You may not have thought about it, but the managing partner for one of the country’s largest teams has, pointing to the “strategic advantage” a FirstLine sale would give some mortgage professionals over others.
“It’s an unfortunate truth,” said Mike Hapke of MCC Mortgage Brokers Ottawa -- a member of The Mortgage Centre family. “But, definitely, I think when CIBC sells FirstLine that will give MCC brokers a big strategic advantage, in that they won’t have to drop CIBC from their repertoire of lenders.”
That wouldn’t be the case for the more than 13,000 mortgage professionals operating outside the CIBC-owned broker network. For them, they’ll likely lose the influence the Canadian Imperial name has on clients both in and, especially, outside of the country’s large urban centres.
While those brokers have always been restricted to “FirstLine” branded mortgages, most have used the CIBC name to help sell that product, argued Hapke, one of CMP's Top 50. That selling power may effectively be lost with the sale of FirstLine to any buyer outside the Big Six.
The analysis speaks to the challenge brokers still face in selling mono-line product, even as more and more Canadians educate themselves on their mortgage options.
“The fact is that a lot of clients don’t know who FirstLine is,” said Hapke, “but telling them that it’s owned by CIBC, they understand that.”
That hasn’t been lost on most industry leaders quick to respond to news last month that CIBC was preparing to sell the mortgage lender.
That hasn’t been lost on most industry leaders quick to respond to new last month that CIBC was preparing to sell the mortgage lender.
“Unless a deposit-taking entity with a great rating or big balance sheet buys FirstLine, it will be a massive loss,” said Alex Haditaghi, founder of Pacific Mortgage, last month. “It’s not good for our industry to lose a funding source like CIBC, with its access to deposits, covered bonds, MBS, CMB giving it the ability to fund $15 billion per year.”
Last week, the bank confirmed reports it was looking for a buyer, although would retain the massive FirstLine book. It also aims to retain as much of that renewal and refi business as possible.
“We do not expect this process will be a lengthy one,” says David Williamson, CIBC’s senior executive VP of retail banking, speaking to the “potential sale” of the broker channel lender. “Once this process is complete, we plan to increase renewals into our CIBC brand from the FirstLine platform over time. Benefits of this will include higher NIMs and deeper relationships as these clients enter into CIBC branded channels.”
That last statement may be a call to action for broker-partners of FirstLine, encouraging them to reach out to clients they've placed with the lender to ensure they retain them after any sale. That notwithstanding, FirstLine will continue to originate mortgages until such time as a sale.