Vanishing options a big issue for brokers

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Early poll responses to the 2012 CMP Brokers on Lenders survey suggest brokers are concerned about the loss of product options and the cookie-cutter approach of conservative lenders.

“Currently, there’s not a big difference among the products that lenders offer,” said Paolo Di Petta, independent broker for EQRON Mortgage in Toronto. “It’s all about rates and not about service.”

Di Petta sees the current environment as part of a business cycle. “Right now the focus is on rates and it looks like a mad race to the bottom for lenders. I’m waiting for the pendulum to swing the other and they start offering better service,” he said.

“The channel is losing lenders…When we lose them we lose their products,” according to Keith Leighton of Ideal Mortgage in Halifax. “Channel lenders should do something about their rates or else we’ll be in a situation where there will be significantly fewer transactions within the next 12 months.”

The recent exit of lenders from the channel can be traced back to 2007 with BMO’s pull out, according to James Laird, broker for True North.

More recently, “we saw CIBC wind down FirstLine this summer,” he said. “It’s a trend that’s not good for the industry, but it doesn’t mean the channel is not profitable.”

“ING which had very strong broker ties were recently snapped up by Scotia. That only foes to show that the channel is profitable,” he said.

And it is because of this that Laird remains optimistic.

“As the channel loses existing lenders new ones will replace them,” he said.

What do you think? Have your say by filling up the CMP Brokers on Lenders survey.

 

  • Elfie Hayes on 2012-09-15 12:33:43 AM

    There will always be times in any industry when changes occurs because it's necessary. We are coming back slowly from a deep recession and we might be in a great deal more difficulty if we had not learned anything from it's cause.

    Underwriting is tight and lenders are turning their backs on Brokers, but you have to know that every vacuum is filled in time.

    Just as Target and Nordstrom see opportunity for Retail in Canada, new lenders will once again see value in investing in Canadian mortgages, perhaps using a more common sense approach this time around.

    If you are a broker, keep doing what you know you need to do, work that data base, step up the quality of your service, educate yourself about marketing and you'll see that many will leave our industry because they can't or won't do the work.

    A culling of a herd keeps it healthy. Now back to work. Continued success to those of you who are keeping on!

  • Paolo Di Petta | dipettamortgage.com on 2012-09-15 3:10:10 AM

    Great comments by all speakers on the topic!

    Just some quick additions for context - I meant to say "there’s not a big ENOUGH difference among the products that lenders offer" - sure products do vary, but the differences aren't significant enough for the average consumer.

    Additionally, in a market that's so rate-dominant - those differences aren't as relevant as they will be when the "pendulum swings the other way". Lenders know this, and I expect they will adjust accordingly when market conditions shift.

    Last, to comment in the shifting lender landscape - I'm not too concerned. There's always someone ready to move into an under-served niche. That's really just a function of the life-cycle of a lender and the life-cycle of the market.

    As long as we, as professionals, stay informed we'll always be able to offer quality products and service to our clients.

  • MP on 2012-09-15 4:30:03 AM

    Ah..I don't remember RBC being in the broker channel and I certainly don't recall them leaving either! Was I sleeping?

  • Derek Rowley, RMA on 2012-09-15 2:31:43 PM

    MP

    That makes two of us

  • AMP Broker on 2012-09-18 5:25:13 AM

    I think RBC is a big buyer on the wholesale side so participates in the broker market indirectly.
    Fewer lenders... can reduced lender fees be far behind? Just thinking.

  • Walter Konig on 2012-09-18 6:06:23 AM

    With rates the same and products nearly the same it's time for the brokers to focus their business on the mono-lines and keep the big banks to the niche things like lines of credit and equity programs.

    Support the lenders that have supported us, it's like buying local!

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