With recent events, the lending landscape outlook remains uncertain. What effects are these changes going to have on the broker channel and how will brokers adapt? Some say it will be short term pain for long term gain, while others think a new order will be created. On today’s Big Story, we spoke to Lee Welbanks of The Mortgage Centre, and Wayne Sudsbury, Bill Eves and and Grant Brown of Homeguard Funding Ltd. (VERICO). 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, Mortgage Brokers News TV
John Tenpenny: Hi, I’m John Tenpenny, Editor of CMP Magazine and welcome to the Big Story on Mortgage Broker News TV.
What’s old is new again. Similar to when non-bank lenders came on the scene to compete for broker business. The lending landscape is changing again. What effects are these changes going to have on the broker channel and how would brokers adapt. Some say it will be short term pain for long term gain, while others think a new order will be created. Either way, good brokers will come out stronger.
Lee Welbanks, Broker, the Mortgage Centre
Lee Welbanks: I can see the pull back coming in this industry, being little detrimental at the onset. We have got of course those [three major] changes that are happening, the potential loss as a major lender and just general pull back from lenders in terms of policy and programs that are offered. The end result is I think we have become a leaner machine, there will be a little bit of fallout, but we are a thriving industry, we have come a long way since where we were 15 years ago as the lender of last resort and we are a strong industry now. So the end result I think we will be better off, it’s just going to have its initial pains for us.
Wayne Sudsbury, President, Homeguard Funding Ltd. (VERICO)
Wayne Sudsbury: I think the broker channel in the future will represent all non-branch bank network lenders. I believe that the big five banks are emphasizing their own proprietary sales forces. Brokers will be able to remain competitive by their boutique mortgage innovations and represent commercial lending forces.
Bill Eves, Vice President, Homeguard Funding Ltd. (VERICO)
Bill Eves: I don’t think there is going to be a change in the broker landscape and as a long time broker, we have lived through many ups and downs in the 30 plus years I have been in business. They are good, they are bad, rules change, governments change, landscape changes, we have no control of that. So the good broker will in fact need to look after their clients, explore all the possibilities of different lending institutions and including banks I guess as well. But that’s what a good broker should really be doing and that’s the way we’ve done our business for a long long time, we have adapted. Hope everybody can do the same.
John Tenpenny: Changes for brokers may come in the form of reduced compensation say some, while others think value added services like commercial and insurance will help brokers survive and thrive.
Lee Welbanks: I think brokers love to look at the idea that for this business to be profitable for the lenders and to keep them at the table, we may have to look at reduced compensation, margins are too tight and I guess it’s not profitable and that’s why we are seeing an exodus of lenders. For those more established brokers, you know make them a leaner meaner machine, but I think for those that are new in this business they are going to find it little more challenging to gain that foothold in this industry.
Grant Brown, Broker, Homeguard Funding Ltd. (VERICO)
Grand Brown: With changes to the mortgage market I feel that we as brokers need to understand that the banks are really striving to take a strong piece of the market share. We need to become better adapting, whether that be through tapping into the commercial market, the insurance market or the wealth management market. This in turn will allow us to be able to service our customer and add value and ultimately build our broker business.