Counsel should be looking to lever relationships with customers by offering other services like credit cards and non-prime mortgages if it does reach bank status.