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Industry leaders chart challenges of 2012

The past year has been a challenging one for brokers and the mortgage industry and it’s notgoing to let up in 2012. MortgageBrokerNewsTV recently spoke with some industry leaders to discuss what those challenges facing brokers and lenders are and how they might meet these challenges in the coming year. For brokers, increasing market share in the face of bank competition, a cooling housing market and trying to stay the course amidst economic uncertainty is just some of what awaits. For lenders, issues such as access to capital and potential regulatory changes around non-income qualified lending will be high on the list moving forward. On today’s Big Story, we spoke to Ron Swift of Pacific Mortgage Group, Andrew Moor of Equitable Trust and Martin Reid of Home Trust. Find out on today’s The Big Story, on MortgageBrokerNews.ca TV, your home for industry news, opinion and analysis.

Video transcript below:

John Tenpenny:  Hi, I’m John Tenpenny, Editor of CMP magazine and welcome to the Big Story on Mortgage Broker News TV.
This past year has been a challenging one for brokers and the mortgage industry and 2012 is not going to be any less so.  Recently Mortgage Broker News TV spoke to some industry leaders about those challenges facing brokers and lenders and how they might meet them.  For brokers increasing market share in the face of bank competition, a cooling housing market and staying the course amidst economic uncertainty is just some of what awaits it.

Ron Swift, CEO, Pacific Mortgage Group
Ron Swift:
 Well I think the challenges are not just so much what we have seen in the last couple of years.  We are not in a growth market anymore when it comes to the overall real estate activity.  So then for brokers it’s all around trying to get market share and so how do you get market share within this marketplace, competing against the banks, they are not giving up their market share any time soon.  So that’s going to be the challenge, is just how do we get to those consumers to gain more market share.  So I think that’s the trick going forward.  You know we got all the products, we got all the services, we do all the things you know the level of professionalism has come up tremendously in the last 10 years.  But now what we have got to do is we are just going to get that message out to consumers.  So I think we are beginning to work on that and as an industry we can work on raising the profile of the broker to the everyday person out on the street, who is looking for financing then we can truly grow our market share and overcome these challenges.

Andrew Moor, President & CEO, Equitable Trust Company
Andrew Moor:
 Well I think one of the temptations we have is always trying to reinvent ourselves every year at the beginning of the new year.  I think the challenge for brokers is to keep on doing the things that are working for them really well, particularly on the service side, just keep on wowing the customers, getting more referral business, picking up that market share that doesn’t currently come through the broker channel; a lot of that is just doing the things that we all know we should do, but somehow when the spring market comes, we get too busy and we don’t fulfil those service promises, so just being absolutely [resolute] on service and I think the challenges will seem pretty small in the overall scheme of things.

Martin Reid, President, Home Trust Company
Martin Reid:
 Well 2012 is going to be a  little bit more challenging than 2011.  You are likely to see a real estate market that’s sort of flat to maybe down about 5%, probably flat in terms of activity as well.  So it’s not a growing market for mortgage brokers, but there is still going to be a lot of business out there, we see interest rates sort of on hold till maybe the end of 2012, early part of 2013 and with that you may get a lot of customers switching out of variable rate mortgages and then to fixed rate mortgages.  We see that as  a good opportunity for mortgage brokers.  There is also good opportunity in the sort of the non-prime side of the business for the mortgage broker.  The bigger banks are a little bit tighter on their mortgage lending, just given the uncertainty in the real estate market.  They have expressed some concern, so we see that as an area that offers a lot of opportunity for the  mortgage brokers, but they really got to sort of focus on adding that value to their end customer.  

John Tenpenny:  For lenders such issues as access to capital and potential regulatory changes around non-income qualified lending are high on the list as they move forward this year.  

Ron Swift:  I think it’s going to be different for different lenders.  I think for the mono lines which I am one, for us it still going to be to continuing to get access to capital, with all the volatility out there and what’s happening on the global front, that’s going to be, continue to ripple through the marketplace, getting access to capital, being competitive every day.  So I think that’s one of the challenges.  Of course domestically we have the issues around what’s the economy going to do?  Housing [starts], job losses, all those things that we are looking at real estate activity, I think all those things together .  Are we having housing bubble, is there too much consumer debt, is there going to be more government regulations coming in early this year to change the world again?  So I think we are juggling a few different issues.  For the mono lines it’s once again, it’s primarily around making sure we have access to capital.

Andrew Moor:  Well I think the biggest challenge facing us all is really the economic uncertainty that’s out there, whether it’s the US recovery or what’s going in Europe and how that can potentially blow up and derail our housing market.  So that’s certainly the top of our list in managing our risks properly and we are certainly feeling pretty positive about Western Canada right now, with the coming of the commodity story out that still seems to be intact.  We are pretty positive about the [F&Q] but external influences to Canada could have a negative impact and I am sure that my peers in all the other lending organisations are thinking about things similarly and worrying about the credit [made to cease] to make sure we are not getting overexposed on a risk perspective.

Martin Reid:  Yeah, there is a couple of challenges for lenders, one of them is going to be on the regulatory side, OSFI, the regulator for banks and trust companies in Canada came out with a paper at the end of October on non-income qualified lending, they may come out with regulations further down the road.  We don’t see any changes from CMHC, possibly a roll back on the loan to value from 95 to 90 on purchases, but politically that one is not a very popular one, so we are not sure that will be happening.  The other challenge for lenders is going to be on arrears and soft spots in the Canadian market and I think all lenders will be focused on that, but we don’t see any broad based weakness in the Canadian market.