Road rep: Brokers more hurt by new rules than specialists

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The new mortgage rules are more likely to challenge mortgage brokers than mortgage specialists, says one leading road rep, pointing to greater broker reliance on “marginally qualified A clients.”

“This is just my opinion and it’s derived from my conversations with mortgage broker colleagues and friends,” said Cristiano Vilela, a Kingston-based mobile specialist, with more than a decade of banking experience behind him. “The rules will probably affect mortgage brokers more than us because of the type of business we see, which tends to be more A-clients who are well able to qualify under the new rules.

“Brokers tend to do more business with clients who may have just qualified under the old rules and won’t under the new.”

That theory gets put to the test starting today as th new mortgage rules kick in, restricting the maximum amortization on an insured mortgage to 25 years and the LTV on a refi to 80 per cent.

Another potential challenge for brokers, suggests Vilela, are caps on debt ratios, which may further restrict the current client pool for mortgage professionals, in particular.

Still, many brokers have steadily shifted their client focus to Triple-A borrowers, developing books less sensitive to changes in basic eligibility.

The new rules are more likely to affect new agents dependent on first-time buyers, said one industry veteran.

“We’re talking about young agents who haven’t had the time to develop a client book of people with significant equity in their homes and so are dependent on those first-time buyers with 5 per cent down,” Ray McMillan, a broker with Home Mortgage Consultants Inc. in Mississauga, told “Also, in terms of refis, unless you have a stable of private lender in place, it will be harder to get those refi deals done."

Vilela and other road reps won’t be relying on those private deals either, but may see their employers gain market share for A deals as a new rate war emerges, argue analysts.

  • Dianne Chafe on 2012-07-10 3:24:08 AM

    Most brokers deal with triple A clients now and it was only a few years ago when we only had 25 year amortizations and the ratios were 32/40 !! We did not lose market share then and will not lose market share now.

  • Jeremy on 2012-07-10 3:37:02 AM

    I couldn't disagree more! This 'Road Rep' clearly has no idea. “Brokers tend to do more business with clients who may have just qualified under the old rules and won’t under the new"-laughable. We have been through 4 rounds of tightening and we, brokers, are still going strong.

    To all my broker colleagues, keep up the great work!

  • Elfie Hayes on 2012-07-10 3:51:13 AM

    I'd like to say that as lending rules tighten up in general mortgage brokers such as myself are getting more calls than ever from good folks who can't qualify through the banks. So I'm not going to lose sleep that I'm going to have a hard time as a mortgage broker. Those of us who have taken our profession seriously have built strong data bases of AAA clients as well as client who don't fit Bank lending. I have no fear that it's not just business as usual for full time mortgage brokers, I'm willing to bet things improve!

  • George Christopoulos on 2012-07-10 4:10:35 AM

    Interesting perspective. The banks have made it near impossible for stated income approvals , "B" lenders are busier than ever and bank rep's are better positioned? Keep drinking the Kool-Aid. As for rate wars , the banks may give away a low interest rate but make no mistake the savings the come at at the rep's expense.
    There will be a lot more business to be done in the "B" and Private Lending market place in the coming years.

  • John W on 2012-07-10 4:19:12 AM

    This article is pointless. Who cares what some mobile specialists opinion is from Kingston. I can read one sided articles in the newspaper. Isn't this publication supposed to have the real info not just fluff to fill up the pages.
    If you are a professional it affects everyone the same, period. A new agent is going to have difficulty getting established no matter what the guidelines are.

  • Sharon Fauchon on 2012-07-10 5:20:36 AM

    I don't know who this road rep talks to but it clearly isn't any brokers I know. It is funny that they (road reps) tend to put themselves on a different playing field that us brokers. We are very good at what we do and my clients are no different then their clients. The difference is that when I get a B client I can still get them a mortgage and work with them so they can turn into an A client in the near future. This is my most rewarding part of this job. I have been a broker for over 20 years and the thing that is changing the most is how much business we are taking from the banks.

  • Sharon Fauchon on 2012-07-10 5:22:33 AM

    Someone needs to get their head out of the spot it is stuck in.

    Come on our clients are no different then any one elses, but we can do that B deal and that is what makes this job so great!

  • Jim A - Toronto and Durham Broker on 2012-07-11 1:46:38 AM

    Overall I believe what is happening to the mortgage rules are not fair to the general public looking to buy a home or refinance their existing mortgage. If there is to be some real control then go after the high interest credit card companies and high interest payday loan lenders and high interest finance companies. This is where the problem exists and it must be controlled some how. As for the mortgage side. As any mortgage broker would know and it is, whether your client are so called bank customers or your clients just do not meet the bank list mortgage brokers and their agents add a true value that no so called bank mobile specialist will ever give. As an independent mortgage broker we trully have the options that no so called bank specialist can offer.

  • Sharon B on 2012-07-11 11:15:11 AM

    I used to work for a Canadian Bank, everyone working there lives under a rock. 95% of my clients have beacon e> 700. I can tell you at the Bank that was not the case. The higher end client is seeking the best rate, best choice, and best service and that is what we provide in my office.

  • Liz on 2012-07-13 3:35:10 AM

    Reading this was a complete waste of time. someone looking for their 15 minutes.......

  • chris on 2012-07-14 3:25:13 AM

    Sorry...absolutely useless article & opinion from a bank rep who has no clue...just shows how stupid this individual is...There's a reason this perosn isn't a Mortgage Broker...!!

  • francine on 2012-07-16 11:38:59 AM

    brokers dont work for the client they work at there benefit i know too many families who lost everything and loan shouldnt of been done brokers put in false income and all ... goverment should even ut in more rules why you think brokers write we lend what banks wont cause they write wrong income and other stuff to client to get loan and put them in debt nice work brokers they dont consider all the people suffering tho and all.....

  • Liz on 2012-07-17 1:52:12 AM

    To Francine, someone who has zero comprehension of the English language. You are making a very broad demeening statement to the entire Broker community. You do not know what you are talking about.

Broker news forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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