An industry veteran is asking young agents to take a second look at the number of deals they’re sending to members of the Big Five, suggesting stronger relationships with monoline lenders is essential to retaining clients but also to serving them.
“An agent is free to send 100 per cent of their deals to one of the Big Five,” John Hamilton, a broker with Dominion Lending Centres in Barrie, told MortgageBrokerNews.ca. “But I think it’s important young mortgage professionals take the time to learn about the products of the monolines, instead of just sending deals to the banks. I think sending more deals to monolines often better serves the client because of the monoline/broker relationship. But it also allows the agent to better retain the client after the origination.”
The cautionary note comes as new media reports suggest monolines are increasingly being challenged by the banks, both in and outside the broker channel. Two of the major banks using the broker channel advanced their relative share of broker business in the second quarter. That shift coincides with, and may in fact be driven by, the “rate wars” and the renewed willingness of bank branches to undercut broker rates. Their goal is to meet year-end targets, argue brokers, who themselves are finding it harder to maintain origination numbers as home sales slow and banks slash mortgage rates.
Against that highly charged backdrop, any growth in the percentage of deals that brokers and agents are now sending to the big banks doesn’t add up, said Hamilton, a broker for more than two decades. “I wouldn’t have expected that. The monolines are offering the lowest rates still, and the more we use the monolines, the more pressure we place on the banks to bring their rates down.”
Still, new agents may in fact be following the path of least resistance, argued another seasoned broker, suggesting they’re less able to re-direct clients who come in focused on a bank mortgage. They may also be less prepared to do the involved work sometimes required of a monoline file.
Hamilton also suggests that trailer fees, actively being promoted by some monolines, have zapped some of their pulling-power with new agents looking for an easy and quick payday.