Mortgage broker clientele continue to skew younger than those of their bank competitors, according to the latest CAAMP-Maritz report on consumer perceptions, addressing a key factor continuing to limit broker commissions.
“Analysis uncovers significant differences in the target audience of mortgage brokers versus direct-lender channels,” reads the report, based on consumer and broker surveys and released this week. “While broker clientele have achieved a high level of household income at a relatively young age, because they are more likely to be living with children it is also likely that their expenses are higher, leaving them with less budget for their homes than customers who deal directly with lenders.”
That rub is spelled out in the survey’s numbers: the median age of a broker client is 36, compared with 42 among those who go direct to a lender, according to the report. Still, despite that relative youth, broker customers have just as much earning power as bank customers, reporting an average household income of $85,987, all but identical to the $85,768 reported by bank customers.
But at the same time, broker customers are more likely to be families; i.e., 53 per cent of survey respondents live with children, while only 43 per cent of lender customers do.
That jives with broker perceptions about their key client demographic – first time homebuyers – but also illustrates the challenges they face in growing commissions through better penetration of the high-end market.
It’s a challenge compounded by the falling number of first-time buyers in the market say economists, pointing to a faltering economy and a demographic shift suggesting there’ll increasingly be fewer young people stepping onto the property ladder.
“We’re probably not going to see as many first-time buyers in the market,” Ted Tsiakopoulos, the Ontario regional economist for Canada Mortgage and Housing Corporation, told brokers earlier this year. “You’ve probably already seen that in your business. We’re not creating as many households in your traditional first-time home buyer category of 25 to 40.”
Those factors threaten to challenge mortgage brokers in ways that the banks simply experience given their older client base.
“The average broker customer reports a home valuation of $289,000, 14 per cent lower than $336,000 among bank customers,” reads the CAAMP report.