Another big bank has joined the ranks of lenders offering a sub-three per cent five-year fixed rate; signalling the growing importance to alternative lending to the mortgage broker industry, according to one player.
“We’re seeing more and more brokers exiting the A-market; I’m seeing more private (lenders) out there, more B-lenders and the banks are killing us in the A-space,” Joe Walsh of Dominion Lending Centres
Bedrock Financial Group Inc. told MortgageBrokerNews.ca. “Banks have begun focusing more on their retail lending and if they wanted to they could blow us out of the water.”
“They can undercut us and that’s a reality.”
The big banks make headlines when they make substantial rate cuts. Most recently, TD Bank became the latest to offer a sub-three per cent five-year fixed rate. Of course, Scotiabank shook the industry with its 2.97 five-year fixed rate; the lowest five-year rate offered by a bank this year.
The sub-three per cent trend was started by BMO in 2012, when it offered its 2.99 per cent five-year “no friller” fixed rate.
And it’s the alternative lending space that many industry players – including one network head – believe holds the key to success for years to come.
“I … believe that those who embrace the regulatory changes that have occurred in the past two years will reap great rewards,” Albert Collu
, president of Mortgage Architects
told CMP in its Hot List issue. “These rewards will be attained by brokers who have widened their appetite and proficiency of alternative mortgages.”
However, there are still brokers thriving within the A-space; especially the tenured professionals who have built a large client base over several years.
“I’m lucky because I’ve been doing this for over 30 years and I’ve built trust among my clients,” Bruce Hale of The Mortgage Centre told MortgageBrokerNews.ca. “My A-rate is no different from the A-rate down the street at the big banks and the banks still want to play in the B-space as well.
“They’re playing both side of the fence.”